And a good job he does. Richard Schoor, MD, a urologist in private practice on Long Island in New York, has started a blog to ponder solo urology practice. In his February 12 post, he had an interesting take on the decision to buy capital equipment.
What was interesting to me is that he approached the decision to buy capital equipment as a basic statistics problem. He focused on Bayes Theorem as the means of applying the probability of certain events happening to the basic projection of volume and revenue. In the end, it still comes down to making a judgment as to how to account for unknown, negative events that may occur in the future. I tend to be conservative in my projections, as I’d rather see a client pleasantly surprised by the unplanned cash coming into the practice as opposed to going out of the practice. When you add a new service, you add to the complexity of the practice. I would assume that you will not capture all referrals for the test, as some insurance plans will not approve you and some patients may want to go somewhere else for some reason. I would assume flat reimbursement, and would cut Medicare reimbursement by at least 10 percent for projection purposes. I would like to see solid profit margins – 25 percent or more – given the uncertainty of the revenue picture for physicians in the coming years.
In general, I like to see add on services that can generate more revenue per hour of physician time. That’s one of the best ways to increase revenue – seeing more patients, trying to toy with billing and the kinds of patients you see are more work and hassle than you will gain.