Know Your Business and Follow a Blueprint to Build It
May 2015 Issue
Just as a contractor wouldn't start a construction project without having a blueprint to follow, O&P practice owners need a detailed plan to manage their businesses and keep daily distractions from weakening their practices' foundations. A successful company's blueprint should include concrete procedures for reporting, assessing, and analyzing business data.
Imagine that your business is established and running well, you have money in the bank, the phone is ringing, your appointment book is filling up, and things are looking good. Beware! When faced with this type of scenario, many business owners allow things to proceed without inspection when, in fact, they should continue to assess and plan for the future of their practices.
For example, ask these questions:
- What areas need improvement?
- What are the biggest struggles?
- What are the greatest wins?
- Who are your major referral sources?
- What is the company's financial status?
The last question requires hard data. At a minimum, I suggest that on a quarterly basis you run and analyze revenue reports according to referral source, income source, and type of care provided, as well as accounts receivable and accounts payable reports to stay on top of the practice's financial situation.
Knowing this information will allow you to revise your blueprint to accommodate changing market conditions, government requirements, risks, and opportunities.
Two other integral components of your blueprint require pinpointing and keeping tabs on your revenue sources and the administrative aspect of your business. Assessing your practice and referral sources allows you to allocate marketing resources appropriately and to discover opportunities in time to act upon them. Review this data quarterly. Factor in the impact on your practice if your number one referral source retires.
What if referrals from your top source have been decreasing and that source is now substantially lower on your referral list? By tracking this data regularly, you will notice the gradual decrease, giving you the ability to reach out to referral sources and create a strategy to implement the changes necessary to stabilize your referral sources.
Does one provider make up more than 50 percent of your business? This is something you should be aware of and it should raise a red flag. If that referral source closed its doors, your business would be directly impacted. Diversify your referral sources; losing one referral source should not be able to stop your cash flow.
Know what your reimbursement is from each of the insurance providers with whom your practice contracts. It is not uncommon to receive a notice in the mail that an insurance company is decreasing its reimbursements without any prior discussion with you. Know your cost of doing business and your bottom line. When an insurance company decreases its reimbursements, it is up to the practice to decide whether or not it will still be able to profit despite the reduction. If you don't know your bottom line, your business could be losing money and you may not know it.
How much do you know about the administrative piece to your practice? You should have more than one person on staff who knows the details about your business. If your office manager is the only one who knows the password to your server, where certain paperwork is kept, or how to access your billing clearinghouse, you should remedy that situation immediately. Imagine if that person-that repository of critical knowledge about your practice-quits, warrants termination, or leaves for health reasons. Where would you go to efficiently gather crucial operating knowledge?
Unfortunately, I have received too many phone calls from O&P practices that, if they had done a few of the tasks detailed above, would have avoided tragedy, stress, and lost revenue.
There is much to be aware of and to manage in order to sustain and grow the quality and revenue of your practice. Having a well-thought-out blueprint is a vital reference point to keep you on track and on mission.
Erin Cammarata is president and owner of CBS Medical Billing and Consulting, Hampton Falls, New Hampshire. While every attempt has been made to ensure accuracy, The O&P EDGE is not responsible for errors. For more information, contact .