According to the Medical Group Management Association (MGMA), the average EBIDTA margin for medical practices in the United States was 17.5% in 2021. However, this can vary widely depending on the specialty, size, and location of the practice.
For example, a fledgling medical practice may have a lower EBITDA margin in its first few years of operation as it invests in new equipment and staff. Additionally, some specialties, such as plastic surgery, tend to have higher EBITDA margins than others (like family medicine).
Overall, a good EBITDA margin for a fledgling medical practice would be in the range of 10-15%. However, it is important to note that this is just a general guideline and the actual margin may vary depending on a number of factors.
How to increase your margins
First, consider increasing your revenue by expanding the patient base, offering new services, or increasing fees. For instance:
- Telehealth: enabling patients to make appointments remotely, using video conferencing. This can be a convenient option for patients who live in rural areas or who have difficulty traveling to your office.
- Remote patient monitoring (RPM): RPM allows you to monitor your patients’ health data remotely, using wearable devices or other technology. This can help you to identify potential health problems early on and to provide more proactive care.
- Chronic care management: a service that helps patients manage their chronic health conditions, such as diabetes, heart disease, and asthma. This can include providing education and support, developing care plans, and coordinating care with other specialists.
- Behavioral health services: to help patients cope with mental health conditions, such as depression, anxiety, and addiction. These services can be provided by psychiatrists, psychologists, social workers, and other mental health professionals.
- Preventive care services: designed to help patients stay healthy and prevent diseases. These services can include vaccinations, screenings, and counseling.
In additiona, you can reduce expenses by negotiating better prices with vendors, streamlining operations, or reducing staffing levels. Working with a CPA, you can develop financial forecasts and consider efficiencies by using technology to automate tasks, reduce paperwork, and improve patient scheduling.
Finally, don’t forget to collect outstanding payments from patients and insurance companies promptly.
If you are concerned about the EBITDA margin of your fledgling medical practice, you should consult with a financial advisor or accountant. They can help you assess your current financial situation and develop a plan to improve your profitability.