Story – A basic understanding of finance
Medical practitioners, health professional and allied health workers do not need to go to business school to run a successful practice but they do need some basic understating of finance. They do not teach business in medical school. When doctors go into private practice, they learn about profits and losses on the job, in a complex industry that is subject to large-scale forces beyond the control of most individuals.
The biggest potential cost savings are on personnel. “Personnel are clearly the biggest place you can save,” said one doctor. This particular doctor had half a dozen medical practitioners on staff and cut his support staff in half, to six support staff, by cross-training employees and working more efficiently. The practice invests in continuous training.
It seems the days of having multiple medical assistants help you with every task are over.
In some practices today, the doctors do the mundane stuff of reminders for appointments after they are done with their technical duties. This can involve the phoning of patients with reminders or to set up appointments. This also pays off when a staff member calls in sick or takes vacation. The business thus avoids the need to hire a temp to be a medical assistant or secretary. With training, a practice can just take one of the support staff and slide them into a different position. Everyone in the office has a list of things to do if they’re not busy doing their primary job.
One method that business owners apply when cash flow is tight is to stretch the fixed costs across more doctors or expanded office hours. Practices with multiple doctors enjoy efficiencies that solo practitioners cannot obtain, as well as greater power in negotiating discounts with insurance companies, paper suppliers, vaccine suppliers and even credit card processors. More practice hours spreads the costs and increases the net contribution per doctor
While the jury is still out on e-records, effective information technology systems can also save doctors valuable hours in prescribing, note-taking and communicating with staff or patients. With work-flow improvement, it gives more time for an extra patient or two in the day.
Financing of equipment remains a key area for savings. A poorly structured purchase can be more costly than it should. One doctor – Peter – purchased a new surgery in Chatswood for $495,000. It was a strata property. He then needed to do a new fitout. In order to finance this he secured a purpose-structured deal. The finance firm, Zenith financed the fitout at a cost of $125,000; financed through a commercial loan facility. The fit out which included walls, examination tables, sterilization units. This was done on a chattel mortgage agreement.
As people costs will remain high, the ability to finance equipment and fit out with innovative and economic solutions remains critical. Training however offers costs savings as it does in any small business. Training new staff on the practice’s procedures, including emphasis on first appointments to establish trust and lay the groundwork for a long-term relationship with patients is vital. One doctor noted “The more hand-holding you do, the more retention you get.” Staff turnover for a medical practice should be a controllable expense just as capital expenditure is.