By Lynn Steffes, PT, DPT
Many private practices focus on growing referrals and revenue while ignoring the expense of doing so. Keep in mind that if your practice has a 20 percent profit margin, every additional $100 in revenue you generate nets approximately $20 for your bottom line. However, if you save $100 in expenses, you will realize a net $100 gain to your bottom line.
Perhaps 2016 is the time to look at expenses that you may have ignored? Reducing your cost per visit by managing your overhead can create positive financial changes. Sit down and spend a little time reviewing each line item on the expense side of your profit and loss report.
A few items to consider that you may be ignoring:
- Your petty cash spending: Is your practice “running to the store” for items regularly or are you doing bulk purchasing and taking advantage of any group purchasing on those items your practice uses every day?
- Your subscriptions: Do you pay monthly for Internet services, magazines, and web services? Is there a better deal to be had or can a few be eliminated?
- Your business insurance: When was the last time you really had competing bids? You can improve your premiums.
A few big items that you might address over time:
- Your lease space: Is there an opportunity to approach your landlord to renegotiate? Should you consider downsizing or subletting excess space?
- Your capitol equipment leases and purchases: Are you monitoring your return on investment (ROI) of large equipment? Do you have the right patient population? Services to support the item?
- Your staffing mix: Do you have the optimal therapist, assistant, support staff, and administrative staff combination?
- Your compensation: Do you need to reevaluate a base pay with incentive compensation model? Or address raises given without consideration of true financial performance?
- Your benefits: Should you reevaluate your staff development plan and look to offer more cost-effective virtual continuing education opportunities in combination with traditional coursework?
Make 2016 the year you reduce your cost per visit and build a better bottom line from the expense side of the equation.
Lynn Steffes, PT, DPT, is president and consultant of Steffes & Associates, a national rehabilitation consulting group focused on marketing and program development for private practices nationwide. She is an instructor in five physical therapy programs and has actively presented, consulted, and taught in 40 states. She can be reached at email@example.com.