Avoid false economies that undermine your practice business

Avoid false economies that undermine your practice business

In our consulting business, we find that when physician practice owners and healthcare executives have concerns about profitability, their first question almost always is something like “are we spending too much?” or “is our overhead too high?” or “are we overstaffed?”

Of course, true overspending might indeed mean generating less profit than the business could—or should. But it’s odd that looking to cut expenses has become so reflexive, considering that increasing revenue is a much more powerful way to strengthen the business. What’s more, efforts to save money may even weaken the business—and, sometimes, those weakening effects can be very hard to spot.

This is the essence of a false economy: an action that feels like a savings, but is actually costly. And the quest to keep expenses in the medical practice as low as possible often leads to these kinds of unfortunate mistakes.

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