Physician Office Budgets (Keeping Costs Efficient) 

Posted by Tom Ricketts on

One of the most crucial elements to running a successful business is also one given the least amount of thought: budgeting. The following guide will help you and your office operate on an efficient and balanced budget!

Step One: Revenue

Divide revenue into categories by function. Separate costs and incomes into sections based on services your office offers i.e. x-rays, physical therapy, lab testing, etc. After splitting up the main categories of your budget, it’s helpful to further compartmentalize your services as this will clarify spending habits and ease the process of decision making regarding specific areas of your practice.

Be sure to pay attention to possible changes in income based on insurance, rebates, and the like.

Step Two: Expenses

After you’ve outlined the different aspects of your business, divide every section into two more categories: Variable and Static

The Variable category will contain expenses and revenue that would, as Vantage Clinical Solutions describes, “diminish or cease upon closure of your medical practice for a period of a month or so”. This includes hourly staffing, utilities, supplies, maintenance, etc. (Source). 

The Static category will include the opposite, or the things that wouldn’t change if your business were to halt for a month. Things to include in this category are “salaries, lease payments, dues/subscriptions, and contractual advertising expenses” (Source). 

Step Three: Net Income

Account for ALL revenue and expenses then subtract the former from the latter. This will result in your practice’s net income.

Expenses - Revenue = Net Income (Profit)

Step Four: Efficiency

With all parts of your business outlined into simple categories, it is now in your hands to follow your budget. Determine which areas of your business are overspending or underspending, cut unnecessary expenses, or increase spending in a certain area if the total profit allows for it. No matter how you chose to allocate your funds, the most important aspect of budgeting is following your plan!


Some Things to Consider…

  • Your business operates by reliance on others. If supplier prices or patient volumes change, adjust your budget or seek more cost-efficient prices i.e. Troy Biologicals
  • Ensure anything purchased has to be approved by you (or someone with knowledge of the intricacies of the budget).
  • Ensure the necessity of all contracted services or subscriptions
  • The right level of detail is important, too much and decisions could become difficult to make, too little and “trouble spots” will be hard to find (Source).

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