What’s wrong with your practice?
Right now, we don’t know. Anyone who walks into your practice with a pre-fabricated plan for success doesn’t know either. We never work with a practice without a thorough analysis of several key components of the practice.
Any business is a complex system that requires all the components to interact seamlessly and efficiently in order for the practice to succeed.
Sample Practice – ABC Hearing
ABC Hearing came to us with an annualized net income of $82,632.
Obviously the practice owner was doing something right, but sensed that he wasn’t coming close to the potential of the practice.
Every relationship has a starting point. Our starting point with every practice owner is the “audit”. The audit provides us with a comprehensive overview of each of the critical components of a hearing healthcare business. Here’s a brief overview of the questions we ask and the reason we ask those questions.
These are in alphabetical order, not order of importance.
- What is your average cost per lead (CPL)?
- Which of your promotions generated the highest return on investment (ROI)?
If you don’t know the answer to both of those questions you have a problem. The key to increasing profits in an audiology practice is in not having an occasional great month but having consistently good months. An effective advertising program is an important tool for generating a constant flow of new patients. And a large part of assessing the effectiveness is knowing the CPL and ROI of each promotion.
BILLING AND CODING
- Would you survive a Medicare audit?
- Are your insurance claims being improperly denied?
Too often improper coding (both CPT and ICD-9) results in claim rejection or denials costing thousands in lost revenue both in receivables and employee hours necessary to reprocess claims. It also increases the chances that your practice will be flagged for an audit.
EXPANDING A PRACTICE
- Did you know that the quickest way to increase overhead and decrease profits is to expand a practice externally?
- Have you considered the opportunities already within your practice to significantly increase profitability?
That being said, practice owners will still want to expand. We can assess your need for expansion and if prudent help you to expand while avoiding the most likely pitfalls.
- Does worrying about your future keep you up at night?
- What will your practice be worth when it is time for you to retire?
Unless you prepare well in advance it will not be worth as much as you think. We will show you exit strategies that can enhance the value of your practice.
The majority of practice owners do not want to work until forever. As the owner of a small business, you cannot count on pension or retirement benefits. You will be responsible for ensuring your financial future. This program will explain how to set future financial goals and provide some insight into making your money make money.
- How long could your practice survive in your absence?
- Who’s really in charge, you or your employees?
Even the best employees need to be managed. The challenge for the typical owner is in finding the time and energy to manage them. To often employees are left without direction or accountability. The focus of Human Resources is simply putting the right person in the right place doing the right thing.
- What are the top five categories of information you should look at as the owner of a practice?
- How easy would it be for you to put your hands on that information, information you should be using to run your business every day?
Every day owners make decisions that affect their practice, often without the information needed to make the best choice. The enormous amount of information that comes into the practice daily needs to be sorted, filed and dispersed into systems that will allow the information to be retrieved when and as needed.
- If you stopped 10 senior citizens walking down the street in the town where you practice, how many would say they had heard of you?
- Are you maximizing the Internet to leverage business awareness?
The most profitable practices are typically marketing machines, with all the employees taking advantage of every opportunity to promote the practice.
- What percentage of your annual sales is from your current patient database?
- What methods of patient recall should you be using?
Once we convince you those 2000 active patient files you have are not really all that active, the question becomes, how do we reactivate them. You will not get back everyone but a proactive approach will ensure that a majority of your patients can be brought back to your practice.
- Do you really know how many active patients versus inactive patients you have in your practice?
- How are you handling the competitive marketplace as it relates to your existing database?
Your patients have more options and more access to information at those options than every before. If the most important asset of any practice is its customer base then the most important program should be patient retention.
- Are you satisfied with the current number of professional referrals your practice receives each month?
- Do other healthcare professionals even know you exist?
A steady flow of referrals from physicians and other professionals is a tremendous asset for an audiology practice but as a rule, very little effort is spent developing and nurturing these relationships.
PROFIT AND LOSS REVIEW AND BUDGETING
- Do you know what the break-even point is for your practice?
- Have you used your P&L to create an operating budget for your practice?
The Profit and Loss (P&L) you either generate yourself or receive from your accountant is the financial report card of your practice. Understanding the essential components can provide you important information on various components of your practice. An operating budget is an essential component to increasing the net revenue your practice generates. It allows you to determine goals and literally set your income level.
- Do you know what the closure ratio is for you and your staff?
- Do you know what the problem is if an employee’s closure ratio is high but their return rate is high too?
As an audiologist, you spent years studying the material needed to learn your profession. As the owner of an audiology practice, you know that a major source of revenue generation comes from selling hearing aids. What have you done to prepare yourself to be an effective salesperson? What have you done to prepare your staff if you have others selling in your practice?
- Are all your eggs in one basket?
- Do you know how much you could generate per hour by adding specialty testing?
Providing comprehensive services under the umbrella of Audiology can provide a practice with a steady source of revenue not related to hearing aid sales.
STARTING A PRACTICE
- Why to start?
- How to start?
- When to start?
- Where to start?
- What to start with?
Starting a practice always begins with more questions than answers. Our job is to provide answers to those questions. Then ask you a few questions that you probably never even considered.
- There are key components of every practice that should be monitored, some daily.
- Do you know what they are?
The success or failure of a business is dependent on a variety of factors. By monitoring essential elements of your practice, you can gauge at any point in time the overall health of your practice.
The starting point for the practice above was $82,632, not a bad number but as in most practices we work with, there was a substantial amount of room for improvement.
Following the audit and an indepth analysis of the practice we focused on 5 key areas for improvement.
Reducing the cost per lead.
We put systems in place to allow for an analysis of their cost per lead. Their cost per lead was $462, significantly exceeding the industry standards. A reduction of the the less effective marketing methods accompanied by the addition of more effective marketing methods allowed the cost per lead to decline significantly.
Increasing the number of referrals via internal marketing.
The practice was not taking advantage of their large database. We implemented several in-house marketing strategies, significantly increasing the word of mouth referrals without negatively impacting the overhead.
Increasing the closure ratio.
To put it simply, no one in the practice could sell. Training an individual to sell any product is never easy, but it’s always worth the effort. Our sales training program is simple to implement and will on average bump a salespersons closure ratio by 20%.
Decreasing the cost of goods sold.
Their cost of goods were slightly higher than we typically see in the average hearing healthcare practice. Once they established a cost of goods they were comfortable with, we implemented systems to ensure the COG would continue to be monitored and changed in response to vendor increases.
Improving the ability of employees to convert leads into appointments.
We provided training to the support staff so they better understood that the goal of a phone goal is not just to answer the phone.
We spent time implementing one change at a time. Once the change is implemented, systems must be put into place to ensure the change is permanent.
With the changes in place the practice generated $374,280 in the 12 months following the implementation of our changes.
As mentioned earlier the practice owner sensed his practice had untapped potential. He was right.