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Physical therapy business profit margin dropping
Question
March 29, 2006
wHEN A BUSINESS BEGINS TO SEE THEIR PROFIT MARGINS DECLINING, WHAT IS THE FIRST THING TO DO. IS IT CUT EXPENSES(SALARY FREEZE/ HEALTH INSURANCE) OR TRY TO BECOME MORE EFFICIENT BY EVALUATING PROCEDURES AND CUSTOMER SERVICE. inCREASE MARKETING EFFORTS?
OUR BUSINESS IS PRIVATE PRACTICE PHYSICAL THERAPY- WE ARE AT TIMES LIMITED IN SEEKING HIGHER REIMBURSEMENT FOR SERVICES BECAUSE WE COMPETE WITH BIGGER THERAPY NETWORKS WHO UNDER BID FOR LOWER PAYING CONTRACTS.
jEANETTE
OFFICE MANAGER
jEANETTE - USA
10681
Answer
You need to take a step back and examine your Business Plan. It you don't have one, it is a good time to write down a plan of how you expect to make money.
Determine who is your competition for clients and patients. Then determine what services you can provide that is different and better than the "big boys". Can you get a more personal approach in dealing with your patients? Are you in a more convenient location? Do you have better hours? Do you have better skills? Are you in a highly specialized area of physical therapy that the others don't cover?
You need to clearly define why customers should come to you instead of a network that charges less. Then you can advertise and market your advantages. Also, note that if your clients are happy, they will give referrals. That is very important in a smaller business.
You want your workers to fell they are part of a team that is doing a service to people in the community. If workers are appreciated and feel they are needed, they will often accept less compensation. But an impersonal wage freeze or such makes for unhappy people. They need to be partners in your efforts.
It is always good to look to areas of waste and improve the way all jobs are done. Getting input from the workers will allow you to find problem areas. I know a dentist who charges 25% more than other dentists but still has great business. He also has a weekly staff meeting with the team to plan out the upcoming activities. People seem to like to work there.
I hope these ideas helped.
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