Knowing the per-patient financial breakdown

I’ve seen providers cringe when discussing financials, especially when breaking them down to a “per-patient” basis – as if by having the discussion we are boiling down human lives into mere numbers, and not as “people” as they so deserve to be discussed.  As an entry level practitioner years ago, I found myself cringing in the same way, choosing to live in my own professional world that somehow didn’t acknowledge that economics actually do have a part in healthcare.

It was years later that for the first time I heard the adage, “No margin, no mission.”  This resonated with me, not because it was a bold or particularly interesting statement, but because I heard this from a very compassionate, experienced, and business savvy pediatrician with whom I worked.  Wow, you mean if we can’t achieve a margin on what we’re doing, we’re not going to stay open to fulfill our mission?  Pretty straightforward, and pretty true I thought.

It was years after this that I went back to school and earned a degree in business, after which time it became crystal clear to me that physicians, physical therapists, dentists, and anyone else in the healthcare industry really need to know the numbers.  It’s not that the numbers are more important than our patients – they’re not.  They are important BECAUSE of our patients. 

Without a margin on the services we provide we will not be open for long, and we’ll do no good to anyone.  And if we want to be involved with the provision of free care to the medically underserved, which I encourage of all my clients, then we must make sure that we have good margins in the aspects of our practices that allow for it, so that we can afford to pass on these economic benefits to those that need them.

This post from Medblogger.net speaks to a recent Medical Economics publication that discusses the financial breakdown of a $100 office visit.  It’s a good read, and an important concept.

If you’re an internist who receives $100 for a 99214 office visit, expect to pocket only $41 in profit. The rest of the money goes for overhead such as malpractice insurance ($3.50), equipment and its repair and maintenance (another $3.50), supplies such as tongue depressors and copy paper ($6), rent and utilities ($7), general operating expenses such as telephones, accounting fees, advertising, medical journals, licenses, and taxes ($11), and employee salary and benefits ($28).

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