Why Do Medical Businesses Fall Short?
2019 isn’t a safe year for businesses. Judging by the stats for previous years, it’s only going to get harder for startups and SMEs to succeed. More than half of new businesses fail, and of those that make it past the first year, the writing is on the wall. The average lifespan of a company is 20 months from the last round of funding. Organizations that can’t raise the capital are vulnerable.
Healthcare companies often fall into this category because they fail to maximize their revenue. Thanks to the level of competition as well as weak financial procedures, the billions of dollars poured into the industry don’t go very far. At least, that’s what the stats suggest from previous years. The good news is that there light at the end of the tunnel. In 2018 alone, medical businesses raised more revenue than 2012 and 2013 put together.
So, the money and longevity are there if you understand how to avoid the pitfalls. If you don’t, you’ve come to the right place because this post has a list of the common reasons practices fail. Carry on reading to find out more about them and how you can grow your medical company.
#1: Tracking Failures
The chances are you track almost everything that comes into and leaves your business, especially if it’s money-related. Not only do you need to ensure you provide a high level of care, but the practice also needs to boost its bottom line. Otherwise, it may not be around for much longer. Still, it’s easy not to track expenses concerning profit because they are not very obvious.
What you charge compared to what you collect is enough to plunge into the red if you’re not careful. Vaccines are prime suspects as your insurance company may not reimburse you the required amount according to AAFP. This was the case with Gardasil over a decade ago and the theory holds true today too as you will lose money on supplies. Plus, tracking these expenses will help you to decide whether a problem is a short or long-term issue.
To be sure, it’s better to collect money as a percentage of your charges. That way, the average will indicate whether you’re in trouble or chugging along nicely. Other metrics you can track are days/hours worked, practice charges, and the number of visits per day. These are all excellent indicators of success.
#2: Billing Irregularities
As a physician, you understand the term “death by a million paper cuts” better than anyone else. You’ve either studied it or seen it first hand and know how true the saying is regarding a person’s health. Well, the same applies to your business too as small issues can compound over a period and lead to significant losses. The main one is billing irregularities.
These are seemingly benign costs which you factor into your monthly report yet also disregard. Overheads play a part in your success, but there are bigger fish to fry if you’re going to grow and expand. In reality, this isn’t the case as something such as employee vacations may lead to a decrease in profits that you didn’t anticipate. Sadly, there isn’t much you can do about this at the end of the year when the accounts are collated.
To avoid surprise at the end of the month or year, you need to spot subtle changes in billing. Again, hours and days worked are excellent indicators as is the rate of collections. By keeping tabs on them, you can identify the cause of a decrease in profits early on and move to nip the problem in the bud asap.
#3: Outdated Technology
Technology is expensive in your industry and practice requires a lot of money to buy the latest equipment. Of course, the purse strings may be tighter than normal and splashing out on a machine which costs a thousand dollars is out of the question. Even when you track expenses and spot the irregularities, you won’t have the capital to invest all of the time.
However, technology has to be at a certain level for many reasons. Patients are the main consideration. Expanding a medical business needs you to focus on the same principles as any other organization. As always, it’s about attracting customers. Purchasing a portable ultrasound machine for sale proves to them that they will get a quality level of care. Regarding their health, it’s the most important thing for patients. The wrong technology will also make it tougher to track and submit claims. A paper billing system is flawed and can’t hold the same amount of information as a computer program. Plus, hard copies go missing all of the time.
To find the right balance, it’s worth investing in second or third-generation hardware. Although they may not be the latest in medical equipment, the tools should be able to provide a high level of care while looking the part.
#4: Expert Assumptions
Before you graduated medical school, you may have been idealistic. After all, you hadn’t experienced the industry and didn’t know what to expect. However, you were sure of one thing: quality beats quantity 99% of the time. This is an assumption which believes you’re standard of care will keep the doors open. Thanks to the skilled employees you have, there is no way patients will choose another healthcare provider.
“Assumptions make an ass out of you and me” is a phrase which applies perfectly to this scenario. While customers always will want the best of the best, it depends on the sector. After all, your area of expertise may not be in demand for the majority of your target base. Cardiology is important, yet regular people care about losing weight, quitting smoking or cutting down on alcohol. As a result of your theory, the practice may alienate a large audience and not relate. Once this happens, growth will be almost impossible.
Always assess the viability of your business plan before making massive decisions. Also, focus on adding physicians as a big network of doctors should naturally mean the level of care increases. Plus, patients will have access to specialists too.
There is a lot of work to do and not enough hours in a day. For physicians, it’s imperative to pick their tasks wisely and complete the things that are the most important. Of course, this applies to a lot of roles including patient care and admin. You won’t sell the drugs you researched and bought without a constant stream of people coming through the door.
Sadly, a lot of doctors fail by choosing poorly or attempting to build a business on their own. A tip worth remembering is that everyone needs help to succeed. It’s those who shun it that fail, usually due to their ego and inability to accept help. To be more productive, you need to concentrate on finding people who can share the burden. A business partner who doesn’t have a background in medicine may be the answer. As well as being able to find investors and run the admin part of the company, they are objective. Often, they’ll be able to see where you should spend your time to be productive thanks to their impartiality.
Remember that a partner in crime will stop your daily workload from turning into a relentless grind. He or she will ensure you stay fresh and on top of your game.