MedEsthetics—business education for medical practitioners—provides the latest noninvasive cosmetic procedures, treatment trends, product and equipment reviews, legal issues and medical aesthetics industry news.
Issue link: https://medesthetics.epubxp.com/i/111786
COST PER PATIENT An analysis of patient profitability compares the costs of all activities used to support a specific patient or patient group. welcome, co���ee services, followup calls and visits that ultimately make up the total cost required to meet the patient���s needs. An analysis of patient pro���tability compares the costs of all the activities used to support a speci���c patient or patient group with the revenue generated by that patient or patient group. To determine the total cost of performing a particular procedure, the expenditures for all professionals involved (i.e., the support sta���, supplies and a portion of the overhead costs) must be considered. To apply a similar strategy to determine the cost of servicing a particular patient, practice owners can use ���activity-based��� costing. 60 MARCH/APRIL 2013 | MedEsthetics Activity-based costing requires an extensive analysis of the amounts spent by the practice on both the procedure and service to the patient. Tis di���ers from general accounting processes that reveal the cost of operating a practice over a set period of time���a day, a week, a month or a year���and dividing that ���gure by the total income in that timeframe to produce an average cost. To perform an e���ective activity-based cost accounting review, the help of an accountant or CPA is advised. Converting Unpro���table Patients Te ���rst step in turning unpro���table patients into valuable assets is to determine whether the relationship can be improved. A practice owner or manager who believes in holding onto every patient���no matter what the cost���may never see the medical aesthetics business reach its maximum earning potential. Tere are a number of strategies that can be used to turn unpro���table patients into pro���table patients, including: ��� Pricing services and products more e���ectively ��� Improving internal processes to reliably predict the impact of business decisions on total system costs ��� Negotiating discounts and payment terms with the patients (i.e. if there is a problem with slow pay, practices may require payment at the time of service) Te one question many practice owners or managers often ignore is whether their best business decision may actually involve letting some of their least pro���table patients go elsewhere. While this may seem like an illogical suggestion (particularly in a bad economy), having the wrong patients can hold a practice back from real success���despite the temptation of short-term pro���ts. If the problem is not addressed, the facility may ���nd itself in a di���cult position, with minimal pro���t margins and an inability to accept new and more pro���table patients. Accounting for acquisition and service costs helps practices develop more targeted marketing campaigns and more realistic pricing strategies. When detailed enough, that same cost accounting can also reveal who your most pro���table patients and patient groups really are. ME Mark E. Battersby is a Philadelphia-based freelance writer specializing in ���nancial and tax-related topics. �� ISTOCKPHOTO.COM patient���in terms of pro���tability���while another patient may spend more per visit, but require so much support and outreach that she ends up costing the practice money. Te best way to evaluate the pro���tability of a speci���c patient or patient group is to keep track of all interactions with that patient or patient group over a two- to four-month timeframe. Many practices determine procedure costs based on the cost of the service provider and the product used plus a percentage of their overhead costs. Missing from this measurement is additional support, including the receptionist���s