MDNews - San Antonio

+++++++++++++++ + + +++++++++++++++ BANKING +++ +++ I FINANCIAL CHECKUP? Has Your Practice Had Its Annual By Howard Lutz T'S IMPORTANT FOR physicians to keep an accurate pulse on the financial health of their practices, and now that tax season has passed, this is an excellent time of year to give your practice an annual checkup. While maintaining accurate records throughout the year is a key piece of the puzzle, it's also necessary to holistically look at your practice as a business. By performing a more thorough analysis, physicians and managers can notice positive trends, potential red flags and opportunities to maximize performance. How Healthy Is Your Practice? Physicians and managers should do a complete review of the practice's financial statements and consider the following questions to determine if the organization is healthy: + Do the financial results reflect the business plan? + Is the practice profitable? + Is the practice operationally efficient? + Are overhead costs manageable? + Are collections speeding up or slowing down? If the answer to any of the first four questions is "no," or if the answer to the last question is "slowing down," then, most likely, there are some areas that need further evaluation to improve the health of your practice. While several factors can influence a practice's financial well-being, there are some common "vital signs" that can indicate the stability of the practice. Managing the Vital Signs of YourPractice As reimbursements continue to decline, managing and reducing overhead becomes more critical to the health of your practice. Overhead: An annual checkup for vendor relationships should be a normal part of your practice. Relationships with companies that provide your office supplies, insurance, equipment, pharmaceuti- cals, credit card services and other materials and services tend to be ignored after they are put in place, and over time, these costs will likely creep up without regard to utilization or volumes. Efficiencies: It is important to explore and balance the costs of services available for purchase, such as billing, collections, lockbox and others. The time and staff required may be more costly to your practice than outsourcing these services. 16 | San Antonio MD NEWS ■ MDNEWS.COM Business Model: Are your patient volumes high enough to generate the revenues necessary to cover your overhead? Do you know your payers' payment schedules? Regularly monitoring your cash flow will help determine if you need to adjust the amount of patients you see per day, your payer mix or other aspects of your business model to increase your opportunities to make a profit. Treating Your Practice Like a Business At the end of the day, your medical practice is your business, and the key to its success is to treat it as one. Establish business goals. Does your practice have short-term, intermediate and long-term goals? Taking the time to give thoughtful consideration to how you want the practice to grow and implementing these strategies will require some time up front, but will set your practice on the right track for success. Build the proper foundation. One consideration is the type of entity you form. Does it provide the appropriate tax advantages both now and long term? Does it easily allow for additional owners, and do you have a clear buy/sell agreement? Does it provide sufficient legal protection? Engage your advisors. Your accountant, attorney and banker should be engaging you with regular checkups. These are your trusted advisors and should be an integral part of helping you navigate the tax, legal and financial aspects of your practice. When they are effective, the value that they add will impact your bottom line. Don't hesitate to ask them for advice. Even if your practice is running smoothly, remember: Health care is an ever-evolving industry, and giving your practice an annual financial evaluation will help ensure your practice remains efficient, profitable and on course for success. Howard Lutz is Senior Vice President, Private Banking Manager for Amegy Bank San Antonio. He leads a team of professionals that works extensively with physicians and hand-in-hand with bankers from all lines of business, enabling clients to receive one-on-one, personalized solutions and comprehensive service at any time. The Private Banking team specializes in meeting and anticipating the needs of doctors, corporate executives, professionals, entrepre- neurs, business owners, wealthy individuals and families who expect and deserve excellence and seek personalized relationship banking. For more information, Lutz can be reached at (210) 343-4555 or howard.lutz@amegybank.com. ■

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