When starting out in any business, the processes and systems you set in place early can establish you on the path to success – or failure. General Practices can be profitable businesses. However, if your business plan is not executed correctly, you may end up seeing low return on your investment (ROI) of time, money and effort.
We’ve consulted with successful practice owners to compile a list of 5 proven drivers of profitability to help you achieve optimal ROI at your own practice.
Driver 1 – Patient Management Efficiency
Matching demand and supply has been the single greatest challenge in healthcare since the dawn of time. Having too much supply without demand means you will have either too many doctors sitting in empty consult rooms — earning you and them no income. Having not enough supply and too much demand means you will have too few doctors, who feel burnout, combined with angry patients that you cannot adequately cater for.
How do you get this critical balance right?
- Online Booking Systems – the most efficient and transparent means of enabling patients to select their doctor and appointment time
- Phone Protocol – Train your staff to ask the question “What is the nature of your medical issue so that we can ensure you receive the appropriate time with your doctor?”
- Employ Nurses – Nurses, especially Registered Nurses (RNs) are wonderful assets to have and can be enormously effective in assisting GPs to be efficient in their patient management. Having sufficient Nurse to Doctor ratio is really important and we suggest this to be around 1 FTE Nurse for every 3 FTE doctors
- Triage Appropriately – Matching the patient needs with the appropriate time with their GP is fundamental to delivering quality patient care and is also essential for the health and happiness of your GPs and your practice. Do not be afraid to lay down the law upfront regarding the need for longer appointments for dealing with issues such as mental health, procedures or complex health management. And remember, your patient’s time is important too.
Driver 2 – Fee Structure
GPs have frequently fallen victim to the vicious cycle of charging too little for their hard work, valuable time and incredible expertise.
Why would patients be prepared to pay a plumber a callout fee of $120 plus the same for every hour of their time – and yet when it comes to their own body’s ‘plumbing’, something which is arguably far more vital and a lot trickier to fix, they should receive the service for free?
There are instances where it is entirely appropriate to bulk-bill your patients; however, this should be agreed to with your GPs, and where possible adopted consistently across your practice to avoid patient confusion or challenging of your fees.
Driver 3 – Practitioner Recruitment & Retention
There is nothing more costly for a GP practice than an empty consult room. You firstly need to ensure that you provide an enticing environment to attract doctors to come and work at your practice. Once onboard, you will then need to ensure you treat them well in order to maintain their job satisfaction and dissuade them from leaving.
Commercial considerations will be key for them, such as the % of billings they receive, whether they share in Practice Incentive Payments (PIP) and your Fee Structure.
The indirect benefits of working in a nice environment that has well trained staff and is nicely appointed cannot be underestimated.
Invest in the nice coffee machine. Put on a monthly doctor dinner. Let them make their consult room to their own liking. There are a myriad of ways to ensure that your most valuable resources are happy so that you can build sustainable revenue through their collective hard work.
Driver 4 – Cost Control
As with any enterprise, managing your costs is fundamental to your ability to make a profit. As wages and rent are usually the most significant costs, if you can manage these well it will have a powerful impact on your financial health.
Mitigating rent costs via sub-letting of rooms to Allied Health practitioners and pathology collection centres is a great means of reducing the impost of your property costs and also adds to the convenience for patients who can receive non GP treatment or blood tests on-site.
Wages are more difficult to manage. Tightening the purse strings too much will result in a practice that is under-staffed, provides terrible customer service and eventually drives away both its doctors and patients.
In addition to a Practice Manager, you will need approximately 1 FTE admin/reception staff member for every 3 FTE doctors.
Driver 5 – Practitioner Remuneration Structure
In order to attract and retain quality GPs, you will have to pay them accordingly. The most common model is a % of their gross billings, which may range from as low as 50% in some of the corporate practices to as high as 80% in the regional areas that are desperate for doctors.
Somewhere around 60-65% is the norm. You may choose to add some performance based measures to reward your more financially valuable doctors, such as a % of billings based on tiers so that the more they bill the higher their % share.
The decision to share or not share the Practice Incentive Payments (PIP) is also key because this income can become rather significant over time as a practice matures and grows. While there is no standard, it is common for the practice to retain this income given it has employed the resources, such as Nursing, required to attract this income.
The above 5 drivers can collectively contribute to the success of your practice. It can be difficult to institute change at more mature established practices, which is why when starting out its important to lay the groundwork for achievable long term ROI.