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    Check financial statements to enhance revenue

    Q: I know in this era of healthcare reform that we need to be prepared to receive less reimbursement for the services we provide. What can we do to bolster ourselves for this inevitable loss of revenue?

    Thomas J. Ferkovic, RPh
    A: All members of the healthcare community must be prepared to receive less reimbursement for their services. Fees will be altered significantly from today's models of production and payment for services. That doesn't mean, however, that you should sit and wait for your revenue to plummet. There's no better time than now to scrutinize your financial statements even more closely with the assistance of your accountant or practice management consultant.

    Financial statements are important tools in managing a practice but are effective only when prepared and used appropriately. Review your statements for more than the variance to budget and profitability, examining such factors as insurance premiums, miscellaneous spending, physician expenses, and contracts. Compare actual results with prior years and with similar practices to get an accurate view of financial performance and trending.

    After developing or updating your financial statements, turn key data into financial ratios that provide meaningful measures of progress—a scorecard that helps you determine what areas you need to manage aggressively. Ratios can improve a practice's financial health by identifying trends, flagging bankruptcy potential, tracking growth, and assessing leverage conditions.

    Regardless of your practice setting, aggressive financial management is critical during these challenging economic times. When used appropriately, financial statements and ratios can be valuable in diagnosing your practice's current financial condition while helping you enhance revenue and control costs.

    Answers to 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

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