Smaller groups and solo doctors continue to wonder if they can even survive this period of slow growth, let alone continue with plans for expanding, building, recruiting, or upgrading technology. Though the economy will continue to stumble along, practice management experts generally agree that “not investing” in your future is a poor choice. It’ll require creativity and even more attention to detail, but in the end you’ll be better off.
There may not be another class of business owners more risk-averse than physicians. Minimizing risk is drilled into medical students, and practicing in our highly litigious society further cements the mindset. That general characteristic may find a sluggish economy bringing out the financial “bears” in many group practices.
A few years ago, you and your partners fought back panic as you listened to your 401(k) manager try to explain who cracked your retirement nest egg and why it was running all over the table. Some groups fired their fund managers; others reorganized portfolios—selling stocks and thereby locking in their losses.
But few observers predicted that healthcare— once regarded as recession-proof—would feel the effects as acutely as it had then. In retrospect, the reason is obvious: Folks paying ever-increasing out-of-pocket expenses are thinking more like customers and less like patients. They’re asking, “How badly do I really need that test, that procedure, or even that office visit?” Not too badly, it turned out.
All this has left many practice leaders quite shaken and the memories of the recession linger. So it’s still very tempting to restrain all non-essential expenditures and then define “non-essential” very, very narrowly. No one would argue against controlling expenses—diligently eliminating waste and constantly seeking out the best prices for all operational costs. But today’s well-run practice has very little “fat” left in the budget, and it may well be time to consider new investments in the medical practice.
Holding back means you could inadvertently restrict resources that hamper your efforts to maintain or increase productivity. Group practice physicians who pocket above-average incomes almost always have higher overhead rates, more support personnel, and more office space that their lesser-earning peers. Simply making draconian spending cuts might have you working “harder” rather than working “smarter.”
Another temptation for nervous medical practices in uncertain times is to shelve or seriously cut back strategic plans for practice growth. Perhaps you’ve spent money and time trying to recruit new providers, and now you’re wondering if you have enough business to justify adding to your staff. Maybe you’re just about to sign the papers for purchasing a new EMR or PM system, and now you’re not so sure about increasing your monthly capital costs. Or perhaps you were interested in developing a new service line that requires a six-figure piece of medical equipment. It seemed like a “sure thing” several years ago but then economic downturn eliminated any new spending. But what about now?
Only you can decide whether it still makes sense to pursue your strategic plans considering the sluggish economic outlook. But as you evaluate your situation, remember that the American economy is recovering, albeit slowly. And it would be a shame to forfeit long-term income-growth opportunities in your medical practice for the sake of protecting current income levels in the short run.