Profit Makers & Takers - Part 3

So, how can practices improve financial profitability?


Ultimately there are only four ways…
1. Improve revenue
2. Improve expense
3. Improve asset utilization
4. Improve risk


...These are the Profit Makers.


Revenue improvement is driven by case volume, contracts, fees, treatment plans, service delivery, charge capture, and cash collections. It’s all about an interlinked chain reaction of business processes involving marketing, case management, and billing and collections.


Expense improvement is driven principally by labor costs and occupancy costs. It’s all about managing productivity while balancing fixed and variable costs. Migrating fixed costs to variable costs is an important strategy particularly labor costs.


Improving asset utilization is driven by the optimal exploitation of both personal and business assets. It’s all about getting the most out of the talent, facilities, financial resources and relationships you have. Everyone should do more of what they do best and less of all of the rest! Keep in mind that assets such as facilities and information systems are also assets that should be leveraged for optimal positive contribution.


Risk improvement is involves financial investment, business arrangements (e.g. contracts), and regulatory compliance. It’s all about identifying and minimizing those risks while recognizing that risk is where the reward is. There are risks you can afford to take. Risks you can afford not to take. Risks you can’t afford to take. And, risks you can’t afford not to take. Knowing the difference is priceless! Not knowing the difference is foolishness. A key strategy is risk shifting and sharing where possible - such opportunities are present in every practice.


Enhanced profitability results from establishing priorities and effectively managing these four variables in one’s practice.


More next post...


Bob


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Performance Builders