|Healthcare Changes Raise Financial Care Concerns for Physicians
What you can do to advise your healthcare clients in this unsure environment.
May 20, 2010
Recent changes to healthcare have affected all of our lives. Individuals have become more sensitive to healthcare costs as more of the financial burden is assumed through increased premiums and higher deductibles. For most of us, the focus has been on this side of the story. Another side is how these changes have affected physicians.
As individuals choose to delay care because of financial concerns, most physicians have not planned for this event. More than ever, now is the time to help physicians transition into focusing more acutely on the business side of the practice.
Quality Patient Care Is the Focus
No matter what concerns arise, the most important issue is quality patient care. As personal financial specialists, we must remind physicians that we can be utilized to help identify areas of concern and help the physician design ways to minimize these concerns. We must also remind them to focus on what they do best, provide patient care.
Use the Dirty Word ‘Budget’
Putting the practice on a budget helps the physician focus on managing costs. Help them answer the question of “where does all the money go?” by designing the budget in a special way. Show actual practice costs first, debt payments second and physician payments last.
Find a Breakeven Point
Once the costs of the practice are identified in the budget process, come up with a monthly collection number that must be attained before the physician gets paid. This will identify an absolute minimum. Then, add the physician’s ideal pay to the breakeven point for a new monthly collection goal.
Well-designed Collection Procedures Are Critical
Collection procedures need to be reengineered for a new age in which the patient deductibles are increasing and more of the financial burden is on the individual, not the insurance company. With this change, procedures need to be implemented and enforced to help increase patient collections at or before time of service.
Should Physicians Share the Sandbox?
With payroll and rent being the highest fixed costs in a physician practice, focusing on mitigating these costs would be the most effective cost-cutting strategy. Besides increasing employees’ scope of responsibilities and consolidating office locations, sharing these costs with other physicians would be another effective strategy.
CPAs, PFSes must live up to the title “most trusted advisor.” In this changing healthcare environment it would be beneficial to the physician and the CPA to talk through these issues. Even if nothing is resolved immediately, at least some issues have been identified and future action might be based on these conversations. Pick up the phone or visit face to face. Now is the most critical time.
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Jennifer Sicking, CPA, PFS practices at Flower Mound, Texas-based Ken Hughes & Associates, PC. Her practice includes federal and state tax return preparation with an emphasis on planning. She also provides business consulting for her clients, who are primarily involved in the health care industry. Outside of the office Sicking is a guest lecturer at the University of Texas at Arlington. Her lecture topics relate to the financial management of healthcare-related businesses.