Navigating the Financial Aspect of Group Practice: Smart Strategies for Managing Growth and Sustainability

Running a group practice comes with its own set of financial challenges, especially as your team grows. Managing multiple clinicians, administrative staff, and the overall expenses can feel overwhelming without a clear plan in place. In my journey of running a group practice with eight employees—including an administrative assistant and a biller who works as a contractor—I’ve learned the importance of understanding and tracking your numbers to keep the practice financially healthy.

One of the most significant shifts when moving from solo to group practice is recognizing that growth also means increasing complexity in managing finances. As practice owners, it’s critical to strike a balance between compensating your team fairly, reinvesting in the business, and ensuring long-term profitability. Here’s how I’ve navigated the financial aspects of growing my group practice and how you can too.

1. Track Income and Expenses Early On

When I first started, I found it helpful to track all my income and expenses using an Excel sheet. This allowed me to quickly calculate my profit (or lack thereof) and make adjustments accordingly. As my practice grew, I transitioned to QuickBooks Online, which I now use to regularly update and review my profit and loss statement. However, I still maintain my original Excel sheet to track Key Performance Indicators (KPIs)—such as the number of client sessions, client retention, and monthly revenue. Keeping a long-term record helps me identify patterns, such as slower months, and plan accordingly.

For anyone managing a group practice, understanding your financial data is essential. It gives you a clear picture of what’s working, where you’re overspending, and how to plan for future growth. In a group setting, tracking and reviewing these numbers becomes even more critical as more employees come on board.

2. Maximize Revenue Streams Beyond Insurance

One key challenge group practices face is the reality that insurance companies rarely give dietitians raises. This means that unless you get creative, your revenue will stagnate while expenses grow. For example, I’ve implemented self-pay packages to encourage clients without insurance or those who prefer to self-pay to commit to multiple sessions. This increases retention and helps stabilize cash flow.

In addition to self-pay, I’ve created self-guided training programs, such as a six-week course for parents of picky eaters. This offers another revenue stream that doesn’t require face-to-face time and allows the practice to serve more people. Diversifying income streams is essential to the financial health of your practice, especially as you expand your team and overhead costs.

3. Structure Pay Based on Performance

With multiple dietitians on your team, it’s essential to ensure that pay structures align with both productivity and financial sustainability. Some of my team members thrive on a salary, managing their schedules and client retention well. However, not every clinician is suited for this model. For those who struggle to reach client goals consistently, a pay structure based on client hours may be more appropriate. This ensures that compensation is tied to the number of clients they see and prevents the practice from overpaying underperforming staff.

Regularly monitoring your clinicians’ performance and adjusting pay as necessary helps keep the practice sustainable while motivating your team to meet their goals.

4. Conduct Bi-Annual Financial Audits

As your group practice grows, so do the expenses—from payroll and office space to software and marketing costs. That’s why I make it a point to conduct a financial audit every six months. This involves reviewing all of our expenses to identify any unnecessary spending and exploring where we can cut costs without compromising the quality of care or operations.

For example, we might be paying for services or subscriptions that we no longer use, or there may be opportunities to negotiate better rates with vendors. These small changes can add up to significant savings over time.

5. Leverage Supplement Programs for Additional Revenue

If your practice recommends vitamins or supplements, consider partnering with services like Fullscript. Not only does this allow you to offer your clients a discount on high-quality supplements, but it also provides your practice with a small commission (typically between 10-30%) on each purchase. Over time, this passive income stream can significantly contribute to your overall revenue.

6. Set Pricing and Manage Raises Carefully

In a group practice, you need to be strategic about setting prices—both for your self-pay clients and for insurance-based clients. It’s common for new practice owners to set their prices too low, which can lead to financial strain as the practice grows. Take into account the true cost of running a business, including rent, administrative support, software, and taxes, when determining your rates.

Additionally, while it’s important to give your staff raises when appropriate, providing generous raises each year without adjusting for profitability can hurt the financial health of your practice. As the business owner, you must carefully balance the needs of your employees with the long-term sustainability of the practice.

7. Monitor and Adjust Insurance Contracts

Not all insurance contracts are created equal. Some may pay so little that they barely cover your costs. If you’re working with contracts that reimburse significantly below your self-pay rate, it may be time to reconsider whether those contracts are worth keeping. In some cases, it makes more sense to focus on higher-paying insurance plans or to encourage self-pay options.

Don’t be afraid to drop low-paying insurance contracts if they’re holding back your practice’s profitability. This can also help free up more time for self-pay clients or those with better-paying insurance plans.

8. Market Your Practice Consistently

Keeping your group practice profitable requires a steady stream of new clients, which means consistent marketing is non-negotiable. Whether through social media, SEO, or local partnerships, make sure you’re actively marketing your services to ensure your clinicians’ schedules are full. In addition, offering educational content—such as blogs, webinars, or newsletters—can help establish your practice as a trusted resource, bringing in more clients over time.

9. Plan for Taxes and Save Accordingly

One of the most common mistakes group practice owners make is underestimating the tax burden. Make sure you’re setting aside enough funds throughout the year to cover quarterly and annual tax payments. This will prevent any unpleasant surprises during tax season. Work with an accountant familiar with private practices to help you navigate deductions, quarterly payments, and other tax-saving strategies.

Conclusion: Building a Sustainable Group Practice

Managing the financial aspects of a growing group practice requires careful planning, regular monitoring, and smart decision-making. By tracking income, expenses, and KPIs, diversifying revenue streams, and auditing your expenses regularly, you can ensure that your practice remains financially healthy while continuing to grow.

Whether you’re just starting out or are several years into running a group practice, staying on top of your numbers and making informed decisions is key to long-term success. Take time to review your financial data regularly, make adjustments where necessary, and don’t be afraid to pivot when certain strategies no longer serve your business.

Your group practice can thrive both financially and professionally if you stay proactive and committed to building a solid foundation for growth.