In this chapter we talk about spending money, tracking expenses, setting
budgets, banking, and all that wonderful stuff.
Everyone brings issues to this chapter. Most of you have lots of school
debt and money is a topic that is very personal. Most every physician I know
tends to want to skip over the topic of budgets, bookkeeping, and account-
ing. Even if you enjoyed math class, this is drudgery for most. By the time
clients get to me to convert or develop a concierge medical practice for them,
they’ve already got a relationship with an accountant who is a family friend,
relative, or mentor.
Money matters for physicians is something you have to learn to manage
like bad- tasting medicine. Open the hatch, drop it in, make the face, and
move forward. Financial reports are no reﬂection of your character—no
matter if they are red ink (loss) or black ink (proﬁt). They just are what they
are. You will have to learn how to discuss a raise with an employee without
feeling you are being challenged, and stand and deliver when it’s time to tell
a client about the price of your services.
It is critical that you learn how to manage money for your business and
personal life. Did you know you can be proﬁtable and still not have enough
cash on hand to pay your bills on time? You have to understand about cash
ﬂow and setting up ﬁnancial procedures from the start of your new business.
This chapter starts by having you select an accountant to work with. They
will help you with your accounting procedures, bookkeeping, and beneﬁts
and taxes. They prove their value when they help you legitimately lower
your tax burden and show you how to optimize that which you work so
hard to earn.
174 ◾ Handbook of Concierge Medical Practice Design
Here are the questions you need to ask your accountant:
◾ What kinds of taxes will I have to pay?
◾ When are the deadlines?
◾ How can I reduce my taxes appropriately?
◾ Which expenses are deductible?
◾ How can I prevent embezzlement?
◾ How should I pay myself in the beginning? Will it change?
◾ Should I use the cash method of accounting or accrual?
◾ How do I keep track of inventory I sell, if any?
◾ How should I handle payroll taxes?
◾ Do I have to collect state tax? If yes, from whom?
◾ What if I do business in more than one state?
◾ What about retirement?
◾ What kinds of retirement program should I plan to offer long- term,
◾ What else do I need to know?
Your overhead, or ﬁxed expenses, is the amount of money you have to
have each month, even if you don’t see one patient or make one sale of a
concierge membership. These ﬁxed expenses include rent, utilities, insur-
ance, phone, and administrative salaries.
There is a term you should become familiar with—your cash burn rate.
This is the amount of cash you spend each month. This can be different
from your ﬁxed expenses, depending on what you spend on variable
expenses. This can include equipment, marketing consulting, temporary
help, and so forth.
There are also variable expenses, which are the amounts you spend
based on how many ofﬁce visits, procedures, or concierge memberships
Other terms you must understand include the following:
Revenue: The amount of money received from sales.
Income: The amount of money from any source, including money from
loans or as a result of investments.
Proﬁt: Money you have remaining after deducting all your costs. There are
two kinds, gross and net proﬁt. The gross proﬁt is the money that remains
after deducting the cost of goods sold, but before deducting general and