Building a Financially Resilient Practice: From Data to Cash Flow

Running a modern practice means walking a tightrope between delivering excellent care and staying profitable. Many owners think the answer is to simply push harder, but sustainable growth doesn’t come from hustle alone.

Dr. Hendrik Lai, a clinician and consultant with decades of experience, argues that the real key is turning data into decisions, sharpening operations, and keeping financial health at the center of leadership.

Data as Actionable Insight

“Data is kind of like garbage,” Dr. Lai notes. “You better know what you’re going to do with it before you start collecting it.”

In other words, the true value of data lies in its application. Raw numbers can overwhelm, but when data is distilled into trends and directionality, it becomes a decision-making tool. Is performance improving? Declining? Remaining stagnant? Those insights, presented in clear dashboards or visualizations, allow practice owners to make better choices.

The lesson is simple. If you collect data, use it. Practices that use data to spot early trends can make course corrections before problems get out of hand.

Rethinking Revenue Cycle Management

Revenue cycle management (RCM) is often thought of as a back-office task, but Dr. Lai stresses that it’s increasingly central to both patient experience and practice profitability. This approach integrates everything from patient scheduling and provider credentialing to claims submission, denial management and final payment.

Along with improving cash flow, this approach:

• Reduces staff burden by eliminating manual handoffs and inconsistencies.
• Creates consistency in financial outcomes, lowering the risk of surprises.
• Improves patient satisfaction by making the entire billing and payment process smoother and more transparent.

When supported by technology enablement like automation tools, integrated platforms and smart communication systems, RCM becomes a bridge between clinical excellence and financial stability.

Financial Literacy as a Core Skill

To Dr. Lai, financial literacy is non-negotiable. To manage effectively, owners must understand the basics of profit and loss statements, balance sheets and cash flow reports.

Too often, providers defer entirely to their accountants, missing the opportunity to make informed choices. Instead, Dr. Lai encourages practice leaders to sit down with financial professionals, ask questions, and even seek out online courses in corporate finance. A modest investment in financial education pays dividends when owners are able to interpret numbers and identify where the business can improve.

Instead of treating RCM as a set of disconnected steps, leading practices are embracing an end-to-end approach.

The Power of Fixed vs. Variable Costs

One of the most practical ways to strengthen a practice’s financial resilience is by examining the cost structure. Healthcare practices typically carry a very high fixed cost base of 85–90%. That rigidity makes it difficult to adapt to downturns or unexpected changes.

For smaller practices, Dr. Lai recommends finding ways to convert fixed costs into variable costs. Payroll, for instance, may be streamlined through process optimization, automation or outsourcing. The goal is flexibility, ensuring costs scale more closely with patient volume.

For larger groups or multi-location practices, the reverse often holds true. By converting variable costs into fixed costs, organizations with economies of scale can lower their per-unit expenses and optimize unit economics. In both cases, the principle remains the same: align cost structures with growth stage and capacity.

A Smarter, More Resilient Future

When practice owners move beyond putting out daily fires and embrace proactive management, they create something more powerful than efficiency: resilience. Using data as a compass, rethinking RCM, investing in financial literacy, and managing costs with intention not only strengthens a practice today but also positions it to grow in the future.

In Dr. Lai’s words, “The value of any data is the action you can take from it.” The same is true for your practice. Numbers only matter if they help you move forward.

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