It can be difficult being the only person to working on the practice's finances. Discover how you can encourage your staff to work on finances.
A: The first step you must take is to teach your staff to think like owners-not like receptionists, nurses, radiology technicians, or billing clerks. Everyone in the practice-not just the owners-must understand money and its relationship to the practice's own health and well-being. All employees need to understand how the money flows and how it is being used.
A private practice's finances has three key aspects: income, profit, and cash flow. Income is the money doctors pay themselves for being an employee of the practice. It is not related to ownership.
You might be surprised to learn, however, that a posted profit doesn't always mean that your practice is doing everything right, either. Profits cannot be left to chance. They must be earned intentionally. If you cannot explain why a profit exists, if it's a pleasant surprise rather than something expected, then the practice's future might not be very profitable in the long run.
Cash flow is the third aspect to keep in mind. A practice needs cash flow to survive. Because the unpredictability of claims payments and other factors can affect incoming cash flow, cash often moves through a practice erratically. This uncertainty causes issues for outflow-which is dictated by supplies and equipment purchases, staff salaries, and the direct costs of performing clinical service.
Because of this unpredictability, even practices that are profitable overall can be cash-poor. And without cash in your bank account when you need it, your business is threatened, no matter how profitable the practice might appear to be on paper. Although you, as the physician/owner, must have ultimate control of the money that goes in and out of a practice, also teach key stakeholders in the practice to assist you in managing cash flow.
Answers to our readers' questions were provided by Thomas J. Ferkovic, RPh, MS, managing director, SS&G Healthcare Services LLC, Akron, Ohio. Send your practice management questions to email@example.com Also engage at http://www.twitter.com/MedEconomics and http://www.facebook.com/MedicalEconomics.