Maximize revenue: Work smart, not harder

Kissimmee, Fla. - In developing a successful aesthetic/cosmetic office practice, whether an existing, disease-based practice or a newly launched one, the goal should always be: Work smarter, not harder.

That's how William Philip Werschler, M.D., sums up what's necessary for managing and marketing a dermatology practice.

Dr. Werschler, assistant clinical professor of medicine/dermatology at the University of Washington School of Medicine, discussed those goals and how to reach them during a seminar he presented here recently at the Orlando Dermatology & Cosmetic Conference.

According to Dr. Werschler, office efficiency is the sum of three parts - time management, cost controls and revenue-production analysis. In order to develop these efficiencies, a dermatologist must first implement office protocols, especially those surrounding cosmetic-practice performances. The ability to assess cosmetic performance, he says, hinges on the management information system (MIS) and adds that the quality of data produced is directly related to one's ability to assess performance.

"Quality information is characterized by four attributes: It is timely, consistent, organized, useful and comparative," Dr. Werschler says. "Quality information is timely if it's delivered in a reasonable enough time frame to take action. It's consistent if the data is presented in the same format. It's organized if the format in which it's presented is easy to use. Quality information is useful only if the data included is relevant to questions that come up, and it's comparative if the data allows for comparison between periods of time."

Dr. Werschler says dermatologists should demand quality data reports from their MIS vendor, and if they don't understand these reports, they should not hesitate to ask questions. Once the quality of information is established, it will be far easier to reach the above-mentioned goals.

"Time management relates to the highest and best economic use of all personnel in the office, including you, the doctor," Dr. Werschler says. "Simply put, are you working most efficiently? Could you pay someone else to do the job you're doing for less than the value of your time? Do you actively manage your schedule, including cancellations, no-shows and late patients? Do you consistently run on time according to your schedule?"

He defines cost control as having a budget and understanding the differences and differing impacts of fixed, variable and blended costs.

"To control costs, you must first understand where they are coming from and which direction they are heading," Dr. Werschler says. "Capital budgeting is the most effective method of understanding and controlling costs. Develop and maintain a budget and you will learn about cost control."

Revenue production analysis, he says, is understanding where your money is coming from, that not all procedures or patients pay the same, and that somewhere in the patient/procedure mix is a "sweet spot," where the doctor can attain a reasonable level of optimized performance consistently. It is also seeing, learning and believing that it is not the number of patients a doctor sees that determines economic performance and profitability, but the revenue generated per patient encounter.

"Consistently, the most efficient and productive cosmetic dermatology practices are not the busiest by volume," Dr. Werschler says. "You need to carefully monitor your performance so that you increase your revenue per encounter. Seeing more patients per day is not a measure of efficiency or profitability."

In Dr. Werschler's view, increasing numbers of dermatologists today are achieving office efficiency by taking three major approaches. First, they are actively diversifying their income portfolio by offering more cosmetic procedures. Second, they are increasingly utilizing physician extenders (PEs), especially physician assistants, a step that has contributed substantially to the expansion of service volume in dermatology offices. Together, the addition of PEs and the expansion of cosmetic procedures and product offerings help to generate passive revenue streams.