Don’t cut staff without considering revenue implication

As you undertake budgeting and planning for the coming year — which we presume (and urge) you do — remember that cutting staff usually hinders revenue growth as it saves overhead cost.

Some other kind of business might respond well to a round of layoffs and staff cutbacks, but your practice probably won’t. The reason is simple: Productive physicians generate more revenue. And time and again physicians and managers tell us that a full staff makes that possible.

Cutting staff, in my opinion, is the last thing a practice should do (unless of course there really are too many employees around!). Unfortunately, that’s the first thing a practice thinks of in tough times. Cutting overhead is such an easy target as we all know.

So keep that in mind as you plan for 2008. In responding to tough times, don’t approve a plan that will probably pare revenue without planning for that income loss.

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.