Medicine and the human body, business and finance: two worlds whose separation is often displayed by the tradition of physicians sitting on one side of the table and business people on the other side. However, it is becoming an increasing problem that there are not many people sitting in the middle of the table; those who understand both the business of medicine and the human anatomy. Recognizing the need for hybrid physicians who can interpret both languages leads to more efficient practice management both professionally and personally.
Picking a seat at the tables of practice management is becoming a critical separator among today’s physicians. Sitting on one side or the other can leave you blind to numerous decisions, the effects of which can make it seem as though you’re not even sitting at the table. Picking up on this, several universities and medical schools have begun offering business related degree and certification programs. These same philosophies have enacted a similar, vital need for physicians to implement practice management in their personal life as well.
The Role of Practice Management
While physicians may not think of their personal life when hearing the term practice management, it is important to note that it plays an essential role both professionally and personally.
At its basic level, practice management is a strategy that is intended to help physicians weather changes in the medical landscape and to adapt to evolving patient needs. A core principle of practice management lies in effectiveness; a practice must be able to operate at a fast pace, but also be flexible enough to respond to regulatory changes or other challenges it may face.
Perhaps this definition is what leads us to believe that it can only be applied in a professional setting. But, don’t physicians need a strategy to help their financial life weather market fluctuations, adapt to changing information and to ensure their wealth’s longevity? Shouldn’t their strategy keep them in a position where they can positively react when “life” happens? Shouldn’t physicians be able to run their financial life just like a practice, understanding the information at hand so they can make smarter financial decisions? Yes, to all of the above.
Practice Management: Professionally
In order to make effective decisions, physicians have to understand and interpret data from all of the different components that make up a business.
When it comes to practice management, many physicians lack the same data-driven discipline they enact when treating patients. And while part of effective practice management is having access to the right team of people who are tasked with monitoring data for you, there are still five reports that physicians themselves should be able to extract insights from:
- Profit & Loss Statement: Are you managing costs and on track to meet your goals?
- Accounts Receivable: Are you letting revenue linger in the “potential” phase too long?
- Adjustments: Are you avoiding vague categories and large dollar amounts?
- Credit Balances: These are liabilities; ignoring this report can be a costly mistake.
- Patient Balances: Patient financial responsibility is at its highest peak; are they paying?
A hybrid physician who can gain valuable insight from this data is critical whether they are running a small practice or are part of a large health network. When challenges arise or data isn’t adding up, you have to be able to recognize those red flags and know where to go management-wise or personnel-wise in order to overcome them.
Practice Management: Personally
In order to make effective decisions concerning their personal finances, physicians also have to be able to interpret data from all of the different aspects of their financial life.
The largest hindrance of the “junk drawer” methodology is that you rely on others to make decisions for you, and you can’t see how these play out across your entire financial life. This is why physicians require a framework to give their financial life structure, and to break down its complexity into four domains:
- Cash Flow: How is your wealth being allocated, and is it growing or dwindling?
- Assets: Is your wealth being put to work for you?
- Liabilities: Are these outweighing your assets and bringing down your net worth?
- Protection: Is your full economic value protected from predators and threats?
Organization may be the first stop in enhancing the ability to interpret your financial data, but this is wasted if insights can’t be extracted from the data at hand. This is why the true value in personal practice management is accessing the ability to maintain financial balance, continuously optimizing your current financial position. Extracting insights from a real-time information feed of your complete financial life allows you to turn data into effective actions, ultimately leading to smarter financial decisions.
Regaining Control Professionally & Personally
Practice management is attractive to people who want to be leaders; leaders in the fact that they are a rare hybrid breed; leaders in the fact that they are running a successful medical practice; leaders in the fact that they are forging their own financial path.
Understanding how to operate as a hybrid in the professional space isn’t just prudent to interpreting the financial implications of running a business; it also helps you gain insight into the entire patient experience you’re providing. Operating as a hybrid in your personal life doesn’t just enact sounds reasoning behind your financial decisions, but allows you to constantly evaluate your changing risk exposure. When effective practice management can be implemented professionally, the difference between strategic small business units and “home office” medical practices of the past is evident. The same is true on a personal level; a physician’s financial life can and should indeed be run as a strategic small business, with a team of people to help monitor their financial well-being and guide decision making. Both can lead to enhanced performance and increased chances of success. Both put control back into the physician’s hands.