How Physicians And Dentists Can Deal With Rising Inflation
With the rising concerns about inflation and the potential for recession, learn how physicians and dentists can deal with the rising inflation to sustain their service delivery and find new ways to grow too.
How Physicians And Dentists Can Deal With Rising Inflation
Amid the rising fears of a recession—whether shallow or deep—businesses and consumers are already facing high inflationary pressures everywhere they turn. As inflation causes the price of inputs to rise, businesses are often forced to raise the cost of products and services in turn. Inflation in the United States hit 9.1% as of July 2022… a sharp increase from the 7.0% that we saw in December 2021.
According to Bridgewater’s Co-CIO Prince, we are at the cusp of stagflation. This means that the inflation rate will be higher than the discount rate, and similarly, the growth rate will lower that discount rate. While policymakers are taking measures to tame inflation and bring price stability, it does not negate the fact that the Federal Reserve has been behind the curve on managing inflation. Altogether, the uncertain economic environment has created a great deal of anxiety among businesses and consumers. This is also reflected in the stock market volatility since the start of the year.
With inflation at 9.0%, any professionals who have joined the workforce in the last 30 years are experiencing an all-time high. This is affecting all types of businesses, including medical and dental practices. Inflation makes it challenging for physicians and dentists since most of their revenue comes from insurance companies. This means that while other companies can adjust their service fees to cover the rising cost of inputs, physicians and dentists cannot; insurance companies pay out based on the service codes and those payment amounts are not adjusted for inflation. Ultimately, their revenue remains stagnant while their expenses continue to increase, and as a result this reduces their overall income potential.
Streamsoft’s Top 4 Tips to Deal with Inflation
Medical professionals must devise strategies that minimize inflation’s effect on their business operations and potential income. Below are a few recommendations to help sustain your operations and keep the lights going.
Invest in your best assets
Many functions of healthcare involve the front office, where patients wait while the team deals with the paperwork.
Create a collaborative environment by involving your employees in decision-making, assigning them projects to lead, and creating a culture of ownership. By helping them understand their role and develop skills needed for service delivery, you can create better results in patient outcomes, brand development, cost control, and improve profitability. Research shows that happy employees create an environment that results in greater productivity which is essential to managing inflation risks.
Automate your workflows
Automation is not a singular event—it is a process. It requires a vision and the framework to achieve the benefits it promises. One way to approach automation is through cost savings. This approach focuses on improving financial performance by upskilling and reskilling existing staff and improving workflow. Another way to approach automation is by improving internal and external experiences. You can achieve this by eliminating tedious tasks and improving interaction quality, resulting in improved loyalty and brand recognition. Together, these approaches can help mitigate the rising inflation risks, talent shortages, and potential economic downturn through productivity gains and improving operating margins.
Streamlining operations helps healthcare providers deliver better services and reduce costs. It provides staff with efficient and patient-centric workflows to help fight inflation by reducing unit cost per task through productivity and patient engagement. Automation requires a commitment from the stakeholders, and when done well, it can help counter the cost of inflation and the simple costs of running a business.
Conduct a supply chain analysis
Globally, businesses of all sizes have been affected by supply chain issues. In fact, it’s been so severe that it’s one of the biggest contributors to the current inflationary environment. Supply chain issues have caused supply shortages and increased the costs of goods. For the healthcare industry, supplies are crucial to delivering patient care. Despite the continued shortages, there are few approaches that medical and dental practices can employ to manage this fluid situation.
Medical professionals can use Just-in-Time (JIT) or Just-in-Case (JIC) inventory management models or both depending on their needs and outlook of the critical supplies. JIT is a method where you receive goods from the supplier when needed. This allows the practice to remain lean and manage the cash flow effectively. JIC on the other hand, keeps extensive inventories at hand. This strategy aims to minimize the impact of supply shortages and practice’s ability to deliver essential care. However, this approach requires higher capital allocation and inventory holding costs.
Work with your banker
Medical practices should keep a keen eye on their balance sheet and cash flow. Additionally, it is prudent to work with your banker to explore available options ahead of potential needs. This gives you a safety net made up of the best options before headwinds even arise. Having a sound financial plan allows providers to manage cash flow concerns while maximizing efficiency and creating better patient outcomes. Moreover, it ensures the practice’s sustainability. By enabling accurate tracking and analysis of expenses, you can lower the overall cost of service delivery.
Streamsoft, a top medical consulting service company, is ready to help you take your practice to the next level. Our strategic assessment can help show you where you stand and where you should head. With Streamsoft as your partner, we will guide you turn by turn, help you tackle critical challenges, and capitalize on your greatest opportunities.
