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Revenue-expenses-profit: A plan for 2012




Michael D. Brown, CHBC
As we look back at 2011, I continually think of creative ways to maintain profitability in today's practices or in any facet of healthcare. It makes me think of my high school track coach, who always stated, "Run all the way through the finish line. Do not stop 10 yards, 10 feet, or 10 inches short of the line. Run all the way through."

CRITICAL ISSUES

As I evaluate 2011 and look forward to the rest of 2012, I continue to say that we have to look diligently at all three phases of practice: revenue, expenses, and profit/net income/owner compensation.

We know that revenue continues to decline because of changes in reimbursement, patient pay scenarios, and managed care. Physicians must increase volume and maximize collections to stay at a break-even point. Secure phase one, revenue.

Phase two involves expenses, and the big three expenditures in today's practices are labor, rent/ownership, and supplies (medical and office supplies and equipement, including electronic health records [EHR] or electronic medical records [EMR] systems).

You must keep labor costs at less than 20%; rent/ownership payments for space at less than 10%; and all supply costs inclusive of EHR/EHR, including debt, at less than 15%. In 2012, practices truly have to manage expenses.

Phase three concerns profitability. Practices must make a profit to create owner compensation. Profitability can be achieved three ways: by increasing revenue/volume, by lowering expenses, or through adding services, volume, or alternative services.

It believe that in 2012, practices have to begin managing these critical issues and "run all the way through," as my former coach would say.

GET CREATIVE

One of my key concerns is making sure that physicians and others with practices deal with the creative side of their practices. Be a marketing guru and think about adding services, broadening your market, and hiring physicians to do what you don't do. Get creative. Don't necessarily look to the hospitals for help. Remember that they are drowning in another boat. You have to be ready to go it alone or give in.

Right now, evaluate all lines of business and be willing to change. Look again at using midlevel providers such as physician assistants and nurse practitioners. Work smarter, not harder.


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