![]() Create a robust accounting system for accounts payable and accounts receivable to make sure you’re managing your bills properly, and the invoices you receive match what you are expecting to owe.Ĥ. Reduce your variable costs. Look for ways to reduce your variable costs, too. Renegotiate your existing contracts with your vendors, such as your office lease or other medical services. Do what you can to drive down your fixed costs. Reduce your fixed costs. Fixed costs have a significant effect on your break-even point. Educational videos and social media are a great low-cost place to start.ģ. You might also consider marketing your practice, increasing your marketing efforts, or trying new marketing techniques to draw patients into your practice. If you’re not already accepting new patients, do so-and make sure to alert providers so they can update database of in-network providers. Do you send out regular reminders for preventive or follow-up appointments? Do you have extended hours at nights or on the weekend? Do you offer same-day appointments? If so, make sure your patients know about these convenient service offerings. ![]() Increase your volume. How well are you scheduling your day? Is your clinic at capacity, or do you have downtime? Look for ways to increase the patient traffic in your clinic. Another fruitful exercise is to do some market research see if you are charging below the prevailing market rate, then negotiate to be on track with your peers.Ģ. Identify your lowest-paying payers and negotiate for a rate that matches or is close to your highest-paying payers. Here are four things to consider if you find yourself near the break-even point.ġ. Raise your prices. Go back to all of your payers and renegotiate for higher rates. If they don’t, then you know where to focus your efforts. See fewer patients, and you’re in for a loss.ĭetermining your break-even point is the fastest way to learn if your charges or expected volume will cover the costs of your services. See more patients, and you will be earning a profit. The final number represents the number of patient visits you will need each month to break-even. That graph allows you to determine your break-even point by identifying the point where the two lines intersect. With your revenue calculation in hand, you can plot both your cost formula and your revenue formula. ![]() We looked at how you can determine your fixed and variable costs using a graph. In a previous column, I wrote about understanding the different costs of doing business. You might be asking yourself, “Why bother? ”It might be a little challenging to arrive at your cost and revenue functions but calculating this will give you great insight into your practice’s financial health. There are two ways you can look at the break-even point: the revenue needed or the productivity level needed. When productivity is below it, a loss is incurred. ![]() When productivity is above the break-even point, a profit is earned. Those expenses include both the fixed and variable costs. It’s the productivity point where the revenue earned equals the expenses incurred. The break-even point is a simple concept. If you don’t, then you’re likely shooting from the hip as you attempt to “manage” your business. All business owners should know their break-even point. ![]()
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