Dr. Dean C. Bellavia

1-716-834-5857

BioEngineering@twc.com

Where's the Money: Part-III: Your NET


Thursday, 28 June 2018 12:00
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Does your net usually fall within 35% and 55% of your collections?  Are your charge adjustments/courtesies greater than 3% of your fees?  Are some of your “expenses” actually part of your net?  Do you have a monthly budget?  If not, maybe this management pearl can help.

 

In the previous management pearl we discussed how to maximize your collections.  In this pearl we will discuss how to keep as much of those collections as possible by controlling your expenses.

The fact is, if your net is less than 40% of collection that your expenses will not be under control unless you have a realistic monthly budget.  And if your net is under 30% you absolutely need a realistic monthly budget and have someone other than the doctor in control of it.

 

I have been keeping track of my clients’ production, collections and net income for decades and one fact is evident: practices that have a realistic monthly budget to keep track of their expenses better control them and usually have a higher net.  But the net is predicated on the personality of the doctor and how he/she runs the practice.  Strong socializers tend to “give away the store” while the opposite personality, strong analyzers, tend to tightly control their expenses.  But even strong socializers can benefit from a monthly budget if they pay attention to it.  Athought that may be sobering: every time you give a patient a $1,000 courtesy you lose $1,000 of your net.

 

Expenses vary from practice to practice; so instead of talking about budgets, lets talk about realistic expense percentages (the year-to-date expense category’s amount divided by the year-to-date collections amount).  The expense categories are:  Salary-Related, Team P&PS, Occupancy, Utilities/Telephone, Clinical Supplies, Laboratory, Clerical Expense, Practice Promo/AD, Purchased Services, Miscellaneous, and Patient Refunds.

 

See the two attached PDFs for a much fuller explanation of these categories and how you can keep them from getting out of control. 

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