These last couple of years have proven challenging for all businesses. This new financial year has already seen many obstacles.
Employee superannuation contributions are lifting to 10.5%. The minimum earnings of $450 before paying super has been scrapped. This coupled with the increase to the minimum wage of 5.2% is affecting small businesses across the country. The Reserve Bank Governor, Philip Lowe stated in an interview on ABC on the 14th of June that he expected inflation to hit 7% by the end of the year.
This has a twofold effect on healthcare practices:
1. Increase in expenses, particularly staffing which is the biggest cost to any small business.
2. The treatment recommended to patients may not be converted because of cost-of-living pressures.
What I would recommend is for healthcare owners to look at:
1. Reducing expenses:
• Consumables are a “relatively” low cost, but a high turnover. PPE has increased markedly over the last couple of years. It is worthwhile to check you are still getting good pricing from your suppliers compared to their competitors.
• Lab fees - I would never recommend for labs to necessarily be outsourced overseas, but perhaps shop around to other local labs to consider pricing. Always remember that quality and price go hand in hand.
2. Conversion rates - understand why patients may not be taking up recommended treatment. In understanding this, decisions can be made as to the best way forward. Treatment has always competed with new cars, private school fees, holidays and now more so the cost of living.
3. Are new patient consultations being booked? If not, you may have to look at your marketing strategies and business relationships with referrers.
• You may be able to offer other incentives like free whitening at the end of treatment.
• It may also be a time to consider payment plan options for patients. There are many buy now pay later (BNPL) options available on the market like Afterpay and Zip Pay, plus providers like Denticare.
• Gift cards for referring a friend. (Note: You would need to understand how much a lead costs, before working on how much the gift is worth).
5. Complete a cash flow forecast for the year and monitor this against actual data monthly to ensure you are reaching your goals.
These recommendations will help with your practices business performance in challenging times. Analysing and understanding how the cogs of your business affect many areas within the practice can build business resilience and sustainability. Through my experience, I see practices from a strategic perspective and work with you in your practice in understanding what might be happening and giving guidance as to what can be done to improve your bottom line.
To learn more about how I can help your health care practice, visit my services.
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organisations that the owner may or may not be associated with in a professional or personal capacity unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club organisation, company, or individual.