Is your ‘check engine’ light on?

A typical scenario is that a practice thinks they have proper inventory controls in place and one day they learn that their profitability just isn't what they think it is.  They find that something significant has gone wrong and they are hemorrhaging cash.  But they don't know why.

This is typically a scenario in practices that don't have a failproof, disciplined financial monitoring system in place that provides them with early detection of crucial practice metrics that have moved into an 'unacceptable' zone.  This is akin to the red 'check engine' light coming on in your car.  Your car might not quit immediately, but it is telling you that something significant isn't right, and you need to take notice immediately and run some diagnostics to determine exactly what is wrong.  Whether it's inventory costs, lack of sufficient markup on drugs, failed capture of lab costs, leaking radiology fees, failed capture of revenues in your billing process, or some other cause, you need to identify what it is and fix it immediately.

This scenario is common.  To prevent it, use a simple financial dashboard to monitor major financial and practice metrics that are easy to use and rapid to assess.  It will save you from serious negative consequences of unexpected changes in your practice.  It serves as that 'check engine' light in your car.

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