As a doctor or other medical professional, you mainly focus on patient care. However, your medical practice is still a business, and you want it to be profitable. You can have a thriving practice with a solid business plan and the right bookkeeping system. Before you can do that, you need to keep your financial records in order. Here are a few ways that bookkeeping can help boost the profitability of your medical practice.
Bookkeeping Tips for Your Medical Office
You want to ensure that all of your books are up-to-date and accurate in your practice. If you are a solo practitioner, that can be stressful. There are a few ways to manage your books. First, you need to choose your accounting method. There are two types of accounting practices in the medical industry: accrual or cash basis accounting.
For the medical industry, accrual accounting is the most common form of bookkeeping. With this method, you count for all the expenses when you receive a bill. Along with that, you will note any receivables from your patients at the moment of billing. While using accrual accounting is common, it is not always the best practice.
Some medical practices use cash basis accounting. The method is similar to accrual accounting, but billables and receivables are logged when paid, not received. Many physicians and medical professionals prefer this type of accounting. With that, medical practices will have the most up-to-date view of their finances. There is a drawback. Cash basis accounting cannot help practices prepare for large quarterly expenses, such as malpractice insurance. If you are not careful, big expenses can sneak up in your practice.
Managing Your Practice’s Health
When you accurately manage your books, you can keep an eye on the health of your medical practice. If you want to know the pulse of your business, make sure to create a schedule for profit and loss statements. When you create these statements, you have an overview of your losses and gains. You can eliminate any discrepancies and decide where to invest your money with that information. While these statements are not required to operate a medical practice, they will provide you with some insights into your finances. That information can help you to improve your business.
Now that you know the basics of medical practice accounting, here are a few ways to improve your medical practice’s profitability.
Review Your Fee Structure
You want to take time to review your fee structure. Make sure that you are charging your patients the correct amount. It might be appropriate to bulk bill your patients in some situations, but you need to have strict criteria and policies for this type of billing. Reviewing your fees can ensure that your practice maintains a higher level of profitability.
Control Your Costs
Your medical practice is like any other business. When you manage your costs, you can improve your profitability ratios. Make sure to look at those areas of high expenses, such as rent and wages. While managing wages for a highly trained staff is difficult, you can find ways to reduce rental costs. In some cases, sublet those empty rooms to other practitioners. Not only can you mitigate rental fees, but you will provide better medical options for your patients.
Maintain an Efficient Patient Management System
Matching supply and demand can be a complicated process for your medical practice. You could be the best doctor in the area, but you will not earn income without any demand. For that reason, you need to find the right balance between these two factors. You will want to review your system for patient management. Take a look at your booking system. It might not be efficient at creating appointments. Untrained staff members can also lead to ineffective patient management. For example, they might not know which questions to ask to schedule appointments correctly. Along those same lines, you want to make sure you have medical assistants and nurses to help with patients.
Hire Professional Accounting or Bookkeeping Help
If you are extremely busy, you will want to have someone look at your books. Your primary focus should be on the patients. However, if you don’t spend time on your finances, your practice might not increase its profitability. You will want to work with a professional accountant or bookkeeper. These experts can give you the right advice about your business. Don’t forget that professional accounting services can save you time and money. Plus, you won’t have to deal with the headaches of straightening out your books.
When you have the best medical accounting management for your books, it can help to keep track of those day-to-day transactions. Along with that, the information becomes more valuable as you gain insights into your business. Once you have a clearer picture of your financial health, you can make those decisions that boost profitability.
It never hurts to speak with a professional who can help you take full control of your medical practice. When you partner with a professional accountant or bookkeeper, you will have more time to focus on patient care rather than struggling with the confusing business side of your practice.
Yes, your medical practice can be profitable, but you need the right system and a solid business plan in place. With some accounting and bookkeeping help, you can achieve those goals.
Let Us Help With Those Next Steps
Whether you are starting your own medical practice or need help with an established one, don’t forget about your bookkeeping. There are several areas where you can cut costs to boost profitability throughout your practice. Removing any inefficiencies can turn your medical practice into a successful business.
If you need small business accounting services, make sure to schedule a consultation with TMD Accounting. Thomas M. Ditullio Accounting has over 40 years of experience, and we can help with various services, including payroll, tax services, and financial management. Schedule an appointment by calling 856-228-2205.