Money Matters

Three – that’s the magic number for private practice

There are three big costs in business – one visible, the other two almost invisible.

The first cost – the visible one – is pretty obvious: the cost of the money you spend or the consequences of the actions you take.

I think we’re all aware of those. Costs such as indemnity fees, room fees, secretarial fees…the list goes on.

The second cost is invisible to most. This is the cost of not putting your prices up, even if it’s just to match the inexorable increase in your costs due to inflation. In other words, if the rate of inflation is, say, 2.5%, and you don’t raise your prices for a year, that’s a de facto price cut.

Think about it. The medical insurance companies sure have.

The third cost is also invisible. It is the opportunity cost of NOT doing things.

For example, you might have a great idea about how to publicise your practice and so get in more patients. Or an idea of a new service you could provide (health checks or ‘personal MOTs’ for example) which would again increase your practice income as you could promote this to past as well as new patients.

Or you might see something a colleague is doing in their practice and think to yourself “Hmm, maybe I should try that”. And yet, when it comes down to it nothing gets done. That new idea doesn’t get implemented. That new service doesn’t get created. The practice doesn’t get promoted.

And that’s the nigh-on invisible cost: the opportunity cost. The income you didn’t get because you didn’t implement the idea.

So I’m going to buck the trend this New Year. I’m not going to talk about resolutions – nor have I made any.

But I am starting the year with the words ‘Opportunity Cost’ right at the very front of my mind. I just hope I can keep it there over the coming year.

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One Response to “Three – that’s the magic number for private practice”

  1. jfletcher says:

    The cost associated with not doing something because one simply doesn’t get around to doing it is not an example of opportunity cost. As Wikipedia defines it: “Opportunity cost is the cost of any activity measured in terms of the value of the next best alternative forgone (that is not chosen). It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices.”

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