“How can I increase the profitability of my medical practice?”
It’s a question that every practice manager, every provider, has running through her mind on a constant loop. The challenge of providing the best possible patient care while keeping the lights on and ensuring full regulatory compliance is an endless juggling act. Changes in the reimbursement landscape and increased patient volume due to the Affordable Care Act have added complexity to maintaining a profitable practice. As a result, the need to find creative ways to maintain (or increase) margins without compromising patient care has only become more acutely felt in recent years.
There are, of course, only two ways to do this: cut costs and/or increase revenue. If you cut costs too much, you run the risk of alienating patients and/or staff. Everything in life can be measured on a bell curve. If you cut too deep, you’ll fall from peak profitability due to inefficiencies, poor morale, and reduced volume. So, the key is to save where possible but perhaps look more towards adding revenue. What does that look like in practice? We have compiled a few ideas for you to think about over this upcoming holiday season.
Bringing on a partner or newly minted physician can be helpful, but the added salary often eats too far into the added revenue brought in by higher patient volume. Instead, consider adding an advanced practice registered nurse (APRN). In many states they can provide almost every service that an MD can. Additionally, nurse practitioners typically have a significant level of autonomy, often independently operating satellite practices under the auspices of a managing physician. Merritt Hawkins pinned the 2016 starting salary of a family medicine MD at $225,000, and that of an internal medicine physician at $237,000. An APRN working in a physician’s office, by contrast, made just under $100,000 in 2015. (It is important to note that this is not a perfect apples-to-apples comparison due to limits in the data available. However, the basic premise that APRNs command a significantly lower salary than MDs holds.) Thus, nurse practitioners can increase throughput roughly as much as an MD, but with less overhead.
With changes in insurance policy and reimbursement, concierge services can help practices recover lost profit. These premium offerings are generally cash only, eliminating the time and hassle of working with insurance. Some providers are going so far as to offer house calls for preventative care. This latter idea is not going to be practical for many groups, but there may be intermediate premium services you can offer. Another option is to coordinate with related groups and offer discounts. For example, primary care or dermatology practices could partner with nearby spas. Orthopedic groups could offer services from local PT practices or gyms. Another option is to get involved with clinical trials. These come with added challenges, but can provide additional revenue and a chance for your providers to be involved in cutting-edge research programs.
Never underestimate the power of the patient satisfaction survey. Yes, it can be hard to get people to fill these out, but the payoff is worth it. Importantly, let your patients offer suggestions to improve service. Some ideas simply won’t be realistic due to the constraints of running a practice, of course. But even minor changes that boost patient satisfaction or take a couple of minutes off their visit could help increase the prominence of your group. When you do accept surveys, make the results transparent so your entire team can see both the good and the bad. Set aside time to review these as a group and discuss places where changes could be made.
Your practice exists to serve patients, but to do that it must also serve the people working within. There is a whole industry evolving around “workplace culture.” That discussion is beyond the scope of this blog; however, ensuring the people in your practice are valued appropriately and engaged in their work is foundational for building and growing profits. Like giving your patients a voice, give people within your practice autonomy and the ability to implement ideas. (Again, we acknowledge the need to do this carefully considering the highly regulated nature of healthcare.) If you as a practice manager find yourself saying “because that’s the way we’ve always done it,” consider whether that really makes sense. The Ritz Carlton Hotel is famous for its $2,000 rule, where any employee in the building is authorized to spend up to that amount to take care of a customer and solve problems. No need to start handing out Franklins to your group, but this is the type of employee empowerment gives everyone – staff, providers and patients – a deeper level of loyalty to your practice.
We won’t spend much time here, as our blog focuses on this aspect of running a medical practice. Briefly, take time each year to review the various IT products and services you’re using, compare them to your actual needs, and hunt around for solutions that could do more/better/cheaper.
Consider slightly unconventional methods of promoting your business. A current trend across industries is content marketing, where organizations provide useful material related to their field to existing or potential customers as a way to educate them and get the organization’s name noticed and remembered. (indeed, this blog is a form of content marketing.) Medical practices are prime candidates for content marketing. For example, some Ob/Gyn practices offer customizable pregnancy calendars. A rheumatology clinic could write blog posts about methods to reduce joint pain. A primary care clinic located in an underserved area could provide a free session on diabetic wound care. The options are almost infinite; the key is finding a topic that your target patients are interested in and giving them a unique and valuable perspective on it.
Finding the right way to increase the profitability of your medical practice requires time and energy that, frankly, you may not want to spend. It’s worth it, though. With so many groups providing similar services, those that thrive will create unique ways to stand out from the clinic down the street. Chances are, there are already some great ideas floating around the office, so grab a pen during your next lunch break and see what comes out.
We’re here to help but not to offer legal advice, so be sure to talk to a lawyer and check all state and federal requirements before implementing any of these ideas.