Physicians Practice - April 2008 - (Page 65)

START IT UP: FINANCE MASTERING THE NUMBERS GAME BY L AURIE HYL AND ROBERTSON CRAFTING A BUDGET FOR YOUR NEW PRACTICE IS DIFFICULT BUT NECESSARY. HERE’S HOW TO DO IT CORRECTLY. Assuming you’ve lent some serious thought to your practice philosophy and dream location, as we described in Part One of this series on launching a practice (find it on PhysiciansPractice.com by searching “Start It Up”), the next step is constructing the ﬁnancial model. To form the underpinnings of this crucial bit of strategizing, all you need are reliable expense and revenue projections, plus a solid budget, for the first couple of years after opening. Piece of cake! OK, we admit this task is not easy. But you must pay sufﬁcient heed to the ﬁnancial side or risk losing everything. It’s your practice, your money — and your job, says consultant Keith Borglum. “You can’t abdicate ﬁnancial controls … to a staff person. The physician doesn’t have to learn to be an accountant, but they have to be able to read the reports intelligently.” On the bright side, says Borglum, “It’s a lot easier than learning medicine.” DURABLE DATA Too little ﬁnancing is a death sentence for any new business, especially one whose major commodity is dependent on — and in most cases entirely limited to — its owner’s time. As a key part of your business plan, you’ll want pro forma statements listing best-, worst-, and average-case scenarios for a realistic mix of patients in your geographic area and specialty. These documents should cover at least two years and would typically include startup expenses, revenue and charge analyses, a fee schedule, and a break-even analysis. WWW.PHYSICIANSPRACTICE.COM is leaving another practice, they do One way to get started is with have some track record of reva consultant. We recommend enues and income … someone experienced in so sometimes we helping guide startups, ABOUT THIS SERIES have a base to and who has particular Have you been pondering striking work with.” expertise in develout on your own, making the leap from For doctors oping budgets for employed associate to practice owner? straight out new businesses. Or are you just starting out in practice, and wondering if it’s worth going even of residency, Sherry Migliore deeper into debt to start your own venture “we have a is one of many rather than getting “a job”? little more such consultWhatever your situation, Physicians Practice is here to help with our comprehensive six-part work to do,” ants. “We work guide to starting a medical practice. In addition Migliore very closely with to the pre-opening day planning advice you may have seen in other such guides, we’ll says. “We’ll the physician to delve deeper into the key milestones go back and develop the you’ll need to meet for success long after you cut the ribbon. look at similar assumptions for the information on ﬁnancial analysis,” she similar practices, explains, describing the using our considerable process at PMSCO Healthcare data to work through the revenue Consulting in Harrisburg, Pa., and expense scenarios.” where she’s director of consulting. “The more unusual your practice, “What are their revenues, their the more important it is to have a anticipated costs? If the physician APRIL 2008 | PHYSICIANS PRACTICE | 65 http://PhysiciansPractice.com http://WWW.PHYSICIANSPRACTICE.COM

Table of Contents Feed for the Digital Edition of Physicians Practice - April 2008

Physicians Practice - April 2008 Contents The Bigger Picture: Medicare Decision Time Letters Physicians Practice Pearls: Outsource Your Pain Noteworthy Cover Story: Trial Lawyers Tell All Management: When It’s Time to Change Ask the Experts Technology: Do You Know Where Your Data Is? The Tech Doctor: Are Your Discarded PCs Really Clean? Billing & Collections: Playing Hardball The Administrator's Desk: Recruiting for Patient Satisfaction Start It Up: Finance - Mastering the Numbers Game Coding The Great Practice Makeover: Taking Care of Business Associates Classifieds Advertiser Index

Physicians Practice - April 2008

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