The benefits of creating a budget for independent practices August 21, 2017
Caring for patients is an obvious priority for independent physicians. Monitoring the practice’s financial situation should also be among the physician’s priorities, to ensure the practice will continue to be sound and stable as it grows. The financial aspect of a practice may be intimidating or of little interest to independent physicians who prefer to focus on the medicine rather than the balance sheet. However, the practice’s finances can be and should be easily monitored with the proper budget.
For many independent physicians, the only numbers they want to read on a daily basis are those associated with blood pressure, heart rate, or test results, numbers that can lives. Budget numbers, when developed realistically and reviewed on a regular basis as part of a solid practice management strategy, may help save the practice.
Medical Economics states that when “a budget is done correctly and regularly reviewed, it can offer many beneficial insights into the financial health—present and future—of a practice.” A monthly review of an independent practice’s budget can tell the physician whether money is being spent appropriately and whether new expenditures that may be under consideration make sense.
A practice may be considering, for example, bringing a test in-house which would require a significant equipment purchase. Setting a budget for the year, or for several years, can help the independent physician determine whether sending patients to a lab is more or less cost-efficient than purchasing the equipment for in-house services.
Creating and monitoring a budget can also help the independent physician who is considering the need to expand the need to expand staff or to market the practice. Understanding the costs involved and whether those expenses are sustainable, based on the budget, will enable the physician to plan the practice’s growth strategy more effectively.