Strategy and Service Line Profitability
Situation and Challenge
A solo practitioner radiologist with a very successful practice asked us to review his business. While he was generating a good income, he was also working long hours.
He wanted to better understand the economics of the business in order to set the most advantageous strategy for the practice. Ideally, he wanted to make modifications to the business model which would result in the same level of income with less physician hours and no impact to patient care.
We developed a financial model which bifurcated the income statement and determined the fully loaded profitability of the major service lines that the physician’s office provided.
We determined that one of the service lines was quite profitable while the other ran at essentially breakeven. We explored and forecasted options which included adding a new doctor, changing the service mix, implementing efficiency measures and splitting the practice. We also factored in reduced clinic hours for the doctor.
The physician implemented a number of initiatives to improve efficiency and profitability. He also added another physician to the practice and transitioned to a more manageable work schedule.