Crash Test Dummy: 5 Signs Your Practice is Failing

Buckle up, partner, it’s time for another PookieMD biz refresher course!  This time, it’s on unmistakable signs that your practice business is about to crash and burn!

Knuckle gripping sign number 1:  You have cash flow problems.  You can’t meet payroll because you don’t have enough cash on hand.  YOU MUST BUDGET FOR CASH FLOW!  (Which leads to my even more basic rule for doing business: you must BUDGET!)

Knuckle gripping sign number 2: Expenses are greater than revenues.  Whether it’s decreased productivity, or that @%*# insurance company that pays so late, the basic rules is that revenues must be greater than expenses.  You must figure out what is happening, and how to reverse the trend.

Knuckle gripping sign number 3: You’re borrowing more than Citibank.  If you are borrowing to meet expenses, you are in deep doo.  No, the feds aren’t going to bail physicians out.  Tighten the belt, sniff the smelling salts and make a plan .

Knuckle gripping sign number 4: You hide from the postman.  The overdue notices keep on coming.  You need to structure your own bail out!  Call in the experts, and swallow the medicine.  You wouldn’t encourage a patient to ignore a breast mass, so why are you ignoring your business?

Knuckle gripping sign number 5: No one looks at financial statements.  This is a variation on the ignore the breast mass and it will go away scheme.  To get an adequate idea of how your practice is doing, you need to look at budgets, budget variances, cash flow and accounts receivable monthly, at the minimum.  In tight times, you may need to budget WEEKLY for cash flow.

So, what to do?  Just like you would tell an alcoholic, first you must recognize that you have a problem.  Next you must review your financial statements to find out the depth of the problem.  Then you must develop a plan to get back in the black.  You must budget, analyze your cash flow issues, and tighten the belt.  Lastly, get help.  Would an internist do a cardiac cath in the office?  Of course not!  Why would you try to go the financial world alone?  Get referrals from friends on good accountants and bookkeepers, read all you can, consider educating yourself through seminars, and take it one day at a time.  If you actively follow your plan, your practice can become viable again!

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