5 Ways to Maintain Your Profits During An Inflation Era
Despite the COVID-19 pandemic being a massive challenge for the healthcare industry, medical practices still found ways to make ends meet in 2020. However, research by MGMA has revealed that despite the industry’s recovery from the repercussions of the pandemic, there was an uneven recovery of physician-owned and hospital-owned practices in the following areas:
- Physician Encounters
Regarding the number of patients doctors see, hospital-owned practices have experienced more physician encounters in 2021 than the previous year. On the other hand, doctors who own their practice have fewer encounters in 2021 compared to when the pandemic just started in 2020.
In 2021, revenue for all medical group types increased compared to 2020. However, physician-owned practices – particularly primary care and surgical specialties – made the most revenue in 2019.
- Operating Expenses
General operating expenses have increased and become a cause of concern for all medical practices except physician-owned nonsurgical and hospital-owned primary care practices. Some factors to this increase include:
- Rising insurance premiums
- Drug/medical/surgical supply costs
- High consulting fees
A recent poll indicates that medical assistants and nurses are the most challenging nonphysician roles to recruit out of the many job roles needed by medical practices. This struggle is partly because the tight labor market has increased the salary of healthcare workers and partly because many experienced medical professionals are either leaving the industry or retiring early.
Additionally, the current increase in inflation has added to the burden of nearly all medical practices. MGMA revealed that 90% of practices had costs higher than their revenue, while only 10% reduced costs or kept them stable.
Of the 348 practice leaders who participated in MGMA’s poll, the majority noted staffing or labor cost as the main culprit of increasing expenses. Moreover, the most significant increase in staffing expenses has been for lower-wage positions such as medical assistants and front desk workers. One practice leader told MGMA that they initially budgeted a raise of 8% for all of their staff, but they found that they needed to add another 4% to retain them.
How Can You Maintain Your Margin During Inflation?
The 10% of medical practices that were able to maintain their revenue or hold rising costs at bay identified the following strategies:
- Eliminate Spending on Unnecessary Supplies
To keep your revenue from being overwhelmed by your expenses, limit your practice’s spending to resources necessary to keep it productive and profitable.
- Closely Examine Staff Schedules to Monitor Overtime and Overstaffing
While working overtime or hiring more people are sometimes necessary, make it a habit to monitor these expenses, so you don’t end up paying more than what you earn.
- Implement Incentives to Boost Reimbursement
If concerned about low reimbursements, you can establish financial incentives to lower costs while simultaneously delivering affordable healthcare.
- Increase Workforce Productivity Optimization
Your revenue is often reliant on your staff and how productive they are. To promote your practice’s earning potential, optimize your workforce by making processes efficient and reducing unnecessary overhead.
- Eliminate Unprofitable Services
Sometimes, maintaining a service can be more costly than delivering it. When you have an offering that doesn’t get much demand from your patients, consider eliminating it so you can focus on the ones that generate more income.
Can Your Practice Combat Inflation and Other Challenges?
Despite the overwhelming number of medical practice leaders affected by current inflation, you can implement numerous strategies to strengthen your practice’s margins during these times. These include keeping your expenses to a minimum, monitoring overtime instances and overstaffing, establishing incentive opportunities, optimizing your workforce, and removing low-demand services.
Perhaps the most impactful way to cut costs while maintaining productivity is by hiring a virtual medical assistant. Our virtual assistants at My Mountain Mover have the skills, experience, and training to execute simple and complex administrative tasks successfully.
Need help finding the best virtual talent for your practice? Book a call with us today!