5 Mistakes Doctors Make When it Comes to Their Finances
Doctors’ expertise lies in treating their patients, but when it comes to running their own businesses, many don’t know where to start. Michael J. Sicuranza, President and Senior Financial Advisor at Affinity Wealth Management, says that private-practice doctors are seeing shrinking revenue due to decreased reimbursement rates, higher overhead costs and in some cases the Affordable Care Act. “The cost of benefits and taxes are up, and the competition from hospitals offering the same services are squeezing the smaller practices,” says Sicuranza.
As a result, doctors have less financial security, and the value of their practices is decreasing. Below are five financial mistakes doctors often make and the solutions to bring their practices success.
Michael J. Sicuranza, President and Senior
Not running your business like a business
Today, with the confluence of rapidly evolving technology, shrinking reimbursements, high overhead, more competition from specialists, clinics, and hospitals, shortage/saturation of doctors in specific locales and recent tax reform (with doctors now excluded from the small-business deduction), success for the private-practice doctor can prove challenging. The key to that success is “approaching their private-practice as a business,” says Sicuranza. This starts with cementing exactly what you want your patient experience and business to look like.
Not having a financial team of experts
If unchecked, the systems doctors have set up for their finances can become inefficient. Sicuranza recommends doctors gather their team of finance professionals together at least yearly. This can be more costly in the short-term but vital in order to make sure the business is on track. Many doctors have a CPA, financial advisor, business attorney and an insurance agent, but they tend to do their jobs in a bubble unless otherwise encouraged.
Not having a properly designated retirement plan
Doctors often set up a 401(k) at the start of their practices. Sicuranza suggests as the business grows, doctors should have a fiduciary perform their due diligence in order to readjust any misalignment, reduce fees, and seek out better investment options. Secondarily, Sicuranza recommends that when practices have excess cash flow, they should consider other retirement plans in addition to the 401(k).
Not having a succession plan in place
In theory, doctors should start secession planning as soon as they start their practice, and it should evolve. Realistically they should start at three to five years before they plan to leave their practice in order to find and hire a replacement, groom them, and most importantly, integrate them with their staff and patients.
Not focusing enough on patient experience
Sicuranza suggests offering unique opportunities, such as a pediatrician providing a seminar for new parents. This adds value to the practice.
Being pro-active is also important, says Sicuranza. A new trend is concierge-style medicine, where patients pay a monthly fee and a doctor is on a retainer. Going outside of the system is the new normal. And make time to market your business. Anyone with a small business knows the value of a strong network, but doctors need to network with other doctors as well as specialists. Doctors need to make sure patients know they are accepting new patients, Sicuranza says. As simple as it may sound, word of mouth is still the most effective marketing tactic. The patient experience should remain center focus for doctors. They should deliver what they offer and acknowledge that even in the field of medicine, there is competition. Despite all other societal or economic changes, medicine is still a relationship business. A good patient experience and a professionally run practice remain at the heart of a successful financial future for doctors.
Affinity Wealth Management offers its clients a full spectrum of financial services with a focus on uncompromising service and deep personal relationships. Michael J. Sicuranza, President and Senior Financial Advisor at Affinity Wealth Management, LLC., serves medical professionals, their practices and families.
Affinity Wealth Management LLC – An SEC Registered Investment Advisor
2961 Centerville Road, Suite 310
Wilmington, DE 19808
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