By William A. Brenner, CPA With the economic rollercoaster settling down, now is a great time for the management teams at medical practices to step back and think about how they can keep their practices successful for years to come. Many of the practices that I, and my colleagues at Citrin Cooperman, have consulted with recently had to make difficult decisions to retain (or regain) their profitability in order to ride through the recession. Even though there may still be tough choices to make as the months roll on, here are 10 steps that medical practice management teams can take to prevent even tougher decision from coming their way. 1. Plan a realistic budget. A real budget isn’t prepared by simply increasing prior year revenues and expenses by an arbitrary percentage; it’s built from the ground up and requires careful consideration of each line item.  From a revenue perspective, be sure to consider any changes in patient demographics, variances noted in the procedure mix, and changes to insurance plans accepted. From an expense standpoint, really spend some time on administrative and medical staffing levels as well as their compensation packages. This is one of the areas where the management team has the most control when it comes to costs. 2. Monitor billing personnel. In my experience, a typical billing staff tends to let rejected insurance claims or patient receivables gather dust and concentrates on pushing through current claims. Management should review unpaid claims with the billers on a regular basis so that no money is left on the table. The same is true with the collection of patient co-pays and deductibles – If a front desk isn’t collecting these amounts before a patient is seen, perhaps a revision in policy should be considered. It is much harder to collect co-pays after the fact. 3. Recall and follow-up procedures should be up to speed. Scheduling follow-ups or routine appointments is much easier before the patient leaves the office (even if it has to be rescheduled at a later date). Make it a policy and stick to it. Do an analysis using data from practice management software to determine the effectiveness of recall procedures. Getting patients back to the office on a regular basis is one of the keys to success. This small change can have a positive impact on the bottom line. 4. Review fee schedules. Many medical practices might be shocked to learn that they actually bill less for procedures than insurance would reimburse. This typically stems from the lack of office policy and supervision of billing staff.  This is another potential revenue leak if not properly reviewed. 5. Consider bringing provider referrals in-house. Given careful consideration and depending on the specialty, referrals in many cases go unrewarded. Why not look into bringing that specialty in-house? In today’s health care environment, the trend seems to be the growth of larger multi-specialty practices that can provide their patients with nearly every service they need. Not only do larger practices have more muscle when negotiating with insurance carriers, but they also enjoy economies of scale, which can result in higher profits and doctor compensation. 6. Centralize purchasing. This is a fairly simple concept that many practices with multiple locations just don’t recognize. When multiple offices independently order supplies from the same vendors, they may give up the opportunity to get bulk purchase discounts, in addition to creating huge stockpiles of supplies and inevitably creating a huge headache for their accounting personnel. In the end it becomes a vicious cycle that results in a total lack of control over supply levels and becomes a drain on cash flow. The simple fix is to centralize inventory monitoring and purchasing, which will result in the ability to negotiate the best prices and avoid over purchasing – basically putting more cash in the practice’s account. 7. Create a strategic plan. A medical practice shouldn’t dictate when and how its doctors work. Strategic planning is an exercise that enables physician-owners take their practices to the next level. Simply put, it is the process by which owners and equity partners develop a realistic vision of where they see themselves and their practices in three to five years, and then begin to build the steps and strategies that will enable them to get there. Without a real strategic plan, a practice will continue to control the lives of its owners. 8. Control staffing levels. Most practice owners add staff each year, even when patient volume remains constant. Existing staff can tend to get too comfortable in their positions, and in many cases become less efficient each year. Over time they begin to define the specific tasks that they are responsible for and are no longer flexible enough to help out in another area or with a new task. As business owners, physicians should take a hard look at their organization’s overall staffing levels. Making reductions in staffing levels is often the hardest thing for a business owner to do. However, in my experience this is often the area of most waste in any business. The same can be applicable for medical staff – does every doctor really need their own medial assistant? They may want it but probably don’t really need it. A simple review of doctor schedules may reveal the opportunity for a realignment of, or reduction in, staff that can be made without having any impact on the care patients receive. 9. Create a practice dashboard. Like the dashboard of a car, a dashboard for a practice can provide the “vital signs” that are needed to regularly monitor the practice in real-time in order to successfully manage the business. Dashboards are great because they are specifically designed to provide information most important to a practice’s success.  A well-designed dashboard can provide snapshots of cash positions, the number of patients seen per day, patient or insurance receivable balances, numbers and types of procedures performed, and expenses to date by specific type or overall groupings. You name it, it can be tracked and monitored. A dashboard can provide actionable data to help make accurately informed decisions and adjustments. 10. Consider reviewing controls over cash. Cash really is king and unless you have strong controls in place (and you're staff knows it) a practice may have more cash leaks than could possibly be imagined. No one wants to consider the possibility that their staff may be stealing from them, but believe me - it happens all the time. Unfortunately, it is most often those whom are the most trusted, the ones invited to the owner’s children’s weddings or even vacationed with. Having a professional review of internal controls is one of the best things to safeguard the assets of any practice. As the year begins, spend some time thinking about the pain and stress that have become the new “normal” over the last year or two. It is a great time to take action and begin building a stronger, more profitable practice. #     #    # Bill Brenner, CPA, is a director at accounting and business consulting firm Citrin Cooperman & Company LLP, and works with many medical and dental practices.  He can be reached at 914.949.2990.