Healthy medical practice financial management can be compared to supporting your patients in maintaining a healthy lifestyle.
Just like a patient’s health thrives with basic hygiene, a healthy diet, physical activities, and occasional checkups, a medical practice’s financial health can benefit from careful care.
Let’s explore best practices so your medical practice financial management is successful for years to come. We’ll continue with the analogy comparing your practice’s financial health to a patient’s health.
Understanding Your Medical Practice Financial Management
While for many basic hygiene is routine, its importance cannot be understated. Consider the following to be basic hygiene, similar to washing your hands thoroughly, for your medical practice financial management:
- Keep Organized Receipts: Always collect and organize receipts for all business expenses, whether physical copies or digital files. Many practices opt for tools that allow users to snap pictures of receipts on the go, some tools can even automatically categorize receipts.
- Maintain Accurate Records: Accurate recordkeeping ensures transparency and simplifies tasks like billing, tax filing, and financial audits.
- Reconcile Bank Statements Regularly: Regularly reconciling bank statements ensures all transactions are accounted for and identifies any discrepancies that might require investigation. Some tech tools can reconcile statements for you, highlighting any irregularities.
Following these can keep your finances from getting messy, and strengthen its immune system so that it’s able to meet new challenges each day.
Review Financial Statements and Ratios Regularly
Your financial statements, budget, and ratios are similar to a patient’s vital signs. Having regular checks can give you clues if anything seems to be going wrong, and identify areas for improvement.
We share the basics of financial statements, budget tracking, and cash flow in previous articles focused on medical practice financial management.
Optimize Revenue Cycle Management
Just like ensuring a patient follows a healthy diet, optimizing your revenue cycle management involves streamlining processes to maximize “nutrient intake” (payments) for your practice.
Ensure you include:
- Clear Coding: Using the correct codes ensures you receive proper compensation for services rendered, and avoids headaches down the line. Train staff and implement a double-checking system.
- Efficient Billing: Consider electronic health record (EHR) systems with integrated billing, and online patient portals for secure bill viewing, payment processing, and communication.
- Transparent Communication: Open communication about costs and insurance coverage helps patients make informed decisions.
Cost Containment and Efficiency
Maintaining a healthy practice doesn’t mean skimping on essential vitamins (resources). Think of cost containment as ensuring you get the most out of your “supplements” (supplies and equipment).
Your practice can consider containing costs by:
- Negotiating with Vendors: You can often get favorable payment terms if you agree to pay early within a certain period of time.
- Conducting an Energy Audit: See where you can save on heating, electricity, and cooling
- Regular Inventory Audits: Extra inventory can come in handy, but too much can be a barrier to your effectiveness. Spend some time reviewing what’s needed, especially more expensive items.
By controlling expenses without compromising care, you create a practice that operates efficiently and remains financially fit.
This article shares more tips for containing costs and maximizing profitability.
Be Ready for Tax Time
Consider tax preparation to be physical exercise…if a patient is working out and preparing year-round, it won’t be nearly as painful as trying to squeeze it all into one month!
Similarly, if you incorporate tax planning and processes into your practice year-round, tax time can be relatively pain-free.
Here are more tips for tax planning at your practice.
Leverage Technology for Medical Practice Financial Management
In the same way that technology helps medicine grow by leaps and bounds, it also supports the administrative side of practices in many ways. Incorporating the right technology can significantly improve your practice’s financial health, such as:
- Financial Reporting and Analytics: Software can quickly generate your financial reports, budgets, and ratios so you’re always on top of things.
- Practice Management Software: A centralized hub, streamlining tasks like scheduling, billing, and reporting.
- Cybersecurity Measures: Implementing robust cybersecurity protocols to safeguard sensitive patient and financial data including data encryption, access controls, and regular system audits to mitigate the risk of cyberattacks.
Always ensure your chosen technology adheres to HIPAA compliance regulations.
Finding Medical Practice Financial Management Information Online
We’re fortunate to have the technology for so much health and financial information to be available online. But as healthcare providers know, not all information is of the same quality. Just as doctors discourage patients from trying to diagnose and solve their health problems with an Internet search, firms specializing in medical practice financial management advise that practices maximize their effectiveness by reaching out to the experts.
Sorenson & Company is the CPA for Medical Practices
Sorenson & Company specializes in providing medical practice financial management. We’re the general practitioners and specialists for any of your practice’s financial concerns! Whether it’s support setting up better systems, choosing the right technology, or figuring out the best strategies to maximize your tax returns…we’re available for your practice.