5 Ways Your Family Practice Could Unknowingly Be Losing Money Every Month

Learn How To Stop The Leaks And Put Money Back Into Your Medical Practice

The most damaging hazards are not the ones you see, but the ones you don’t. (Titanic, anyone?) This means the most obvious costs to run your medical practice are not always the areas of real concern, it is the hidden costs that lie unseen, below the surface cutting into your profits.

As you look out over the health of your own practice, being mindful of all the ways you are providing service and generating profit, be sure to evaluate each of the following areas that often go undetected.

Your Budget is Out of Sight And Out of Mind

I know, I know, who wants to talk about budgets when there are so many other things to think about? Budgets may not sound like the most riveting topic, but it could be the most accessible tool in your bag that keeps your practice out of trouble. 

Unfortunately, many physicians are completely unaware of what their costs of business are, and even more elusive is the certainty of how those costs compare to industry standards. Having a budget is one step, but analyzing that budget alongside national surveys can help you identify if you are overspending on staffing or underspending on supplies. 

Instead of thinking of a budget as a restrictive and unfortunate necessity, we like to think of a budget as one of your practice’s vital signs. A budget can be the quickest way to diagnose the reason for lost profits so the proper treatment can be prescribed.

Your Billing Codes Are Inaccurate or Inadequate

In talking with many medical practice owners, billing codes are considered to be the 8th circle of Dante’s Inferno. These codes may seem evil, but like it or not, they are a necessary evil.

If you fail to keep your coding knowledge up-to-date, it will result in lower reimbursements or denied claims, leaving thousands of dollars on the table. 

Because of the fear of being audited or cited for “over-coding,” some practices will intentionally down-code (under code) in an attempt to protect themselves. But a recent study by Medical Economics Magazine cites that down-coding can cost a single doctor $40,000 per year in lost revenue.

Since coding rules and reimbursement protocols change every year, it would make sense to invest in the resources to keep your practice up-to-date and confident on what billing codes apply. This simple, organizational habit can pump tens of thousands of dollars back into your practice.

You Are Overstaffed or Paying For Unnecessary Overtime

Let’s be honest, working overtime is typically a given in a medical practice. The seasonal demands that influence your rise in patents equate to extra hours for you and your staff. But overtime and overstaffing can also become a parasitic cost within your organization as it silently sucks away profits while you are none-the-wiser.

For example, let’s say you ramp up hours and bring on a part-time employee because cold and flu season push your practice to the limit. Those increased hours and additional employees enable you to handle the higher patient load, but without proper management, they will remain active through the slower times, costing you thousands in wasted expenses.

Having a staffing plan and ongoing evaluation of overtime can be an easy way to prevent wasted costs and put extra profits into your bottom line.

Your Purchasing Is a Free-For-All

Hello Amazon! It has never been easier to order, ship, and receive every supply your office could need. But with this ease often comes wasted cost. Now overly proactive employees can log in to your Prime account and ship paper towels, ballpoint pens, and coffee filters on a whim. So when Sarah, your front office admin, notices you are out of paper towels, she orders them. But what she doesn’t know is that Rodney saw empty storage closet the day before, and also placed an order for two cases. A trivial example, but the issue remains: services like Amazon Prime are gateways for inefficient purchasing and over-ordering.

Instead of your purchasing looking like the wild west, consider:

• Setting up a solid inventory management plan
• Join a purchasing group to obtain discounts
• Establish and then standardize brands of items you need to prevent employees from purchasing the $19 pens when the $2 pens will do

You Are The Victim of Petty Theft, or Worse, Embezzlement

This is the leaky cost that no practice owner wants to think about. Surely, it couldn’t happen to us, right? Unfortunately, the statistics say that the theft of supplies and even pharmaceutical samples will occur at some point in your practice.

Now, an employee taking home a ream of paper is one thing. But the nightmare scenario is the thousands of dollars that are embezzled over multiple years, right under your nose.

Historically, embezzlement typically happens within medical practices that don’t pay careful attention to monthly financials or closely monitor budgetary spending. 

Even more dangerous are the practices that do not have financial control policies in place. The blunt truth is that you can’t identify embezzlers by the way they look, what they wear, or how they talk. They typically don’t walk in wearing a black hat, cape, and wispy mustache. What if a staff person increased your fee schedule by $10 per visit and pocketed the difference. Would you know?

To be honest, this is a major reason why many growing companies choose to outsource their accounting. By having your financial oversight being compiled by someone outside your company provides yet another layer of financial security.

Fail To Plan, Plan to Fail

The hidden costs that eat away at your company’s profits are only dangerous if they remain hidden. By establishing proper accounting practices and comprehensive financial oversight, you can protect yourself from these hidden costs and rest assured your medical practice is moving in the right direction.