How do I make money without looting my patients?
Dr. V S asked a finance question. “I’m a specialist doctor. I know many doctors charge a bomb as consultant fees. I want to know how do I make money from my practice without looting my patients?”
Finance question! Wow! Who doesn’t want money?
Well to be honest I think a number of doctors don’t really practice with the “intention to loot.” Everyone starts with “the intention to treat.” But a financially viable practice doesn’t result from simply charging more or less. It’s a lot about understanding and handling finance. Unfortunately many colleges don’t train medical graduates about accounting and money. They just churn out people with paper degrees. The skills are up to us so is the success and the finance. The glory belongs to them though!
So here are a few things that will help you set better prices:
-Understand basic accounting
What are the purchases and expenditures? Salaries, rents, instruments, utilities, supplies and medicines. Do a crash course on accounts or finance and tally, if you’re going to be a one man show. But irrespective of the members in your team you need to understand the baby steps of finance. Try reading “Bookkeeping for Dummies” no joke! 🙂
-Budget your finance
Set up goals through your budget. What is the margin you’re aiming for? Set an arbitrary number that you want to hit. Have realistic goals. Evaluate them quarterly or six monthly so if there’s an area that needs attention you can rectify it. For example, if utilities have gone up or you received a rebate from the government (yeah right) then you can tweak things accordingly.
-Make Wise Investments
This is something all doctors should know. Don’t spend all your capital/profits. Organizations, start-ups and companies don’t blow all the money they earn or have, why should you? Spend a portion of your margin on investments, even if it’s tiny. Get into the habit of reinvesting into a deposit or a sound investment plan. You can always increase this later. Treat your practice like a start-up. Stay lean but stay mean about your money
I’m not keen on insurance in general. It feels like a scam to me. But look into it, if you’re in the (lawsuit happy)west or a surgical practice or in a warzone!
-Get a Financial Adviser
This early? Yes! The earlier the better. Your needs will change over time. But get an accountant to help you make the best decisions and investments plan. The magic word is plan. You have to plan even before the money comes in.
-Now decide rates
Once you have all this in place, now look at your charges and fees. The above steps will help you put everything in perspective for your patients. You’re running a business too and you have to pay your nurse and the electricity. You can’t sit in a hut and make people lie on the floor. Be fair about your fees. At this point knowing what you do, will help you charge a fair price.
I made this mistake of looking at my finance excel and obsessing about when the minus would be plus. It will take time for you to break even. That’s the truth. Stop staring at it everyday. Just look at the dates of your planned evaluation and study the accounts then. Looking at it everyday will not change the numbers.
-Evaluate your sources of profit
Your profit won’t always come from fees, it could be the pharmacy or the labs, which is why “some” doctors over-prescribe or over-test. That should not be your reason, though. Evaluate your profit areas and transfer a portion of the profit to patients with discounts or vouchers etc.
Spend on the needs of the patients and your staff. Balance the two. If your evaluations show an area of waste then cut it down. Or if you’re planning to buy an instrument, weigh the cost benefit ratio.
No one needs to overcharge patients to break even or be financially viable. Do justice to your patients and to yourself. If you have any tips about setting up a financially viable practice then do let me know.