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How many good months is enough?

By turtledove follow turtledove   2016 Feb 5, 9:12pm 5,657 views   24 comments   watch   nsfw   quote   share    


I feel like this is an answer I should know, or be able to look up, at least... But I have looked. There is no answer. This is my life and other people depend on me... and I live in fear that I'm going to screw up. As I've mentioned in the past, we started our practice at the end of April, 2015. It's been nine months and November, January, and February have been incredibly busy. It's really coming together. I have a part time nurse who would love to come on full time. But she will lose her health insurance if she comes on full-time (she's getting assistance from the state and has a kid). I need to bring on a front office person. I am certain that we would be okay to bring them on full time, but I get nervous when I think about adding benefits. What if next month is slower? I made $26,000 today, but what if I go a month without making any? IVF is fickle. People want to proceed then change their minds. Is three months of data (with a completely dead month in there) enough to establish a trend?

My question is this. How many months of productivity equals a trend? Seriously. I have people whose lives will be impacted by what I do. Or don't do. I'm straddling between bringing on people too soon (with benefits) or waiting until I'm overwhelmed by the number of patients and all kinds of things get missed -- because there are only so many things one person can do. But there's no way to know who is going to start an IVF cycle until they start an IVF cycle. People cancel all the time. If I were to bring some people on and they were to lose their insurance as a result and then I couldn't deliver on an insurance plan that would be devastating. I just don't know when it's okay to feel like we've established a new minimum threshold of income in any given month.

How many months of productivity would support bringing these people on with benefits and would be enough to say, "I make enough for these people to depend on me?" November was enough. January was enough. February was enough.

1   indigenous   ignore (0)   2016 Feb 5, 10:28pm     ↓ dislike (0)   quote   flag      

You have almost a years worth of data. Determine what the slow months are ( I realize you can't do that yet but you will be able to soon). Look at year over year months to see if they are up and by what percentage. Since you are light on data go to others in the same specialty and find out if their sales are up or down.

Look at the demographics for your specialty i.e. what is the age group or your patient and get the demographics for your area in that age group and what the projections are coming up.

The economy looks good for the foreseeable future so your patents may not be affected, in their thinking, by the economy.

I suspect the market will more likely be one favoring the employee, i.e. wage inflation is likely to start impinging on employers.

If I were you I would stick with part timers as there is a bigger supply of housewives who need part time work with the added benefit of they are mature workers. Plus the benefit of avoiding any health insurance benefit problems. If things get slow then you will have let people go that is just the way it is.

Also you need to have a marketing plan, i.e. how do you bring in new patients?

2   Tenpoundbass   ignore (14)   2016 Feb 5, 10:36pm     ↓ dislike (0)   quote   flag      

I'm curious for what you have to lay out on an employee in "benefits". Wouldn't it be cheaper for you, and better for the employee. To just come clean and say. Look I have to pay "X" amount of dollars for a retirement plan for you, that over the course of the time you contribute to it. 40% of your contribution will have been eaten up by fees and shady accounting. Then you'll be taxed 1/3 of it if you ever touch it, even in retirement. And then I have to shell out more money on Obamacare, then you have to shell out money as well, "Everybody pays their fare share!" Obamacare that God help you if you ever have to use it. Those premiums are just the Club fee to get the bill for anything and everything you may have done at a Doctors office, hospital or Ambulance road side assistance. Why don't I just pay you more and YOU take care of YOU?

I mean who wouldn't go for that?

Here's an extra $300 a month, pay down your mortgage.

3   Reality   ignore (8)   2016 Feb 5, 10:51pm     ↓ dislike (0)   quote   flag      

Two words: Independent Contractor.

4   indigenous   ignore (0)   2016 Feb 5, 10:53pm     ↓ dislike (0)   quote   flag      

Reality says

Two words: Independent Contractor.

The IRS frowns on that. Generally hard to do in TD's situation.

5   Ceffer   ignore (5)   2016 Feb 5, 11:28pm     ↓ dislike (0)   quote   flag      

There are agencies who will lease your employees to you and take care of the benefits. That way you aren't trying to administer pension plans, health insurance, benefits etc. etc but basically pay a flat rate for the employee. Also, the employee isn't coming to you for that stuff, they go to the agency.

If you pick up enough, you can try leasing one full timer through such an agency, most likely an office manager. Trying to administer all of the benefits can be a full time job by itself, pretty nightmarish in fact, and you probably don't need that burden unless you get really big in your practice. You'll pay more through the leasing agency, but save time and strain not having to deal with all the additional stuff.

I would stick with temp agencies and part timers until you are more secure about your cash flow. You probably get more from part timers for the time they spend there, and you don't have to worry so much about having them hang around doing nothing during down time. Part timers are often, as you have noticed, single mothers on the dole who don't want to threaten their state benefits or even section 8 housing so a lot of the don't want to be full time.

At least you are starting to get in the black, and you should attempt to go into it every day with the attitude that it will succeed rather than that it might fail. Otherwise you will second guess every little thing and drive yourself nuts. Also, these "growth pains" are some of the hardest parts of managing the business. You should also expect that there will be wide fluctuations in production, it won't be laminar, but it will always pick up again if slow. That is the real "normal", not steady production, and as somebody else mentioned, you might find it "predictable" and plan for the slow times.

Independent contractors, although they may sound attractive in terms of not paying their taxes or benefits, mostly do not qualify in the routine clerical positions in medical offices. You would issue them 1099s, but if they didn't pay their taxes, the government could come back and make you pay the taxes with penalties later, or even reclassify them as employees and get all the withholdings as well, a very expensive mess that is not worth the risk.
If you just pay them cash under the table without filing a 1099, then you have an instant blackmailer who could also cause all the above to occur or worse.

If you are racking up some additional cash, I would also consider hiring a management consultant who can basically orient you to all the ins and outs.
A good accountant can be very worthwhile. Lawyers can get you in more trouble than they are worth a lot of the time, but you should probably find one to ask questions about labor laws, contracts, leases etc. but try to keep him/her on a leash.

If you get too exhausted, you might just become disoriented and overwhelmed, so make sure you have some peaceful time and recreation planned as well.

6   indigenous   ignore (0)   2016 Feb 6, 2:11am     ↓ dislike (0)   quote   flag      

I have heard of the leasing of employees, most people just use a payroll service so it is not much of a hassle at all.

7   APOCALYPSEFUCKisShostakovitch   ignore (55)   2016 Feb 6, 5:16am     ↓ dislike (0)   quote   flag      

You want to see eight quarters in *front* of you and be able to manage more of the same and worst case scenarios - both for yourself and your contractors and maybe even employees. Coffer's right about the accountant. Find a good one with some experience in your industrial space and commercial enterprises of all sorts in general. Any book keeper can see the top and bottom line. An experienced accountant can read the streams invisible to the laity like a Mediterranean boat captain and let you know your options and their consequences.

8   Y   ignore (3)   2016 Feb 6, 6:08am     ↓ dislike (0)   quote   flag      

so when cam crosses the goalline for the 5th time sunday he can't hire a strip dancer to finish the play? 5 tds are tiring!

indigenous says

Reality says

Two words: Independent Contractor.

The IRS frowns on that. Generally hard to do in TD's situation.

9   FNWGMOBDVZXDNW   ignore (3)   2016 Feb 6, 7:13am     ↓ dislike (0)   quote   flag      

The OP wasn't really about an independent contractor vs W2, and TD probably has experience with W2 employee paperwork by now. The question is about how to project earnings. I think that DieBOA... brings up a reasonable time span (2 years) to get a good idea of what the business is doing (expected income per quarter & typical variation). But, in the mean time, you are going to have to guess, and the employees just have to understand that as a new business going full time would be somewhat risky. It also depends on your own income needs and personal financial flexibility.

I think that some lenders focus on medical practices and perhaps even your specialty. These people would be good to ask. I know with veterinary medicine, there are lenders who focus on this area. They have a lot of knowledge based on the typical trajectory of other similar practices. Having a line of credit might be helpful in a business where cash flow fluctuates a lot. Also, accrual accounting might be beneficial if your cash revenues are likely to fluctuate a lot while your costs are fixed. This is especially true if the work you do is more consistent than the cash from billing.

As far as risk goes, there are short term fluctuations (random ones you mentioned), possibly seasonal fluctuations (not sure in your line of work), and longer term economy fluctuations. I don't know how long term fluctuations are going to hit your business. You could look for peoples experiences from 2008 / 2009 to see what kind of impact it made. Your customers are not using insurance, so either have a lot of disposable income, can borrow against a house, or have equities to sell. I would think that the large income customers are the least affected by the economy and stock market. If there are no real big seasonal fluctuations, then you don't need as many months to get an idea of how much month to month variation you are experiencing. If the seasonal variations are large, it takes two years to get two data points.

These are some things I would think about in your situation.

10   lostand confused   ignore (0)   2016 Feb 6, 7:55am     ↓ dislike (0)   quote   flag      

Don't you get nurses from contractor agencies? I don't run a business, but deal with a lot of contractors-in IT though. it depends, generally if they are independent we usually keep them 2 years and then make them take a month off-but that varies by state. It is much easier if we take one from the big outsourcing companies -they can stay here for years and can't sue for benefits etc , because they are employees for another company contracted to do business with us.

Taking on full time or even a contractor-you best consult good legal advice. In a corporation, you get an entire legal dept who look at the terms of the legal aspects and considering the law suits I have heard about in my own company-it is a strange world out there.

In today's world of Obamacare and litigious society where people think the one taking all the risks and running a business is a fool-hats off to anyone who is doing it on their own!

11   indigenous   ignore (0)   2016 Feb 6, 7:55am     ↓ dislike (0)   quote   flag      

The best way to predict the future is to create it. Marketing trumps accounting.

12   indigenous   ignore (0)   2016 Feb 6, 8:27am     ↓ dislike (0)   quote   flag      

If you haven't already you may consider an individual to call on other Dr.s to get you referrals. Assuming that your specialty gets referrals from other Dr.s. The trick on this is consistency probably call on them once a month, low pressure, excellent manners, typical industrial sales.

13   FortWayne   ignore (4)   2016 Feb 6, 8:46am     ↓ dislike (0)   quote   flag      

Trends break all the time, I wouldn't in business consider the trend a "norm" without considering reserves.

Is it quite normal or possible for you to go without enough income for a few month? I don't knwo if this helps, but the traditional old school, whatever you wanna call it, business mindset is that you need enough income to go for 6 month to a year without making a penny, if you have that reserve you can go with the "trend". Otherwise, it's risky.

Hope this helps TD

14   Ceffer   ignore (5)   2016 Feb 6, 10:37am     ↓ dislike (0)   quote   flag      

If you do marketing, you have to go into it whole hog and the results may not begin to be apparent for 6 months or more, and then, you have to keep it up. If you have a commodity that can produce up to $26,000 in a day, than you can afford marketing. Good marketing will cost money. People also expect things like logos and a consistent theme to medical offices. It may seem like you are running a theme park, because you are.

"Eggs a Poppin' R US" "There's Always a Bun in Our Oven!"

15   FortWayne   ignore (4)   2016 Feb 6, 10:47am     ↓ dislike (0)   quote   flag      

Trend is a single year to see seasonal adjustments.

16   NoCoupForYou   ignore (2)   2016 Feb 6, 10:51am     ↓ dislike (0)   quote   flag      

The first year is the build up year. Most companies fail mostly because that "one year" is the magic time that it takes to get the word out and for satisfied customers to tell friends. By the time the word starts getting out, they've run out of capital.

As a recommendation from my field, I don't know where you live - Cali? - but if you do live there I bet you there is a Fertility Expo or Conference. Also, you'll be talking to a crowd that's highly interested and has done some research already, which actually pre-qualifies some potential clients (they've already looked into insurance, etc.).

A quick google search has "Men having babies" expo, for example.

17   indigenous   ignore (0)   2016 Feb 6, 12:57pm     ↓ dislike (0)   quote   flag      

Ceffer says

If you do marketing, you have to go into it whole hog

I would disagree with this. The way to go for Dr.s in a specialty is to get referrals from other Dr.s , this is best accomplished though a salesman (not a high buck guy) to build a report with the Dr. or his people.

18   Shaman   ignore (2)   2016 Feb 6, 2:17pm     ↓ dislike (0)   quote   flag      

I think pictures of adorable babies with your business name and some contact info would be enough. Maybe one picture per ad or poster or billboard but vary the picture between billboards. What you need are reliable people to do the lower-skill work so you can be free to do the very high paying work you know how to do.
A guaranteed source of steady or even overbooked customers would mean you'd have no cash flow problems to cover the employee costs.

19   turtledove   ignore (0)   2016 Feb 6, 2:26pm     ↓ dislike (0)   quote   flag      

Ceffer says

If you do marketing, you have to go into it whole hog and the results may not begin to be apparent for 6 months or more, and then, you have to keep it up.

The marketing side seems to be going very well. We established an area of surgical expertise on a hot topic that few others know how to do. We realized that we know how to remove Essure devices without a hysterectomy. There are literally only a handful of doctors in the country with the laparoscopic skills to do it. Most Gyns say it cannot be done and that the only way to get them out is a hysterectomy. Knowing this to be false as we took them out on IVF patients who hoped to conceive again, we saw an opportunity to be an "expert" in something special.

There's a site that has 25,000 women who are sick from their Essure coils. As the guy on The Doctors put it, "You guys are like the Messiah to those people." We offered them a way to solve their problem without having to lose all their organs. Since many have crappy insurance (or are on Medicaid which doesn't tend to have IVF doctors in their network), I negotiated an amazing rate with a local surgery center and put these women into groups of 3-4 on a single surgery day. They pay $4,000 cash for everything from pre-op, surgery, anesthesia, facility, pathology, and post-op. We keep $2K of that. This served as our bread and butter while we built up the IVF (which took considerably more time) and we were able to have a "surgery day" every other week. Once we became pretty well known by the patients, we started getting calls from their lawyers. So, that was the second thing that gave us additional regular income. Reviewing cases for $350/hour. As I said, the Essure thing was our bread and butter. This was the first thing that caught the attention of the producers of The Doctors and got us our first segment on the show. So, from a marketing standpoint, I feel like the Essure thing was a good move even though it isn't exactly what we hope to be known for. But it gave us an immediate way to establish an area of expertise.

While that was going on... I started hounding surrogacy agencies until I found one who was looking for an IVF doctor to work with. I found one in the Fall. They have tons of patients from China and Spain. We've become their go-to clinic. In November, January, and February, they have brought us ten cycles (each cycle is worth about $7,000 to us after the lab is paid). And they just sent me about seven more match sheets this week! So, that's proving to be an excellent marketing outreach. On the bad side, you have to be careful being to closely affiliated with any one agency, as the other agencies will fear that you might poach a client from them and send them to your go-to-agency. It's a delicate dance.

From the IVF side, I used my new contacts with the television show to talk to them about doing an IVF segment. I gave them a story and they really liked it. So, that got us back on national television, this time in a segment that covers exactly what we do for a living. I've got a good relationship with the producers. They've indicated that they like working with us and if a story comes up for another doctor and they need an IVF specialist on the panel, they will call us. So, I think I've made the most out of that marketing outreach as is possible. If I can think of another story, of course, I won't hesitate to make the most out of those contacts. Both the Essure segment and the IVF segment have follow-up segments... so each should result in 2 more appearances on the show. The first on aired on January 6 (Essure), the second on January 26 (IVF)... and the follow-ups will happen in the Spring. Each appearance has an immediate effect on the phone traffic to our office (which is what's making me want to hire a front office person because the phones are a problem. In the meantime, I've added an answering service to fill in the gaps until I figure out what to do).

I'm working on the referrals from the other OB/Gyns. That's been a tough nut to crack. The established ones already have clinics they work with. So, I switched gears on that and started focusing on newly-minted OB/Gyn practices. They are proving to be much more interested in establishing a relationship... But as you all have said this will take time to develop and see some return from the effort.

I'm sure their are other things to do, but I feel like the marketing effort has been strong (considering I'm making this up as I go along). But that's the benefit of being a small office where the owners are a husband and wife. We can switch gears so easily. No one is trying to screw the other person... We have identical goals... And for whatever reason, we work together extremely well. We have the ability to see how something goes and determine if it's working or not without having to go through a committee or worrying about who we are going to piss off. That is a luxury!!

Here are the trends that I can show. Every month since we opened (with the exception of August and December) was better than the previous month. I only have nine months of data, but based on that, I would say that August and December are the slow months we need to be prepared for each year. November had 3 IVF cycles. January had 7 IVF cycles. February has 8 IVF cycles. We have cycles booked out into March, but they aren't a done deal until the person comes to baseline and pays the fee. And our surgery program is still going very strong. There's a three month waiting list for Essure removals.

So, I think that there's enough there to bring people on... But after this year of scrimping and saving, I'm just terrified to commit to anything. There were a few weeks over the summer where, I'm embarrassed to admit, I made cereal for dinner because I couldn't afford groceries. In a perfect world I'd have a couple of months of expenses (both business and personal) in savings before I start hiring people... But I don't want to start dropping balls with patients either.

As far as agencies go, that might be a good solution for the receptionist position... but I owe our nurse a lot. She's a friend. Her son and my son are best friends. She worked for free when we were getting started. She had just graduated from her nursing program, so she was looking for some experience. While she was in school, she availed of some state programs to get through. She's living in Section 8 housing and she's on Medical. The minute I employ her officially, she's going to lose all that. So, I feel like I have to be certain. She's good people; I owe her a lot. One thought I've had is rather than offering insurance, I could offer a bonus program on IVF cycles over five each month. That would give her the money to pay for her own insurance, but if we have a slower month, I'm not having to sell my car to pay for her health insurance. Would that be an offensive offer? I could do $300/IVF over 5. So, in February, that would be a $900 bonus. And then I could hold off on the benefits plan until we are stronger and have back up savings to cover slower months, which I think are limited to August and December... but who knows?

What are your thoughts on a bonus plan?

20   Ceffer   ignore (5)   2016 Feb 6, 2:48pm     ↓ dislike (0)   quote   flag      

The problem with bonus programs is they are used by money as the employees, not earmarked for a particular need such as health insurance. Also. they can create entitlement so you have to be careful about them. Oddly enough, bonus programs also create dissension among employees who don't get them. Some think they deserve more than others, and instead of solidifying your team, it can tear it apart even if you are giving something away. Use or consider bonuses carefully and make sure they are always tied to very specific performance i.e production goals, . Also, have all employees sign non-disclosure agreements that they will not discuss wages, salaries, bonuses, benefits etc. with other employees on pain of termination, so you don't get them plotting against you when they grouse or brag to each other about what they make or don't make.

Make it clear that money talk is directed to the employers ONLY and never other employees under any circumstances.

Even though the nurse is somebody you like, you should avoid becoming intimate friends, simply because friends sooner or later no matter how good they are will engage in "friend extortion" in the workplace, often resulting in very uncomfortable situations, particularly if work performance falls down.

There is also the issue of professional jealousy. A buddy of mine calls it "class struggle"because employees are more or less relentlessly going to be envious of your status if you become successful and will go from struggling companions to green eyed subversives once the practice is up and running. They are not partners in the business and you are asking for trouble if they are not aware of the boundaries.

If you like your nurse and want to hire her full time, then you can do it through the payroll/leasing company who basically acts as the employer while you lease her labor. These companies should have all the stuff in place to give graduated benefits, insurance, vesting in retirement plan etc. It doesn't sound like you are big enough or have enough time to deal with all of their benefit packages.

21   Shaman   ignore (2)   2016 Feb 6, 5:31pm     ↓ dislike (0)   quote   flag      

Good to know about those Essure coils . . . a few years ago my doctor recommended them for my wife as we were done having children and it wasn't surgical. I got the big V done instead of that. Glad we went that option now. Sounds like a lot of women have had problems...

22   indigenous   ignore (0)   2016 Feb 6, 5:33pm     ↓ dislike (0)   quote   flag      

I agree with everything Ceffer says in the above post.

Bonuses are a slippery slope that cause more harm than they do good.

Nurses are generally all good people, cept maybe Nurse Ratched? But she is an employee like Ceffer had, keep it professional.

You are doing terrific whatever you are doing keep doing it with very little change.

You are thinking about what to invest in to further the cause. This is good cept make sure you pay all of your bills first.

Make sure that you isolate the EXACT thing that caused the your current affluence. This can be the end of a business. Usually more like the individual will think he is rich and spend the money recklessly. You are probably thinking that this does not apply to me. Unless you isolate the exact thing that caused the affluence you are guessing and being reckless with your investment. After you have paid every bill you can think of then and only then invest in the thing that caused your affluence. Which may not be more nursing help.

Many businesses make the mistake of being too dependent on income from a few sources. E.G. the day will come that your Essure coils will no longer produce revenue or much of one. The leg work necessary to produce a referral net work will come in very handy at that point. Marketing/sales is always your main focus.

23   Shaman   ignore (2)   2016 Feb 6, 5:38pm     ↓ dislike (0)   quote   flag      

Whatever you do, don't sell yourself cheaply. My wife had a big problem with that (when it came to her practice), and a book by Suze Orman fixed her of that. Cheap=no value, whether it's toasters or medical procedures. If it's inexpensive, people will flake, decline to pay, and treat you like an employee. If it's expensive, hard to get an appointment, and there are penalties for missing appointments, people will show up on time with the check so they don't miss their chance. It's the reason why restaurants sit their first customers of the dinner shift in the front window, and the reason that dance clubs like to keep a line at the door. If people are concerned they'll miss out, they'll cancel other "engagements" to keep yours. My wife had to learn this one, but it made her life much more enjoyable.

24   B.A.C.A.H.   ignore (0)   2016 Feb 7, 8:43am     ↓ dislike (0)   quote   flag      

My partner and I are lifelong employees at companies, "passive" people in This World.

But I think Indigenous' comment about Making The Future is very insightful. It works in many aspects.

Identify the goal, whatever it is, for 5-10 years from now. It can be a stretch goal, but it's gotta be realistic. Realistic don't mean constrained by fear though.

Pencil a path towards that goal with checkpoints. Then these tactical matters are just that, tactical matters. I like some of the others' suggestions of outsourcing detail stuff, so you can focus on The Path. Your "trend" is a checkpoint. If it's in line with the strategic path you're on, then it ain't broken. Don't fix it.


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