Nearly three-quarters of dental practices surveyed expect increased
revenue over the next five years, compared to 37 percent of medical
practices
Even with flat or declining revenue, 50 percent of medical and dental
practice leaders say they will focus on increasing profitability through
increased focus on patient acquisition and cash flow management
The majority of independent medical and dental practices have confidence
in their ability to grow revenues over the next five years, with dental
practices particularly bullish about the future, according to a new
study from Citizens Bank.
The 2015 Citizens Bank Healthcare Outlook found 72 percent of small,
privately held dental practices are predicting higher revenues over the
next five years, compared to 37 percent of medical practices of similar
size. The Citizens survey of the state of the industry for independent
medical and dental practices included 450 medical and dental practice
groups with fewer than 10 doctors or dentists and revenue between
$500,000 and $5 million.
“In addition to the critical roles they play in providing health care
services, independent medical and dental practice groups run very
sophisticated businesses with complicated cash flow dynamics and a lot
of opportunities to either get it right or get it wrong when it comes to
managing the bottom line,” said Lisa Enright, Senior Vice President and
Director of the HealthCare Practice Banking Group at Citizens Bank.
“This research shows that, as they grapple with changing regulations,
challenging insurance payment plans and advances in technology, medical
and dental practices also are increasing their focus on operational
excellence and strategies for profitability. Whatever their prospects
for top-line revenue growth, healthcare providers increasingly recognize
the importance of sharpening their focus on financial management.”
Though their outlooks for growth are different, independent dental and
medical practice groups share the same top business objectives.
According to the survey, maximizing revenue, acquiring new patients and
improving operational efficiency and profit margins are at the top of
the list.
Dental practice leaders attributed their optimism to growing demand for
their services – 92 percent of respondents said there is “high demand
for the type of dental service my practice offers.” They also are
confident in the business model of practices this size – most said they
expect their main competition to come from other independently owned,
not corporate practices.
Medical practice leaders noted a variety of headwinds, with 60 percent
citing lower levels of reimbursement from insurance companies. Still, 51
percent said they will aim to increase profitability by focusing more on
patient acquisition and cash flow management.
In a new white
paper analyzing the survey results, Citizens suggested six areas of
focus for healthcare practice group leaders who want to increase profits:
-
Cash flow management: With insurance reimbursements down and
operating costs on the rise, effective cash flow management is
critical. Small healthcare practices must understand their operating
costs and the financial impact of regulatory compliance. Because
factors such as the slow pace of insurance reimbursements are outside
of a practice leader’s control, it’s essential that practices bill
patients in a timely manner and have a proactive plan for dealing with
delinquent accounts, taking full advantage of tools available to help
with cash flow.
-
Establish a line of credit: Having available funds to meet
unexpected expenses is critical. With the added labor demands of
increased regulation, the uncertainty of insurance reimbursements, new
technology requirements and opportunities, and other business needs,
sufficient cash on hand can mean the difference between success and
failure.
-
Human resource management: Effective human resource management
is tied to optimal patient outcomes. That’s why it’s important to have
trained and dedicated staff or external partners to deal with
time-consuming regulatory and insurance issues so that medical and
dental staff can focus on patient care.
-
Marketing service and support: For too long, many healthcare
practices have primarily relied on referrals for new patients. In a
competitive environment, this is simply not enough. Practice leaders
need to become familiar with other marketing tools, especially social
media, which can effectively build awareness of a practice without a
significant capital investment.
-
Importance of technology: New medical or dental technology can
be costly, but can often provide a competitive advantage (or ensure
that a practice keeps pace with the competition). Practice leaders
need to understand the expected ROI of an investment in medical or
dental technology to determine whether the benefits of the technology
outweigh the cost. In some cases, a practice may be able to attract
new patients as a result of technology upgrades as long as the
technology and its benefits are effectively marketed.
-
Understand competitive landscape and implications: The
healthcare landscape is more crowded than ever. In this environment,
patient satisfaction is key to retention, which can lead to the
acquisition of other patients through referrals. The challenge, of
course, is to maintain the highest standards of patient care while
being asked to do “more with less.”
Many times, healthcare practices will choose to partner with consultants
or other third-party providers to assist with some of their challenges
and provide valuable expertise in a particular area. When choosing a
partner, a practice must make sure that the outside organization has a
holistic understanding of the healthcare landscape and the practice’s
needs, and can provide specifics on how its service can benefit the
practice.
Survey Methodology
Citizens Bank conducted a survey of 450 independently and privately
owned medical or dental practice decision-makers, with 10 or fewer MDs
(if medical) or DMDs/DDSs (if dental) and annual revenues of $500,000 to
$5,000,000 in the states of MA, NH, VT, CT, RI, NY, PA, NJ, DE, OH, and
MI.
To learn more about Citizens Bank, call the customer contact center at
1-800-428-7463, like the bank on Facebook,
follow the bank on Twitter
or visit the Citizens
Bank website.
About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and largest
financial institutions, with $138.2 billion in assets as of December 31,
2015. Headquartered in Providence, Rhode Island, Citizens offers a broad
range of retail and commercial banking products and services to
individuals, small businesses, middle‐market companies, large
corporations and institutions. In Consumer Banking, Citizens helps its
retail customers “bank better” with mobile and online banking and the
convenience of approximately 3,200 ATMs and approximately 1,200 Citizens
Bank branches in 11 states in the New England, Mid‐Atlantic and Midwest
regions. Citizens also provides mortgage lending, auto lending, student
lending and commercial banking services in select markets nationwide. In
Commercial Banking, Citizens offers corporate, institutional and
not‐for‐profit clients a full range of wholesale banking products and
services including lending and deposits, capital markets, treasury
services, foreign exchange and interest hedging, leasing and asset
finance, specialty finance and trade finance.
Citizens operates through its subsidiaries Citizens Bank, N.A., and
Citizens Bank of Pennsylvania as Citizens Bank, Citizens Commercial
Banking and Citizens One. Additional information about Citizens and its
full line of products and services can be found at www.citizensbank.com.
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