Many medical practice owners quickly hit a common hurdle – business is booming but cash in the bank is low.
If the problem is ignored, it can severely hobble the practice or bring it to its knees. Even with a full list of patients.
So it is key to identify the issues swiftly so your practice can run smoothly and grow, without limitation.
Here are the key medical practice cash flow killers to avoid.
High overheads
Running a medical practice is expensive, especially if you’re not on top of your costs. Analysing your overheads against the revenue you produce can indicate whether or not the overheads are suitable, or if they are stunting your cash flow beyond good measure.
If this is the case making small adjustments can help, however bigger costs such as rent or the loan repayments are not always easily managed. You can’t just pack up and move to a more affordable place.
Take a step back and analyse what is in your control, like machinery maintenance, overtime payments and patient numbers. Here you make the changes that matter.
Loss of patients
While cash flow can be an issue even with a full book of patients, if there is a decline in regular patients over a short amount of time that will certainly be reflected in your accounts. Take a look into why this could be. Short staffed? Look into locum doctors who can temporarily fill spots at your practice without taking up permanent roles. Long wait times turning patients off? Holding your staff to regular consult times and hours of operation is important, while also managing expectations.
Analysing the loss of patient numbers can lead to a diagnosis and then a cure. Fixing the areas that seem to be the issue to increase your primary source of income will be the best way to increase your medical practice cash flow.
Equipment maintenance and costs
Providing your practice with the latest equipment and tools to perform daily tasks is fantastic but can quickly eat into the budget and lock up cash flow. The cost to initially purchase these items and then the ongoing costs to keep them in tip top condition can be a big drain on resources.
Instead, consider renting items needed or even equipment finance. Both these options can offer flexible repayment methods, taking away the financial strain while giving your practice what it needs.
Loan payments are too high
During the initial stages of growing your practice, it can take a while to generate a consistent, steady flow of cash.
Business, property and equipment loans can be a costly factor. Explore medical finance providers that will allow for loan repayments in line with your cash flow. The loan repayments can start off smaller while you’re becoming established, then when you’ve got a strong client base and great cash flow, the loan can be paid off more substantially. Increasing the loan repayments by mirroring it to the practice’s income can offset those big loan costs especially in the early days of the practice.
The reality is, you may not have the best loan deal. You may be able to come to a more affordable arrangement with another provider, or you may be able to consolidate your debt – rolling what you owe in to one loan, saving on fees and rates. Talk to your experienced medical finance expert.
Get Professional Advice
Work with the medical wealth experts at Nitschke Nancarrow, who handle medical practice accounting and finance needs.
We know the industry, and understand what it talks to improve practice cash flow and set up your business for growth. Contact us.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.
