Your Monthly Dose of Financial Clarity + Strategy for Medical Practice Owners
🧠 Featured Insight: Why Most Medical Practices Bleed Cash—And Don’t Even Know It
Medical practices often appear profitable on paper but still face tight cash flow, mounting overhead, and unexplained shortfalls. The culprit? Inefficient financial systems that silently drain revenue.
According to the Medical Group Management Association (MGMA), practices lose up to 30% of their annual revenue due to avoidable issues like billing errors, denials, missed charges, and poor A/R follow-up.
Here are some common contributors:
- Outdated billing processes: Manual charge entry or disjointed EHR integrations slow reimbursement cycles.
- Missing charge capture audits: Services rendered but never billed, particularly for procedures and ancillary care.
- Undertrained front office staff: Errors in insurance verification or copay collection lead to denials and delays.
- Patient balances overlooked: Uncollected balances stack up if follow-up systems aren’t automated and consistent.
What to do: Quarterly financial cleanups, regular charge reconciliation, and monthly revenue cycle reviews help identify and plug revenue leaks. A small investment in process optimization can lead to tens of thousands in retained revenue over time.
📊 Numbers That Matter: Key Metrics Every Practice Should Track Monthly
Reviewing reports once a quarter isn’t enough. To lead your practice with clarity, you need a pulse on the numbers that drive financial health—every single month.
Here are three must-track metrics that reveal how efficiently your practice is operating:
- Days in Accounts Receivable (A/R)
📉 Goal: Under 40 Days (High-performers aim for <35)
⏱ Why it matters: The longer a claim or patient balance sits uncollected, the less likely you are to get paid. A rising A/R average indicates breakdowns in claims submission or patient collections. - Payroll as a % of Revenue
📊 Goal: 28%–32%
💸 Why it matters: Staffing is often your largest expense. If this number climbs above 35%, it signals over-hiring, overtime issues, or revenue problems. Tight labor controls are key to profit margin. - Overhead Ratio
🧾 Goal: ≤ 60% of collections
📉 Why it matters: Overhead includes rent, staff, insurance, software, and more. If you’re spending 65–70% of your revenue on overhead, there’s little left for owner compensation or reinvestment.
Pro Tip: Set up a simple monthly dashboard to track these KPIs side by side. Patterns will emerge, helping you catch small problems before they become big ones.
💡 Practice Growth Tip: Optimize Time-of-Service Collections
One of the most effective (and underutilized) ways to improve practice cash flow is to collect patient responsibility at the time of service. Yet many practices still bill after the visit, delaying revenue and increasing collection risk.
According to RevCycle Intelligence, 62% of patients are more likely to pay if asked clearly and confidently at check-in or check-out.
What you can do right now:
- Automate estimates and copay notifications ahead of appointments via text or email.
- Train front-desk staff to ask for balances without hesitation and handle common objections.
- Offer simple payment methods like tap-to-pay, text-to-pay, or payment plans with auto-draft.
Practices that implement these steps often see a 20–30% boost in cash flow in the first 90 days alone.
📣 This Month’s Reminder: Start Your Q4 Tax Strategy NOW
Waiting until year-end to think about taxes is a recipe for lost deductions and missed savings. Over 65% of effective tax strategies must be implemented before December 31st to count for the current tax year.
Here are a few areas we help practice owners evaluate in Q4:
- Accelerated depreciation for new equipment purchases
- Prepayment of deductible expenses
- Entity structure review (S Corp vs. LLC tax treatment)
- Retirement plan contributions and setup deadlines
- Owner compensation and payroll tax optimization
The earlier you plan, the more flexibility you have. Tax strategy isn’t something that happens in April—it’s designed now.
📬 Let’s Talk: Your Practice Deserves Clarity
You didn’t start your practice to become a part-time CFO. But without financial clarity, you can’t lead it with confidence.
If you’re behind on bookkeeping, unsure where your money is going, or want to proactively reduce your tax burden before the year ends—we’re here to help.
📅 Schedule Your Complimentary Practice Financial Diagnostic »
