Dr. Una is passionate about helping physicians embrace entrepreneurship so they can grow their wealth and win back the freedom to practice medicine on their own terms. Learn more at: https://entremd.com/. Dr. Una helps physicians build and grow their businesses to 7 figures and beyond. Each week, she will share key insights on how you can turn your medical experience into a profitable, passion-based business that gives you time, freedom, and a deep sense of purpose. Be sure to follow the podcast so you never miss a new episode!
Whether you have plans to sell your business or not, you want to build a sellable business.
Why?
Because a business that is easy to sell is a business that is desirable to keep. You win either way.
But how do you up the sellability of your private practice business?
Increase the profit margin.
The first way to do this is to optimize your schedule—take a real look at the calendar and make sure you're filling any gaps with appointments. After all, you've already paid overhead, payroll, fixed expenses, etc. so filling those gaps goes straight to the profit margin.
It's critical you don't stop playing offense; don't stop your marketing efforts and don't stop reviewing referral bases that can get your gaps filled and your schedule optimized.
In today's EntreMD Podcast episode, "3 Ways Private Practices Can Increase Their Profit Margin," I detail that and the two other ways, so tune in for those!
// COMMUNITY: EntreMD Private Group on Facebook Join a group of physicians who have decided to build profitable businesses, so they have the freedom to live life and practice medicine on their terms. https://www.facebook.com/groups/entremd
When you are ready to work with us, here are three ways:
The Profitable Private Practice Movement - If you want to build a thriving private practice that serves a lot of patients, while creating time and financial freedom for you, come join us here.
EntreMD Business School Grow - This is our year-long program with a track record of producing physician entrepreneurs who are building 6, 7 and 7+ figure businesses. They do this while building their dream lives!
EntreMD Business School Scale - This is our high-level mastermind for physicians who have crossed the seven figure milestone and want to build their businesses to be well oiled machines that can run without them.
To get on a call with my team to determine your next best step, go here ...
SPEAKER_00
Hi dogs. Welcome to the Ontree MD Podcast, where it's all about helping amazing physicians just like you embrace entrepreneurship so you can have the freedom to live life and practice medicine on your terms. I'm your host, Dr. Imna. Well, hello, hello. Welcome back to another episode of the EntreMD Podcast. As always, I am super pumped to be in your ears. And today we're going to be looking at something that is near and dear to my heart because if you've listened to me for any amount of time, you know I talk about building profitable businesses that give us the freedom to live life and practice medicine on our terms. And so I am going to be talking about three ways that private practices can increase their profit margin. Now, my very first business was a private practice, a pediatric practice. And one of the things, if you are not in private practice, you may not know, is that the overhead can be pretty high. It's a pretty complex-ish operation to run. And so there is, there are some things that can be done to kind of work on the profit margin so that they're better. And we're going to be talking about three of the best ones. Okay. All right. So I've had my private practice for almost 14 years at this point. Private practice has been through a pandemic. Private practice is a pediatric practice. And in the grand scheme of events, as far as insurance companies go, you know, tend to have lower reimbursements than some other specialties. And our practice is about 70% Medicaid. And so we have a lot of opportunity to not be profitable, but we are. And we've gone through a recession and we've gone through a pandemic and all of those things, and we're still there. And so I really just want to share some of my best, you know, tips, tricks, hacks, and a lot of the things that we have needed to do to respond to different things that have come up in the course of running the practice. Okay. So I'm going to give you, I'm going to give you three of those things. This is one of those episodes where you're going to want to take a screenshot and, you know, share it on your social media platform and kind of share what your biggest lesson was. Tag us, hashtag onTraMD. I'll be happy to take a look at it, shout you out too, reshare it, and all of those kind of things. Okay. I'm always rooting for private practice talks. So the overarching thing I want you to think about is a private practice is a business. And when there is a way to look at it, and when things kind of don't seem like they're going your way, there is an opportunity to play full offense, to go all out, to change things, to change the narrative, to change the direction. Your private practice, you almost want to think of it as a product, right? Like it's not, it's not necessarily like a job that you own or anything. It's like your product, it's your business asset that you're trying to build. If you've heard me talk about private practice, you know I talk about building a practice that is sellable, that can work without you. Doesn't mean that it needs to work without you, doesn't mean you need to leave, doesn't mean you need to sell it. But I did an interview with Dr. Ronke Dosuma, really smart, smart, smart private practice owner. And she made a statement that I'll never forget. She said, a practice that is worth selling is a practice that is worth keeping. You know what I mean? And so when we say build a sellable practice, it doesn't mean you have to sell it, it doesn't mean you need to walk away, but you want to build it that way so you have options. And the more you build it that way, the better it would be. So we're playing full offense. When do you stop playing offense in your private practice when you're ready to not be in private practice anymore? Right. When you're ready to sell it, maybe you know you have a son that's a doctor like you and he's taking over the practice. But as long as you own it, you're still playing offense. Same like a basketball game. When do they start playing offense? Even if they have a 40-point lead, they don't stop playing offense until the game is over. Okay. So this is kind of offense. So I'm looking at my numbers. Profit margin is not where I want it to be. How can I respond to it? What can I do to change it? Because there are things to do. So, number one, the first thing you can do is you can increase the volume. Okay. So the volume of, let's say the volume of visits, the volume of procedures, the volume of surgeries, like whatever, depending on your specialty. You can turn up the volume. Now, when I talk about this, I'm not talking about turning up the volume in a way where you're adding team and all of that. I'm talking of missed opportunities. So for example, if you look at your schedule and there are holes in your schedule. So let's say you're a family medicine doctor and you want to be seeing 22 patients every day. And every day you're seeing 16 patients, right? That's six extra spots that you can fill up. And if you fill them up, that all goes to the bottom line. How do I mean? You've already paid the mortgage for the building, you've already paid for the staff. They're already there. You already paid the utilities, you already paid for the EHR. Like your expenses, the fixed expenses are fixed, right? Like it's it's it's fixed. And so for every six patients you add to that schedule, and I'm just making up numbers, okay? So let's say it's a hundred bucks per patient. That's $600 a day. That's going directly to the bottom line. Okay, so if there are any gaps in the schedule, then you want to turn up the volume to fill those up because you already paid the overhead for it, most of the overhead for it, right? So turn up the volume. And I will stop here to say this because I see this a lot with private practices where we, you know, we may have a really good year, and then we think that, you know, the heavy lifting of marketing is for the newbies or someone who just started up and things like that. And I want to invite you to think about it a little differently, right? Like, when do you stop playing offense? You stop playing offense when you no longer want to be in private practice, right? And so it's a great time to look. Like, if you bought into the philosophy, like I've outgrown marketing. Sometimes people tell me that I've outgrown marketing. I'm like, you don't outgrow marketing because there are ebbs and flows. There's time that business is so much better, and there's sometimes that it's so much harder. And you need to have all those cylinders, your marketing cylinders in place so you can turn it up and turn it down as you need to, but it needs to be there. Okay. So referral basis, the people who used to send you patients, are they still sending you patients? And don't just say yes, look. Like, are they still sending you patients? You need to reactivate those relationships. Your internal marketing, like how many patients do you have? What percentage of your patients are overdue for appointments, right? This is the time to hit the phones and get them to come in, right? Not in a manipulative, I have to meet my bottom line type of way, but there's a reason they have follow-up appointments, right? This is good care that leads to a nice bottom line, right? Healthy patient and healthy clinic. Okay. So you need to, you need to look at that, right? And the more you manage that marketing muscle, the more you have an optimized schedule, the better your profit margin is. Okay. And your expenses don't necessarily rise to match it because you've paid the bulk of your expenses. So that's number one. Okay. Again, it's something to look at. It's not something to assume, is okay. It's to really pull up the books, pull up what your calendar looks like, pull up what the you know, like the appointment calendar is looked at and look at all these pockets, right? That you that need to be filled. So that's number one. Number two, number two, which is really like number one, two, three, four, five, six, seven, is to ensure that your team is profitable. Okay. Ensure that your team is profitable. Ensure that your team is profitable. When it comes to making decisions about, you know, services, number of patients on schedule, all of these kind of things, you have to remember that your business creates revenue and then the revenue then pays the team. Right. And so you want to think in terms of is my team bringing in revenue? Is my team covering their overhead? And this is looking at each position. Each position should be creating revenue or should be freeing up the people who are creating revenue. Okay. So for instance, let me break this down a little. So your your physicians, right? How do they contribute to the bottom line? Well, they they would see patients, right? That's one. And so the more optimized their schedule is, and I'll be very clear, I'm not talking about, you know, like doing something that is not sustainable, right? But volume still has to be seen. I've I've had people tell me what, you know, like I really want to spend an hour with my patients. And I'm like, okay. I'm like, if you want to spend an hour with your patients, that means you work an eight-hour day, you're gonna see eight patients, right? And if you see eight patients and insurance comes, and again, I'm making up numbers. So let's say they pay you 200 bucks per patient, that's 1,600. Okay. And you're working in a medical practice where the overhead is easily, easily 50%. And so that leaves you at $800. Right? Like, and so is that is that what you want? Is that sustainable for you? Do you see what I'm saying? So back to back to where I was going. So are their schedules optimized? Are they seeing the number of patients that they need to be seen? That's one piece of it. All right, for the things that, you know, if say they're doing procedures and all of those things, are the procedures being coded for? Right? I've been to practices where they're doing all these strep tests, they're not billing for them, they're doing the extra procedure in the room, they're not billing for them. That's all money that's being thrown away, like literally thrown away. Are they coding properly? Right? If you if you are, say, internal medicine or pediatrics and 90% of your visits are 99213s, you are literally, again, throwing away money, right? So are things being, you know, billed for? Are they coding appropriately and stuff like that? It's worthwhile to pay for a course for the doctor to learn how to bill appropriately, code appropriately so that you're getting paid. Again, these are things that go to the bot directly to the bottom line. Your front desk person. And there is some transparency that can be had with this because, for instance, for my team, I'm like, okay, we talk about serving people in providing expert medical care. We talk about, you know, giving our patients good customer service. Notice that's not number one, that's number two. We talk about doing it in a profitable way, is number three, but I talk about all three, right? I talk to them about the relationship between what they do and the bottom line. They need to understand this. I talk about the number of patients, the target number of patients we want to be seeing every day. And so for the front desk person, they're aware. And so when somebody calls, they're not saying, oh, we're booked for the day. Like, hello, those are two spots there. We're gonna fill that. So the front desk person has this understanding like this is what the schedule can look like. Okay, I started at the top of the day. These are the, you know, the openings that I have that I can put patients in and these kind of things. So you know that if they fill up your schedule, they've paid for themselves, right? And also that means that if we have a day that is slower, then you know what your job is. Because if a day is slower and you got on the phone and actively called people who were overdue and you brought in four more patients for me, you paid for yourself. Do you see what I mean? Like you want to keep your team profitable. Maybe you have the medical assistants who's in the in the room with the patient. Well, what if for every single? So one is that they provide this great care, right? So that your retention is higher, your patients continue to work with you. That's one way they pay for themselves. The other way is for everybody who comes in, depending on your specialty, everybody who comes in is leaving with an appointment. So if they see 20 patients that day and they have 20 future appointments scheduled, guess what? They paid for themselves. So you want to be looking at all the roles. Like, how does this role affect the bottom line? And, you know, I know I'm talking a lot about the bottom line and numbers and all these things. And if you're like, oh my goodness, this is annoying. I didn't go into medicine for this. I went into medicine to take care of people, not to worry about the bottom line. Please understand that businesses that work are businesses that serve and earn. Period. Okay. Businesses that serve and earn. Businesses that serve and earn. If you do not figure out the bottom line, then you cannot continue to serve. Okay. So it's okay. Okay. So that's the second thing, ensuring that your team is profitable. The third thing is to unplug the revenue leaks. Okay. Unplug the revenue leaks. And in private practice, there are many. There are many. Check and and there's data, right? If you if you have a really good practice management system, you can pull up the data. What percentage of your co-pays are actually collected? What percentage of the deductibles are actually collected, right? Because if people know that they don't have to pay, a lot of times they will not pay, right? So what percentage is being collected? If you notice that there are things that are happening in the patient room that are not being captured, that's a leak that needs to be plugged up, right? You can pull up your books, right? Like, you know, QuickBooks, wherever, wherever you store your financial data, and start looking through all the items that you get charged for every single month. I can guarantee that in at least 80% of practices, you'll see a phone service you no longer use, a fax service you no longer use, you'll see a whole machine that you no longer use. Like all these things that are no longer relevant, but they're just there and nobody has looked at them. So we just keep billing and billing for them. Those are things that could come off. And that those dollars go directly, directly to the bottom line. You have patients who have outstanding balances. If you start collecting those, again, there's probably somebody on your team right now who has the bandwidth to collect those. Those again go directly, directly to the bottom line, right? And so look for those places where money is being thrown away and then recapture those. So I want you to think about looking at your practice, and you're like, okay, I'm gonna, I'm gonna maximize our volumes, right? So everybody is at capacity. So I'm not talking above capacity, I'm talking about at capacity. I'm gonna look at my team to ensure that everybody is profitable. Like every think about your team. Each team is like a profit center, right? Everyone is profitable. Again, you're like, they're humans, they can't be profit centers, but you hire them, right? To do a job. And you want the practice to be able to generate the money to pay them, right? So we're not saying they as individual profit centers, right? Okay, so each one as a profit center. What are they doing? And if they are not doing profitable things, then this is a great time to add on RGAs, revenue generating activities to what they do. So everybody's contributing to the bottom line. Now remember, you've already done their payroll. So every revenue generating activity that they they make that creates revenue is going directly to the bottom line, right? It's going straight to the bottom line. In the beginning of my practice, right, we would have this is back in the day before I learned a lot of the principles that I teach, you know, in the entrepreneurial business school. And I had, we would have slow, um, slower summers, right? Because, you know, people are going on vacation, kids are out of school, and all of these kind of things. And I'm like, okay, so this is this is a slower day. We have like X number of patients on the schedule. So what are you guys gonna do? And then my staff would tell me, oh, yeah, so we're gonna do the spring cleaning and we're gonna take care of all these faxes. And so it's all admin, like we're gonna do all this admin stuff. And I'm like, hello. That's not how, that's not how we maintain the balance in this place, right? And so I'm like, okay, I had to start teaching them. These are what are revenue generating activities. Should you do the admin things? Of course. Should you do the spring cleaning? Of course, but not before our RGAs. Okay. And I'm so like, here's a list, here's a list of 120 people who are overdue for their appointments. Go hit this, go make mama 20 appointments, and then go do whatever admin thing you want to do. Knowing fully well that even if that was truly a slower day, they did enough work to justify, right? Like where it was, it was a it was a profitable day for that position. Do you see what I mean? So it's a it's a way of thinking. It's a way of thinking. Okay. So so number one is the volume. Number two is ensuring your team is profitable. Number three is plugging those leaks. Okay. And these may seem simple, but when I learned to code properly, it added easily about 10 grand a month for one, just me, 10 grand a month to my bottom line. Okay. So each one of these things, they're huge. And if you do them in combination, you come to this place where your your revenue to start with is much better. But not just your revenue, but your profit margin is much better. Okay. So that's kind of the way that I think about it. Of course, there are more things, but it's not about knowing all the things. It's about implementing, right? Like it's about implementing things. So if you take these three, you implement them, and I really want to hear about it, right? Like you do this and it changes things in your practice. Send me a PM, send me a DM, say Dr. Una, you will not believe what happened. And I'll tell you, of course, of course I believe what happened. Okay. So that's what I want you to do. And if you're like, you know, wow, I just wish that I was in a place where I could understand these things and start thinking these ways and start showing up in as the CEO of my, you know, my private practice and take us to higher levels of profitability and all of that. There is a place for you. Okay. It is the entree and business school, but it's entream business school scale. And this really is for practices who are close to or at the seven-figure mark, who want to grow, who want to scale. And at that point, you're thinking about team, right? Like how do I lead through my team and get results through my team. I, for instance, took a whole year of sabbatical last year. Um, I was out of my practice for a whole year, and we grew. We grew. And how did we grow? Through the team, right? So talking about team, talking about the processes, and talking about really how to optimize and maximize profit. Okay, because now you have a certain level of revenue confidence, but now we have to clean it up. So we're talking profit. And so if that's something that you're like, man, I want to do that, I want to be in that environment, I want to be where those conversations are being had, then I want you to go apply. So it's ontremd.com forward slash scale. So ontremd.com forward slash S-C-A-L-E. Okay. And you can fill out an application. The team will go over all the details with you and see if we're a good fit for each other, and we'll be happy to welcome you to that community. Okay. So that's that. But in the meantime, what I want you to do is I want you to go apply these things. And I cannot, I am looking forward to it. Like forward to it when you're like, oh my goodness, we're more flushed now. We're in a much more comfortable place. We're able to build an emergency fund for the business. We're able to do all these amazing things, and we're not worrying about money at all. Okay, that's where I want to see you. And yes, you can get there. And I cannot wait to celebrate you when you do that. So thank you again for listening to this episode. This is one you want to share. Okay. You want to share with the doctors in your life? And I'll see you on the next episode of the Entre MD Podcast. Hey, if you love listening to the EntreMD podcast, I want to invite you to join EntreeMD On Demand. It is my signature subscription program that gives you access to a library of business courses designed to help you do one thing as a physician entrepreneur, and that is to thrive. Just head out to entreamd.com forward slash on demand, and I'd love to have you join us. See you on the inside.
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