How to Avoid the Most Common Money Mistakes Made in a Weight Loss Practice
— By Karol Clark, MSN, RN
Nearly every weight loss practice has wasted money to be found. The process of discovering money mistakes is nothing to dread or be embarrassed about. Instead, get excited! Discovering and avoiding common money mistakes will benefit you now and in the future.
It doesn’t matter if your practice is really big or small. There is almost always money being wasted in a variety of ways. And, no matter what you may discover in your practice, know that you are not alone! The common money mistakes outlined here happen more often than most would like to admit. Awareness, understanding and strategic action are the first steps to stopping money wasting mistakes now and safeguarding against such issues in the future.
You will find the majority of common money mistakes in four primary areas. These areas include:
- Missed Revenue
Let’s address them one at a time.
For practitioners and nearly all clinical specialists, marketing is not something commonly taught during your lengthy training. You also don’t have much time to devote to it because you are busy improving the health of your patients and saving lives. Understandably, marketing is often outsourced and, depending upon various factors, may create a recurring financial burden on your practice due to a poor return on your marketing investment.
Here are some common mistakes:
- Marketing to ‘Everyone’ Instead of Your Ideal Patients
- Falling Prey to Flashy Promises and Vanity Statistics
- Flight of Ideas and Strategies
- Focusing on Your Competition Instead of Your Patients
- Outsourcing Without ROI Metric Reporting or Interpretation
- Too Many or Too Few Offers
- Lack of Testing & Follow-Through
Below are some great ways to avoid these various mistakes:
- Take the time to define your ideal patients. Considerations include age, gender, common diagnoses, insurance type, cash pay, amount of weight to lose, pain points, goals, where they seek information, how they make buying decisions and the like. This helps to clarify your marketing methods, messaging and referral programs.
- When you track your return on investment (ROI), avoid being enamored by vanity statistics such as the number of likes or followers. Instead, focus on number of new consults, new patients, number of surgeries and revenue that comes as a result of your marketing efforts.
- Try not to keep up with your competitors. Instead, lean into your ideal patients. Understand the transformation they desire, message around this and then demonstrate how you and your team are uniquely able to help them meet or exceed their goals.
- When you engage in any marketing efforts, be sure to have a clear call to action. More is not better when it comes to patients moving forward. Confusion results in indecision.
- Measure, measure and measure some more. Understand what marketing efforts are resonating with your ideal patients and most importantly the exact steps in a campaign that are working to take a patient from interest to engagement with you/your team and action to become/remain your patient.
- Never under-estimate the value of testimonials and online reviews. Health care consumerism has illuminated this need for nearly every practice and practitioner.
- Consider organic content marketing as an alternative (or adjunct) to paid advertising. What you create has much greater longevity and potential to showcase you frequently in web searches.
- Never under-estimate the value of growing your practice through your e-mail list.
While marketing can be confusing or overwhelming, it has never been as easy as it is today to reach your ideal patients online as long as best practices are used. In a world filled with a lot of noise, you need to showcase your expertise and ability to create the transformation your ideal patients desire most.
No doubt, one of the biggest expenses in your practice is your payroll. Not only salaries for employees and contractors, but all of your employee benefits, paid time off, bonuses and the expense of getting payroll processed. This is especially true in today’s market as you compete to hire (and keep) awesome team members that contribute to your bottom line rather than stress your bottom line.
The general recommendation is to make sure your payroll costs don’t exceed 20-30 percent of your gross revenue1 — although it is common for service-based industries to have salary costs up to 50 percent of your gross revenue. For added stability, try to limit payroll to no more than 30 percent; this helps keep things in perspective and your bottom line “in the black.”
Here are the top mistakes contributing to a payroll that is too high:
- Old (Expensive) Habits Continue in a New (Lean) Reality
- More Team Members than You Need
- Underutilizing the Team You Have
- High Staff Turnover
- Rising Cost of Benefits
- Paid Time Off Policies Without a Reasonable Cap
- Overtime or Temp Agency Costs
- Poor Payroll Oversight (missed errors can cost you now and in the future)
Before you take any actions, it is important that you figure out the primary root cause(s). Whether you need help now or you are trying to avoid high payroll costs in the future, here is what you can do:
- Quantify your exact payroll costs (salaries, payroll taxes, benefit costs, contractor costs and payroll company fees).
- Determine if there are obvious “easy” answers to resolve the issue.
- Take a look at your organizational chart, roles and responsibilities to see if workloads are distributed properly.
- View each position as either revenue producing or one that saves the time of your revenue producers. (Each person has revenue generating potential from the receptionist quickly scheduling qualified new patients and ensuring your schedule is efficient to the medical assistant promoting your nutritional products.)
- Determine if the right people are in the right positions.
- Consider your overall revenue and predicted changes.
- Involve your accountant and/or HR attorney if appropriate.
- Identify possible solutions — get creative.
- Make any necessary changes.
- Communicate changes in an honest way while following federal and state labor requirements.
Involving your team to ensure each person understands their role when it comes to adding revenue and/or saving time for top revenue producers can make a big difference. This goes for your social media and marketing team as well. Every post should have a clear purpose and call to action such as attracting new patients or engaging current patients for a longer lifetime value and higher level of satisfaction.
Your mortgage or rent, fixed recurring expenses and variable expenses are the next areas that can get out of control. Take a look at where money may be going down the drain and take steps to slow or stop the leak.
Here are steps to avoid money making mistakes when it comes to your overhead and expenses:
- Determine if it is a good time to renegotiate your rent or mortgage. For any negotiating situation, do your research and know that it never hurts to ask. Even if you believe there is no room for negotiation, you can be pleasantly surprised.
- Dive into any recurring payments you are making — especially for professional services that do not have a good return on investment. You may have a contract for an app that is not being utilized or a marketing cost for social media that is underperforming. Look in your accounting software and evaluate every recurring charge you have. Call the vendor(s) providing the service and have a conversation about your findings, your expectations and a need to end the contract if there is no improvement. When you lead with a problem-solving mindset, you will find the person on the other end works hard to improve the situation. Better yet, try to avoid long-term contracts in the first place.
- Review all other monthly expenses. Determine if any can be deleted or consolidated. Look at your utilities, internet expenses, printing expenses for your marketing, collateral materials and patient education materials. Often, online vendors are less expensive. And don’t forget your biohazard waste removal and bank/credit card fees as well.
While these initiatives can be thought of as painful, they can be more of a search and find challenge with many ‘aha’ moments along the way. Focus on the savings instead of any potential feelings of regret. Once these are discovered, the next step will be putting systems in place for maximum efficiency and reporting that guards against lost revenue or overspending in the future.
Missed revenue is one of the most troublesome money mistakes because it can be an easy fix — especially when it comes to billing and collections. If you outsource billing and collections, have someone in your practice responsible for oversight and obtaining timely monthly reports. Then analyze the reports and require corrective actions as necessary.
Below are a few tips for correcting any money wasting issues when it comes to billing and collections in your practice:
- Increase the percentage of cash pay business you do and require payment up front or most up front with 1-2 monthly payments after that if you feel that is necessary.
- Require input of charges within 24 hours from the time of service.
- Run a daily report for any missed charges and don’t be afraid to assign someone in your practice to verify all surgery/office charges for the month were entered.
- If you are doing a forensic review, start with the highest charge items and dig deeper from there.
- Utilize a software system that tracks denied claims and accounts receivable for insurances as well as patients.
- Put someone in charge of following up on denied claims and allow them the time to do the necessary research.
- Be sure to have a signed payment contract in place for any outstanding balances or payment plans.
- For outstanding patient balances, have someone in your office follow-up personally first to review the balance and collect payment or set up a payment plan to avoid unnecessary collection fees from an outside company.
You may be amazed at what you find — some practices that focus here and make necessary changes have been found to bring in more revenue in one quarter than two or three previous quarters combined.
Other considerations for missed revenue may be a result of the following:
- Inaccurate Bookkeeping
- Confusing Offers
- Poor Sales Techniques
- No/Ineffective Point of Sale System for Retail
- Inefficient Team Performance
- Lack of Leadership & Accountability
If you are missing revenue, deep down, you likely know it. Taking the time to investigate these common reasons and changing course will ease the mental burden of wondering if any of these are happening in your weight loss practice and set you on a solid path moving forward.
Whether you feel the pain of wasting money or not, you and your team are encouraged to take a hard look at these most common money wasting problems. Stop the leak and reap the rewards.