Improving efficiency is a core part of how to run a successful medical practice, and putting the right processes in place to enable it is especially important in the early years, when your practice is getting off the ground.
Achieving smooth and efficient operations empowers practitioners to give greater attention where it is due – with the patients. Issues such as inefficient payment processing and mistakes when billing can slow cash flow.
We explore strategic insights for setting up your practice the smart way – allowing for efficiencies early on to simplify your day from day one.
The metrics that matter for medical practice efficiency and finances
Cash flow is one metric that provides greater financial visibility – giving you the insights that ensure you can make strategic decisions that define your success.
In addition, creating dashboards and building automation that update you on these figures will help you to make the best decisions around growth. Do you hire more support staff? Do you invest in more robust practice software that reduces administrative time?
Measure these metrics:
- What’s the balance of your bank accounts and loan amounts? This should be reflected in your P&L (profit and loss) statement, which is reconciled every day in your accounting software. Accounting software integrated with your practice software, can keep your practice in sync by providing the right timely insights.
- How effective and timely are your billing processes? Build up a picture of financial peaks and troughs in your practice. This helps you to budget and allocate resources more effectively.
- How are you tracking against your cash flow forecast? Pinpointing the factors that are keeping you on track or pulling you off course will provide early opportunity to accelerate success.
- What are the payable bills and other payments for this month? The key is paying at just the right time – not too early or not too late – to ensure your practice isn’t out of pocket. To make sure the ends always meet, the principle remains true for every business: always borrow to grow, not to survive.
- How full is your inventory? Staying cash flow conscious will mean tracking how soon you’ll need to restock and who your best suppliers are.
Boosting efficiency from day one of your medical practice
Integrate your technology ecosystem
Implementing medical practice accounting efficiency begins with building a seamless technology ecosystem that integrates your essential business software. Technology will help you shorten the cash conversion cycle, so we’d recommend you automate all cash management processes. This also minimises human error and the painstaking time and effort involved in keeping spreadsheets up to date. Furthermore, these efficiencies may effectively reduce headcount for your small business, since you’ll require fewer people to get the job done.
Cloud-based accounting software, such as Xero, helps to store all key financial information about your business in one place, so that you and your staff stay updated across bank balances, bills and invoices. Importantly, it also presents monthly data in such a way that you can identify trends and improve processes.
When all payment channels, such as EFTPOS, are linked you’re equipped to reconcile your payment system far more easily. Furthermore, this time saving efficiency will help reduce staff administration and free up time for your patients.
Automate reminders to patients and staff, streamlining follow-up
Automation is no longer an added bonus – it’s essential for supporting efficient processes, geared towards positive patient experiences. Automating reminders can happen on every level and can include:
- Reminders for employees to follow up with patients who are due for another appointment.
- Reminders to patients who have an upcoming appointment, increasing the likelihood they’ll arrive on time.
- Reminders when invoices are due or when bills must be paid.
- And more.
When it comes to expenses, a recommended principle is to pay your suppliers on the due date, not earlier. Accounting software can be programmed to automatically pay on relevant due dates.
Gain financial visibility to turn data into strategic action
For your business to run efficiently, you will need an overview of funds available and the ability to meet any ongoing obligations (such as employee salaries, rental costs or loans). Financial visibility equips you with the data-driven and strategic insights to pinpoint unnecessary expenses, build a better cash reserve for unexpected expenses and reinvest in your practice growth.
Unfortunately, medical practices can often accumulate a mass of unneeded supplies. It makes sense to periodically analyse accounts and SKU (stock keeping unit) profitability to identify slow-moving or outdated inventory – as in supplies you won’t be needing more of – so you can reduce costs.
Across your practice, it would be wise to both encourage and incentivise actions that generate cash and preserve it, too. Ask staff to set expense targets, monitor them, and consider remuneration when outcomes are achieved. Perhaps there is a more competitive interest rate to be discovered or bank accounts to be consolidated. Also, contemplate whether you might implement new policies or metrics that could make your business more competitive and bring greater value to shareholders.
Over to you
For those with their sights set firmly on success, effective management of the financial side of your practice will be a high priority. Establishing efficient processes and technology in place early will set your practice on track for the long term.
To simplify the financial side of your business and solidify smart medical practice finances, download your copy of the finance guide here. We explore how to run a successful medical practice by establishing the right processes from day one.