Budgeting for Private Medical Practices
As in any other business, a budget can be an important management tool for a private medical practice. A budget is a way for you to measure and keep track of both revenues and expenses. Budgeting for private medical practices helps you identify and fix any inefficiencies in your practice operations.
When you create a budget, keep these in mind:
A budget is most useful when you consider what you have planned for the upcoming year.
Start with last year’s numbers, but don’t simply increase revenue and expenses by a certain percentage. Think about factors like whether your staff might need additional training to deal with the new reporting requirements of various payors. As well as whether the addition of a new provider or service posing incremental revenues may also increase expenses in order to support the change.
Involve key staff in the budgeting process.
They are likely more involved in the day-to-day operations of the practice. So they should be able to point out areas that you might miss as a physician-owner. This can help build engagement with the staff and bring about accountability for areas that they manage.
Check out the free guide “Three simple ways to improve your medical practice’s cash flow”
After you have a good budget in place, make sure you use it.
Monthly, review how performance is actually tracking against expectations and try to understand the reasons for the variance. For example, if your revenues are lower than budget, is this because you saw a lower number of patients than planned? Or is it more of a billing or collection issue? Once you know that, you will be able to figure out what the fixes could be.
Make your budgets dynamic.
As you progress through the year, if you find out that there has been a change in circumstances or something was badly estimated, modify the budget accordingly. This way you have a powerful tool that is based not only expectations but also the reality of how the practice is actually operating.
As we come to the end of the year, this is a good time to plan for the upcoming year and put together a budget for the practice.
Next Steps
The professionals at CIG Capital Advisors can help you prepare your private medical practice’s budget and understand how your plans for next year may impact your financials.
Schedule a complimentary custom consultation here.
Check out the free guide “Three simple ways to improve your medical practice’s cash flow”