I do believe in aggressively working to grow a business, but I do so with a caveat — I am reluctant to employ ‘bet the company’ strategies. If you’re in a ‘grow or die’ situation, then you had better make it grow. Otherwise, I like to see some sort of safety valve — not quite a “plan B”, but a means to regroup, possibly into a small practice.
We are entering the fourth quarter of 2007 with the economy in flux, to say the least. The mortgage industry has taken very bad hits as subprime loan companies are dropping — some 19,000 people laid off in August, and more layoffs to come. Housing sales finally stalled and are dropping, as are housing prices. Unemployment is up slightly, and may rise a bit more. Credit has gotten more expensive and harder to obtain. Are we headed into a recession? Maybe, maybe not. The real question is how will consumers behave, which leads to the question on your mind — how will this impact my practice?
I would plan conservatively for 2008 in developing my projections. Congress has not acted on the Medicare cuts, but in preparing the first draft of a 2008 budget this month, I would assume a 10 percent drop in revenue from all sources. The owners may have to freeze their income for 2008. I would be aggressive about shutting off lights and conserving utilities. Watch your supply cabinet inventory levels. Try to negotiate no price increases for clinical and other supplies, and seek discounts from vendors who are significant cost to you.
For purposes of cash management, set up an unsecured line of credit with your bank, if you haven’t done so already. This is simply a safety net to use carefully. You can generally lend money to the corporation as well as long as you (1) have it to lend and (2) keep records and pay yourself back.
This can also be a good time to add one or two ancillary services. Capturing additional revenue per visit is one of the few ways to increase revenue. Before doing this, just make sure that you are not running afoul of the proposed Stark
Lastly — write your congressional representative and senator. The pending Medicare reimbursement cuts must be reversed, and they should be voting now, not next year.
Good planning now enables you to play out different scenarios and you will be able to act quickly as the year unfolds. A good practice will be to hold a planning session with the physicians over the next quarter to hash out the plan for 2008. In addition, you should also hold a session with all staff, discussing the situation before you and the plans to manage through and continue to thrive. Your staff reads the paper — or watches TV and reads web sites — and will be generally aware of what’s going on. A staff meeting puts this in perspective for the staff and gives them the confidence in you that you know how to lead the practice.