Almost half of all physicians have their own practices – and two-thirds of those work in a surgical specialty. Owning their practices enables these medical professionals to have greater autonomy and often more flexibility in scheduling, but that independence comes with all the challenges of running a small business, such as hiring staff, paying for office space, and handling medical billing. In turn, these small medical practices often struggle with maintaining a positive cash flow and financial management in general.
In this article, we will explain why many independent medical practices struggle with financial management and show how a CPA service can help small medical practices resolve their financial issues.
Why Do Small Medical Practices Struggle With Financial Management?
While the reasons behind the financial struggles many small medical practices face may be varied and highly personal, three factors figure prominently.
Lack of Expertise in Business Management
While physicians and surgeons know a lot about their fields of expertise, these medical professionals may not know as much about managing businesses. Some people choose to outsource those services or hire in-house office managers, but even those solutions require some oversight.
Lack of Time From Busy Patient Schedules
Running your practice may offer some schedule flexibility, but that benefit quickly erodes when physicians and surgeons try to manage their businesses while still providing medical services. Back-to-back patient visits don’t leave enough time to handle accounting, budgeting, and other financial duties — or even to oversee those efforts.
Constant Updates to Laws Pertaining to the Healthcare Industry
The healthcare sector is always evolving, and practices are continually tasked with adapting to the latest pandemic precautions, patient privacy requirements, and appropriate uses of new technology. A current understanding of changes to tax laws and regulatory requirements is needed to keep practices up to date and in compliance.
Overcoming Financial Struggles in Your Medical Practice
All of these factors can contribute to the difficulty many independent medical practices have in managing their finances, but the following steps can help reduce the overwhelm, improve efficiency, and optimize profitability — all while freeing up doctors and surgeons to spend their time on what they do best — treating patients.
Outsource Your Practice’s Medical Financial Management
Many independent medical professionals outsource their medical financial management to some degree. They may use a third party to collect patient data or insurance information when they schedule appointments, collect co-payments, or follow up with patients who have overdue bills. Outsourcing might also include general bookkeeping or collections of unpaid claims.
Small medical practices may choose to outsource all or part of the financial elements of their businesses, and sometimes that decision is temporary. For instance, an independent physician may opt to outsource medical billing until their practice grows to the point of hiring a full-time staff member to handle claims, contracts, and collections.
Hire an Office Manager or Billing Staff
Hiring an office manager or billing staff allows you to acquire the financial expertise and literacy you may lack. When you have an employee as your office or billing manager, that person can devote their time entirely to your business instead of dividing their attention across multiple clients. This level of focus helps your small medical practice bill patients promptly, follow up with insurance companies regularly, and gain insight into your practice’s production. Hiring an employee to handle your finances could save money depending on the number of outsourcing hours in your contract, account setup fees, and other service costs.
Work With a CPA That Specializes in Healthcare
Whether you choose to hire the expertise you need, learn about medical financial management yourself, or outsource your medical practice’s finances, you need to either manage those efforts or hire someone who can look after your interests. A CPA that specializes in healthcare will have the ability to handle your financial needs and do so more efficiently than someone who does not have that expertise. They can advise you on whether outsourcing or hiring makes the most sense, and they can oversee those efforts with regular audits. The right CPA will also have knowledge of current tax laws and be able to guide your practice’s approach to its finances so that you can minimize your tax burden – professionally and personally.
Overcome Financial Issues in your Medical Practice
Understanding the reasons why financial issues happen in healthcare can help independent physicians and surgeons overcome financial struggles and achieve small medical practice success – and we can help. Consult with your BradyRenner CPA for more info. (https://bradyrenner.com/)