In today’s economy, business growth is considered to be good. 

Growth is the gold standard. It’s what most business owners say they’re shooting for. We often equate growth with more revenue and therefore more profit and more success.

But is growth always what it’s chalked up to be?

For many healthcare practice owners, they’ve grown their staff, grown their client base, and grown their service offerings. Yet, things still feel hard. 

Maybe they’re constantly turning over patients. Maybe they’re spending many hours simply fighting to get paid. Or maybe they’re spending all of their time dealing with HR issues. Growth was meant to be exciting, so what happened?

In this article, we look at why growth for growth’s sake can actually cost your healthcare practice, and what you can do to turn things around.

The Growing Pains of Building a Practice

Going from a single-person operation to a practice with staff changes the landscape. It doesn’t really matter what industry you’re in. Adding people, whether that’s a new clinician, assistant, or an office administrator, changes the way your day-to-day business operates.

It’s not uncommon for us to see practices that hit this growth hurdle as they stretch from $250,000 to $500,000 in annual revenue. The topline of their financial statement keeps rising as they add staff and services, but the needle doesn’t move on the bottom line. 

On paper, revenue growth looks good for your practice bank account, but at the end of the year, there still isn’t more for you to take home. You’re working harder than ever and have nothing to show for it. 

It’s a story we hear often. So if you’re experiencing this, rest assured that you’re not alone.

Where Does the Money Go?

Scaling a business takes more than adding staff and expanding service offerings. In fact, each person or service you add can hurt your practice’s profitability if you don’t do it in a calculated and strategic way. 

To effectively scale your practice’s business, you can’t simply focus on offering a broader and more dynamic client experience. It takes smarts and business savvy that many healthcare providers don’t consider when they start a practice.

To figure out why your topline is rising but your bottom line profit is stagnating you have to take a careful look at the money. Specifically, how are you getting paid and how much is it costing you to provide services?

How Do You Get Paid?

Depending on the services your practice provides, you probably bill through a number of different channels. 

These could be steams like:

• Government
• Worker’s Compensation
• Disability
• Auto
• Private Pay 
• Contingent

Not all money is good money. If you’ve spent any time trying to get paid across these streams, you know there’s such a thing as “bad” revenue. 

Whether there’s a particular insurance company that takes so long to pay that it hurts your cash flow, or there are standardized unit rates for a particular service that make it hardly worth the time to offer, if you look closely at your income sources, you know there are streams that are more and less valuable.

Turning away business can be scary. When you were starting out, you were grateful for every patient and every phone call. But over time, some of your income streams have become more trouble than they’re worth. 

What does this mean for your practice? You may never be able to turn away patients who want to pay through a particular stream, but you can stop courting them. Have a look at your advertising. What are the keywords on your website? Will clients looking for a physiotherapist after a workplace accident feel like your clinic will meet their needs? Or are you presenting yourself as the place to go for a local homeowner who hurt his back shoveling his own driveway?

By positioning yourself as accepting yourself as a clinic for clients paying through a particular revenue stream, you’ll see more of those walk through your door, and fewer of the ones that will take weeks or months to collect on. Your cash flow will be stronger. 

But this only solves part of the problem.

What Are Your Cost of Services?

When you started growing your clinic, how did you go about doing it? Did you add another provider who offered the same services you do so you could see twice as many patients? Or maybe you added a second service offering so you could offer broader care to your existing patients?

Maybe you heard from clients that they were looking for a registered massage therapist, and it seemed like a good fit to add one to your chiropractic clinic. Or you had available treatment space and met a new osteopath in town who offered to help you cover the rent.

Services get added to clinics for lots of reasons, but unfortunately scalability doesn’t always enter the conversation until after the fact. More services means more patients through the front door, and that can only be a good thing, right?

If you’re struggling with growing revenue and a stagnant bottom line, you’ve learned the hard lesson that more isn’t always more. Not in the ways that matter anyway. In order to make it pay off, you need to make sure that introducing new services and service providers is done efficiently. 

Finding efficiencies is a 360° undertaking. If you’re adding new services without reducing the overall cost of providing those services, you’ll never see it reflected in your bottom line. 

Here are a few things to consider:

• Standardize the cost of providing care. You need to be able to compare, so you need to know the cost per patient. 
• Understand your labour costs. Are your staff paid based on fee for service or hourly? How are contractors compensated? Find a solution that has the greatest potential for increasing the profitability of your practice.
• How is your schedule managed? Are treatment rooms left empty? Is there down time as equipment is changed over from one appointment to the next? Do particular types of appointments only get made on evenings or weekends, and do you have the staff to meet those demands?
• What are your biggest cash flow problems? We talked a bit about this above, but also consider how you handle your accounts payable. If you can’t boost how quickly you get paid, are there ways to cut back expenses or go with suppliers with longer payment terms?
• Do you have solid and documented operating and training procedures? Service providers run on human assets. It’s natural that everyone wants to provide services in a way that works for them, but over time, individual efficiency can suffer, and procedures get lost in translation.

Once you have a better understanding of your cost of services, you can find the pain points that are hurting the profitability, and the practice areas that will grow both your top and bottom lines.

Where to Start?

Understanding what needs to be done and actually doing it are very different things. Auditing your cash flow when you already spend too much time just trying to get paid can feel like a losing endeavour. Having conversations with staff about improving service efficiency can be painful.

If you’re struggling with rising revenue and declining profits, it may be time to ask for help. 
At ELEVATE Practice Intelligence, we use proven techniques to find inefficiencies and identify the elements of your practice that will take your growth and profitability to the next level.

Book a free consultation today to learn more.