Dell - Patient Care and Healthy Profits – How to Get the Balance Right
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Medical Patient Care and Healthy Profits – How to Get the Balance Right Print
Date: 1/03/2009
Making a profit in the healthcare industry is very different from making a profit in other industries. After all, no other industry has to abide by the Hippocratic Oath to do no harm in the same way doctors do. Theoretically in the medical profession, patients’ interests are paramount. This potentially means patients should come before profits. Clearly, in the modern setting, this would not be a viable model for a doctor's surgery. So how can a medical practice make a decent profit, while still keeping the Hippocratic Oath in mind? Where to Draw the Line David Dahm is the CEO of specialist medical practice management consultancy Health & Life. He says it’s all about finding the right balance between patient care and healthy profits in a practice. “If you’re not a profitable practice, you can’t afford better medical equipment and the quality of the care you provide suffers. So don’t apologies for making a profit if you’re in business in a medical practice,” he says. "When it comes down to it," Dahm says “it’s all about the risk/reward relationship. You need to work out what is the appropriate level of compensation so you can eat and sleep well and also look after your patients.” “It is no good running yourself into the ground as a doctor. It’s about giving the patients everything they need, not necessarily everything they want. It’s about taking a marathon view of the business and creating sustainable services. That’s the business’s primary responsibility, not just creating a doctors’ sweat shop,” he says. Creating Healthy Profits Dahm’s advice to doctors who want to get a better balance in their business between patient care and profitability is to first focus on understanding how profits are created in the practice. “To be sustainable in business, you don’t need an MBA. You just have to understand the principles of making a good profit,” he says. According to Dahm, a doctor's practice, like any other business, must produce a monthly profit and loss statement, so that the business owners can get a good understanding of the income and outgoings in the business, especially passive income. Passive income in the business is income not directly associated with doctors’ consulting services. It includes things like nutrition, pathology and radiology services. “The idea is to get a good understanding of where income in the business is earned, so the doctor can go and play golf once a week and still know the practice will be earning money,” Dahm says. Ideally, the practice should also have an ongoing business plan that is regularly updated, and includes revenue goals and projections. “Without this, it will be very difficult to sell the business,” says Dahm. “If you don’t have an understanding of profit centers in the business, you can’t really develop a succession plan because there’s no business case to attract other doctors or investors into the business. And because the business can’t explain itself to others, this means the practice is really unsalable,” Dahm warns. Getting the Right Patients Once you have an understanding of how revenue is earned in the practice, it’s possible to develop profiles of the types of patients the surgery wants to attract to the business. “You don’t have to see every patient,” says Dahm. “You want to come to work knowing that the patients respect you and will turn up to appointments when they say they will. A large number of missed appointments is one of the biggest ways to drag down profits in a practice and it’s important this aspect is managed so profitability remains as high as it can.” The idea is to establish a culture in the practice of mutual engagement between patients and doctors, to ensure the care for the patient is as high as it can be, while making the practice as profitable as it can be. “There are lots of ethical ways you can get people to be engaged with the practice. It’s about having good policies and procedures and making sure your bases are covered,” says Dahm. This might include having reminders or hold messages about the importance of keeping appointments, or letting the surgery know if the patient can’t keep an appointment. It also means having a great Web site and ensuring that staff builds good rapport with patients. When it comes to getting the right balance between patient care and profitability, it’s ultimately about getting a handle on the profit levers in the business and making sure you only attract patients to the surgery who have respect for your time and professionalism. Get that balance right and you’ll end up with healthy patients and healthy profits. The articles in the SB360 are for general comment only, and neither purports, nor is intended, to be advice on any specific IT, business, legal or finance manner. No small business should act on the basis of any matter contained in this site without considering and, if necessary, taking appropriate expert IT, finance, business or legal advice upon his or her own particular business circumstances. This Website may contain links to linked websites. Those links are provided for convenience only and may not remain current or be
http://content.dell.com/au/en/business/d/sb360/patient-care-vs-healthy-profit.aspx
05/09/2009
Dell - Patient Care and Healthy Profits – How to Get the Balance Right
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maintained. Links to those linked websites should not be construed as any endorsement, approval, recommendation, or preference by Dell of the owners or operators of the linked sites, or for any information, products or services referred to on those other websites. Your use of any link to a linked website is entirely at your own risk. Unless stated otherwise on this Dell website, we have no relationship with the owners or operators of those linked websites; and no control over or rights in those linked websites. Dell
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http://content.dell.com/au/en/business/d/sb360/patient-care-vs-healthy-profit.aspx
05/09/2009