All MHM clients are very dedicated individuals. Having spent approximately 15 years training and finally becoming medical professionals, they then go on to work incredibly long hours.
They do so because they actually love what they do.
All at some point all have taken the decision to start a private practice. It’s unlikely they would be my clients otherwise if you think about it. They start a private practice because they wish to make more money doing what they love anyway. To have any other objective is either (a) silly or (b) engaging in self delusion. There is no shame in admitting you start a private practice to make more money even if you love what you do.
At that point the private practice becomes a business.
As I’ve blogged many times previously a private practise must be run as a business – a business with more than a little social conscience but nonetheless still a business.
Yet, sadly, many consultant surgeons make the mistake of believing their practice / business will grow and make them rich if they continue doing what they love to do i.e. help patients. Sadly that is not true for doing what you love seldom leads to long-term financial success.
And that means, as much as you love being a Private Consultant Surgeon, you must measure the performance of your practise / business. This is the point at which the private consultant surgeon realises he/she must learn to understand financial analysis i.e. the numbers. It’s not all that complicated actually. Supplying data to your accountant every year isn’t the same as understanding the numbers behind your practise though.
Let me give you a real example. I was contacted recently by an established medical professional who, he claimed, appeared to be working all the hours God sends but said he was always broke. It didn’t take long to work out why. The first good indicator was a complete lack of financial analysis other than a tax report a little over one year old. No debtors ledger was available so the surgeon didn’t have any real idea how much he was owed. Indeed it transpired both patients and insurance companies were only invoiced monthly.
So I took the last six months worth of clinic lists and checked how many had or had not been invoiced. Quite a lot had not. I did the same with surgical episodes with the same result. This was followed by an investigation into how much had not been paid even if invoiced.
But it was also a simple case of adding up the total revenue generated for each month, calculating the total costs (room rental, monthly indemnity insurance premiums, secretarial costs etc) and subtracting one from the other. Even if any type of provision was made for tax liability was ignored (bad move!) the results were not encouraging.
The really bad news is that the consultant looked very blank when I asked which percentage of patients were referred to him from which source i.e. how many GP referrals, private referrals, recommendations from previous patients, insurance company referrals etc. It was clear this particular consultant had no real idea of how his practise or business was performing.
And that was and still is a very dangerous place for any business to be.