To avoid a cash-flow crunch, ensure that your revenue is adequate for your practice

Stethoscope-On-Indian-Rupee2Physicians who run their own clinics have many responsibilities: patients, employees, facilities, and their own income. Carefully tracking revenue and expenses must be a top priority, however, because a clinic cannot survive without adequate funding.


Pragnesh Vachharajani, MD“Financial review is a must for any business. In addition to stimulating growth, a review enables you to identify problems that need to be addressed.”
—Pragnesh M.Vachharajani, MD, family physician with a special interest in obesity and lifestyle-related disorders in Ahmedabad, Gujarat, India and a member of mdCurrent-India’s Editorial Advisory Board.


Although controlling and monitoring cash flow is important, these activities do not need to dominate your professional life. Here are some pointers on how to keep your practice financially healthy:

Key Point: Monitoring revenue requires only a little extra time, but will be very beneficial for the long-term health of your clinic.
  • Forecast your revenue and productivity.
  • Compare your data to targets.
  • Ensure that your staff collects monies owed for your services promptly and in full.
  • Conduct short, frequent financial reviews to spot problems sooner.

Revenue and productivity forecasts

All businesses—including clinics—must estimate how much revenue they will collect and determine if that amount will cover their operating expenses. Usually these forecasts are based on historical data. But even owners of new clinics can predict earnings.

New clinics should base revenue forecasts on[s2If !is_user_logged_in()]…

[/s2If][s2If is_user_logged_in()] market research and information about clinics that mirror theirs in size and specialty. For example, your research might show that several similar clinics have closed, meaning that more patients will gravitate toward your clinic and boost your practice’s revenue.

Your research can also help you determine what to charge for your services. In the mdCurrent.in article, Calculating physician fees requires market knowledge and flexibility, physicians told us that asking colleagues what they and area hospitals charge is a proven method for setting fees.

After the data is collected, you need to determine what your expenses will be in the coming months. New physicians should limit their expenses as they build their practices. Start with minimum staff, clinic space, and supplies. Once you arrive at an expense projection, establish the revenue target for the month, quarter, and year. After a target is set, calculate how many patient visits and/or procedures will be required to achieve your revenue goal.

Review collections often and, if necessary, revise charges

Once a practice is operational, physicians must diligently track revenue and expenses to determine how actual performance compares to targets.

This process can be simple, Vachharajani says. Input data—such as revenue from patient visits and procedures—on a Microsoft Excel spreadsheet and compare that to data for similar time periods.

“Convert the figures to a graphical form,” says Vachharajani, who performs monthly, quarterly, and annual analyses. “Visualization makes a good impact.”

If collections are not meeting expectations, first ensure that your practice’s productivity is sufficient to generate the required revenue. If not, then you will need to identify the obstacles that are interfering with productivity goals.

If productivity is meeting expectations, look at your practice’s collection rate. Are patients paying in full? If not, how much is still outstanding? What is preventing employees from collecting monies owed? Addressing collections issues will help your clinic overcome cash-flow crunches.

If it’s not a collection issue, then perhaps you will need to increase your prices to meet your revenue goals.

Your expertise is in medicine, not financial management, so if you can afford it, hire an accountant to oversee your practice’s financial well-being. But for physicians who need to monitor finances on their own, it just requires a little extra time. In the end, you will be better able to assess your clinic’s monetary condition and its future.

“Reviewing finances helps you explore weak areas,” Vachharajani says. “When you do this on a regular basis, you can anticipate problems in advance and plan properly.”
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One Comment

  1. HARIKRISHNA MANEKLAL DESAI
    Posted Mar 2014 at 3:23 am | Permalink

    PRACTICAL HINTS FOR REVENUE.APPRECIATE YOUR ARTICLE FOR FUTURE PLANNING OF COLLECTION

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