There are some useful lessons to be learned from when older consultants with well-established practices were starting to look at retirement. Simon Brignall reports.
In last month’s article, I discussed some of the challenges consultants face when starting out and growing their private practice.
In the start-up phase, everything is new and exciting. You are constantly having to learn new things about practice management and you are possibly worrying about where your patients will come from.
Then, in the growth phase, your practice may experience growing pains as you struggle to accommodate the increase in workload. This can put strains on your practice administration and infrastructure, and that will quickly highlight any performance deficiencies.
So, it is very easy to see why, when their practice hits the third stage – maturity – many consultants feel they can take their foot off the gas and start to reap the rewards.
This is never a good idea. The best practices ensure they stay in this sweet spot by following some simple steps which I will outline in this article.
The fourth phase of business is decline/renewal. While decline is a fact of life, some practices do choose to do something new. Every great civilisation the world has seen has had its day in the sun.
But it is often as important to plan your exit as well as you did your entrance and that is why I shall also touch on some of the conversations I have had with consultants who are approaching that milestone.
The view from the top
When your practice reaches maturity, it can be very satisfying, as you will, no doubt, have built up a strong referral network from colleagues and satisfied patients and you are likely to be less impacted by new consultants starting out.
Like any business, the biggest risk can be becoming stagnant and resting on your laurels. It is important to keep doing things that made you successful in the first place such as consultant/GP engagement, seminars, marketing or having patient referral platforms.
Surprisingly enough, I get many calls from consultants whose practices are extremely busy, but they do not feel their income or cash flow reflects this.
Ironically, enough success can create its own problems.
The importance of billing
I have added the statement below from a previous Independent Practitioner Today article from one of our consultants, as it is a common example of many conversations I have had with established practices over the years.
‘As my practice grew, the increased workflow put more and more demands on me and required me to take on a medical secretary to help with practice administration. More recently, I started to feel that, despite working hard with a busy practice, my cash flow was not mirroring the work I was doing,’ consultant cardiologist Dr Dinos Missouris said.
‘When I started to review the finances of the practice, I found two main problems: I was not getting the visibility that I wanted on my aged debt and the information, when provided, was not always accurate or up to date.
‘My age debt was running at over 20% and so I knew it was time to take some form of action. I had heard or Civica Medical Billing and Collection through a colleague and so I contacted them.’
Struggle with finances
We often find it is the larger practices who struggle with their finances. This is due to the volume of patients they see, which makes it is very easy for tasks to be set aside.
Even if they manage to remain on top of the billing, it is often the reconciliation and chasing process that is impacted.
This not only affects cash flow but means problems are not identified quickly. In turn, this reduces the likelihood they get resolved satisfactorily, which can also lead to losses in income.
This is on top of making the practice look unprofessional – something which, again, can negatively impact its reputation and subsequent revenue.
It is important to ensure your administration team meets your current needs and that you have access to up-to-date financial information on the practice.
As collection experts, we have a bad debt rate of less than 0.5% and for many practices it can even be as low as 0.3%.
Take the time to review
Access to accurate practice data detailing your activity at the various locations where you practise or the type of patients you are seeing allows you to spot trends over time and adjust accordingly.
It is easy to make assumptions about your practice that do not reflect its true position. This may lead you to open another clinic at a popular location or add functionality to better support a rise in self-pay activity you are seeing.
Our company’s reporting dashboard provides reports on the type of procedures a practice is conducting and can track GP/marketing referrals so that the practice can monitor their impact.
Armed with this valuable data, consultants can then engage with their referral network about new or popular treatments that will benefit their patients.
It is important to review your fees regularly. I appreciate this is a difficult area, both within the insurance market as well as the self-pay sector.
In our experience, consultants typically do not set their fees effectively because they have not done enough research when initially conducting this exercise or it may have been many years since they last looked at them.
When deciding to either have a better work-life balance or when you have set an end date for work, it is just as important to plan this as you did when you were starting out and growing your practice.
I have had many calls from consultants over the years that have involved all sorts of options including:
Setting up their own clinic;
Bringing in new consultants into their practice;
Managing their practice into retirement.
The first three options often allow the consultant to continue to see a revenue stream as they reduce their own activity and, in some instances, may profit from an equity sale in the future.
We are happy to provide advice and assistance if you are looking at any of these options. But let me deal with the managed retirement option here.
I often speak with consultants who have set an end date and reach out to us to get their finances in order over their last working years.
Some have chosen to leave the NHS and plan to devote themselves fully to private practice. Ironically.
This signals an increase in activity and so to ensure they maximise their potential, this means focusing on patients and not administration.
To do this effectively, they need to ensure they have the adequate resources in place to best manage this activity and often the simplest solution is to partner with an experienced medical billing company.
It is important for consultants to put robust processes in place to manage their finances.
For any practices with a substantive aged debt problem, it is vital for this to be followed up so they know the status of all outstanding invoices.
When thinking of retirement, this is the time to prioritise the aged debt issues, because time may be a factor.
You need to know every opportunity has been taken before you make decisions about writing off any bad debts to ensure you gain the tax benefit.
If any points I have raised here resonate, then hopefully I have provided you with some effective solutions.
Of course, your best option may be to reach out experts such as a medical billing and collection company who can not only provide valuable support but has a wealth of knowledge to help.
Simon Brignall (right) is director of business development at Civica Medical Billing and Collection