Ways to reduce the pressure (of the recession on your practice, that is)

April 3, 2009

San Francisco-If you had a very ill patient, you would examine his or her vital signs frequently. The same holds true when the "patient" is the U.S. economy, said John B. Pinto, of the ophthalmic practice management consulting firm J. Pinto & Associates.

San Francisco-If you had a very ill patient, you would examine his or her vital signs frequently. The same holds true when the "patient" is the U.S. economy, said John B. Pinto, of the ophthalmic practice management consulting firm J. Pinto & Associates.

"Read widely," Pinto said. "Educate your staff and board. Limber up your ability to respond to both threats and opportunities."

He offered ophthalmologists a number of ways to "recession-proof" their practices:

Review lay staffing levels and costs, and reward supervisors for labor cost containment. Don’t reduce staffing, however, to a degree that harms patient accounts work, reduces your efficiency, or diminishes customer service to the point of being diseconomic.

Increase communication with your partners. "Economic challenges in a practice commonly result in a sharp reduction in doctor-to-doctor harmony," Pinto said.

Eliminate business and clinical processes that don’t add proportional value. Make sure doctors and technicians aren’t duplicating history taking or testing steps. Don’t eliminate value-added services that could lead to better care or appropriate higher charges.

Limit capital outlays. Until the trajectory of the recession is clear, table non-essential purchases.

Focus on the top line: revenue production. Remember that practice revenue is driven by patient volume.

Don’t shortchange your marketing. It should remain the same percentage of collections-1% to 3%-no matter what the economy is doing.

Review tax strategy and your personal financial planning.

Assure liquidity. "Cash flow is more important than your mother," Pinto said. Examine your balance sheet for a quick ratio (current assets divided by current liabilities) that materially exceeds 1.0.

Lock in access to capital.

Review insurance coverages and practice contracts, such as buy-sell agreements.

Finally, while being smart and aware, don’t panic. "Depending on the source, economists either believe the current "great recession" is either vastly overblown, or that Western-style deregulated capitalism is going off a cliff, never to return," Pinto said. "The truth probably lies somewhere between those extreme views."