Most medical practices are aware that this year may pose a significant challenge in the form of a recession. Initially, economic troubles were simply a side effect of the transition to a post-COVID world. However, as three years pass, it becomes more apparent that the rising inflation rate is more than just transitory. As we approach yet another challenging economic year, practice decision-makers are looking for ways to navigate through the troubles that come with 2023 – rising inflation being one of them.
According to an MGMA Stat poll, 58% of 700 practices say staffing is the most prominent challenge they are dealing with heading into 2023, followed by rising expenses.
While inflation and wages are rising, reimbursement is going down. This fact is one of the many reasons practice decision-makers spend significant time calling, interviewing, and training new team members, only for most of them to leave within the first 90 days. According to another MGMA Stat poll, the medical assistant job role is one of the most challenging to fill.
On top of financial factors, burnout is increasing at an alarming rate, causing many physicians to leave the medical field or retire early. Furthermore, 2022 saw an increase in stress or burnout levels in 80% of healthcare leaders.
The most evident result of rising inflation rates is a spike in the cost of goods and other resources, which wouldn’t be a problem if revenue also increased, but that isn’t what’s happening. 9 out of 10 medical practices reported that their growing expenses dwarfed their revenue.
While gas prices have slowly dropped, consumer goods and medical supplies costs remain high. The non-labor items with the most significant price increase are drug and administrative supplies, facilities, and IT.
Navigating Through These Challenges
With the threat of inflation bleeding into multiple areas of your practice, you should have a game plan to combat it – here’s how:
Assess Your Finances
Money is one of the most critical assets in any business, especially in medical practices. It fuels both workforce and access to resources. Cash can be hard to come by during a recession, so the best first step to combating rising costs is to evaluate your available finances so you can get a solid idea of how much you can and cannot spend.
Set a Realistic Budget
During times of crisis, the standard strategy for most people is to eliminate unnecessary costs. However, this method isn’t wholly applicable because there are some services that medical practices can’t function without. Instead, you can delegate specific budgets, giving more to very profitable services and less to those with more minor demands.
Evaluate Your Collection Strategy
Because medical practices often offer essential services, you can only increase your prices by a little. You can shift your focus towards collecting the money owed to you from patient deductibles, as you need to do so to avoid leaving money on the table.
Maximize Revenue Opportunities
A high-inflation economy might not be the best time to explore other ways to earn more money, but that doesn’t mean you can’t revamp your current business strategy to make your practice more lucrative. Some examples would be targeting an untapped patient demographic to attract new demand or offering promotions to boost sales volume.
Leverage Creative Staffing Solutions
When general costs are high and the workforce is low, opting for creative staffing solutions is hitting two birds with one stone. In recent years, outsourcing virtual talent like virtual medical assistants have seen an increased demand because it gives medical practices access to experienced and knowledgeable talent without incurring a high cost. Companies such as My Mountain Mover specialize in providing virtual assistants for the medical sector.
Will 2023 Be a Bad Year?
The economic forecast for 2023 might not sound the best, but that doesn’t mean your practice would have to fall victim to its challenges. Combating inflation is less about being meager with your expenses. Instead, it’s more about being smarter with how you spend and earn.
With the right strategy and team members, 2023 can become another year of growth for your medical practice.