Forecasting Practice Results: A Tool for Planning
We are entering the last of 2007 and the early part of 2008. Most practices are trying to decide the next step in their progression for growth and improved margins. The following outline has been developed for the practice to use as a forecasting model.
| 1. Are you planning on adding any new services (ancillary)?
If so what are they and can you project the volume? |
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| 2. Do you have plans to add a new associate?
If so, when and how will they be compensated? |
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| 3. Do you anticipate hiring any new employees?
If so, how many, when and how much? |
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| 4. Do you plan on replacing or adding any equipment?
Will it generate additional revenue or will it upgrade the existing equipment? 5. Do you plan on relocating the practice? (moving to a new office) |
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If so, when, where and how much is the rent anticipated to change?
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The planning process is important for your practice to evaluate its options. The following table will assist in developing an impact analysis for your plans.
| Practice Name: | ||||
| Forecast Year | ||||
|
2006 Tax Return |
2007 Annualized |
2008 Projected |
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| Inputs: | ||||
| Collections | ||||
| Less: | ||||
| Salaries & Wages | ||||
| Repairs & Maintenance | ||||
| Rents | ||||
| Taxes & Licenses | ||||
| Interest | ||||
| Depreciation | ||||
| Advertising | ||||
| Pension, profit-sharing | ||||
| Employee benefit programs | ||||
| Auto & Truck Expenses | ||||
| Bank Charges | ||||
| Dues & Subscriptions | ||||
| Insurance | ||||
| Legal & Professional | ||||
| Medical Waste | ||||
| Office Expense | ||||
| Outside Services | ||||
| Postage | ||||
| Printing | ||||
| Seminars & Education | ||||
| Supplies | ||||
| Telephone | ||||
| Travel | ||||
| Uniforms | ||||
| Utilities | ||||
| Gifts | ||||
| Total Expenses | ||||
| Net Income | ||||
To complete: Input the 2006 information from the 2006 tax return for the practice. Input the 2007 information from your practice financials either generated by your Quicken program or by your account. Forecast the 2008 information based on your plan for 2008.
Ask the following questions:
1. Do I plan to have as many patient visits in 2008 as 2007 and/or 2006?
2. Will I give my staff pay raises? If so, how much?
3. Will my supply cost continue to increase?
4. If I add an associate, how much should I expect to make in the year they come on board?
5. Can I estimate how much impact my plan will have on my practice?
These questions will allow you to focus your attention on the key areas that will impact your practice.
In addition, the following table will serve as a starting point for evaluating your visits.
| Volume Analysis |
2006 |
2007 |
Projected 2008 |
| Total Charges (a) | |||
| Total Collections (b) | |||
| Total Visits (c) | |||
| Charge per Visit (a/c) | |||
| Collections Per Visit (b/c) | |||
| New Patients |
This information is available from your CPT or Practice Analysis.
The volume analysis will provide you insight to your revenue per visit and will aid in the projection of collections for 2008.
The key to your success and retaining value of your practice in the future will be your plan for how to maintain and grow your profit margin. Planning is the first step.
For more information, contact Mike Crosby, president of Provider Resources, LLC at (888) 776-2430 ext. 2042.
