Budget your way out of vacation guilt

Tell us if you’ve heard this one before:

In June a doctor in your practice takes a week off. Nothing dramatic. A few days of scheduled downtime. Everyone knows about it. The clinic adjusts. The schedule rearranges itself. And then the year marches on as if nothing happened.

Until August.

Suddenly cash is thin. Not catastrophic, not existential, just noticeably down. Enough to feel it. Enough for the practice manager to start checking the deposits twice a day. Enough to make you wonder what changed, even though they “know,” in the abstract, that time off means fewer visits.

The problem isn’t the revenue dip. That’s predictable.

The problem is that many practices have no model tying the doctor’s week off to the cash that never materializes months later.

So the financial hit feels random. Random feels stressful. Unplanned random can be harmful.

If you don’t intentionally build a connection between operational realities and financial expectations, the revenue cycle will do it’s thing and not tell you about it.

Here are some numbers to illustrate the mechanics:

Say a physician normally sees 100 patients a week. For ease, the average reimbursement is $100 per visit. That’s $10,000 in expected future collections tied to one week of work.

But as you know, the practice doesn’t collect $10,000 in the same week the visits happen. Wouldn’t that be nice…

Instead, the real payment pattern may look like this:

17% collected in 30 days
61% collected in 60 days
22% collected in 90+ days

So that week in June spent on the sandy beaches of Lake Lanier Islands shows up as a 17% cash dip in July, a much larger 61% dip in August, and a trailing 22% softness in September.

And the numbers look like this:

July cash is down by about $1,700.
August drops by another $6,100.
September softens by the final $2,200.

At this point, vacation days have been forgotten and everyone is left with unease. The dips weren’t budgeted, they weren’t anticipated, so now they feel like something went wrong.

Maybe collections slowed. Maybe payers are behind. Maybe the front desk is missing copays again.

No one says, “Oh, it’s because Dr. Greatwolf loves water slides in June.”

This is exactly why budgeting matters.

A budget isn’t some corporate exercise where the CFO locks everyone in a room and argues over percentages. In private practice, a budget is the only thing that lets you turn something as normal as a vacation into an expected financial event instead of a surprise disappointment.

With a proper budget you will see:

1000 fewer visits in June,
$10,000 less revenue in June
$1,700 less cash in July
$6,100 less cash in August
$2,200 less cash in September

Then you will know if the numbers are something to plan around or panic about.

Without a budget, everything feels stressful. Every dip feels like failure. Every fluctuation feels like a signal that the practice is on edge.

But with a budget, the dips are expected. A predictable shape in the rhythm of the year.

And this isn’t only about vacations. The same math applies to holidays, conferences, maternity leave, surgery weeks, seasonal volume changes, etc.

If your normal month generates $150,000 in collections, but you budget for an August drop to $138,000, then you know you need either an extra $12,000 in reserves or $12,000 in alternative production to offset the dip.

That’s the power of moving from “I feel like we should be making more and I am not sure what’s going on” to “this month we expected to be $12K lower than average collections, but we are +2.9% over budget as we opened a few additional patient appointment slots.”

Without a budgeting system and process that ties the operational to the financial, while looking at the financials a specific way, you are left to react when something feels off rather than knowing months ahead that the dip is coming.

Budgeting is how you reclaim that control. It’s how you look forward through the year with a plan.

Wrapping up

You should never feel like taking a vacation is something you have to skip. Or that a few days off is going to sink the practice.

With the right planning a vacation is just another Thursday. A good budget helps you plan, sets expectations, and eliminates surprises. Because you can’t fix hidden problems.

You can take that vacation already though.

Disclaimer: The content provided is intended for educational purposes only and does not constitute financial or legal advice. This content is not intended to create, and receipt of the newsletter does not constitute, an attorney-client relationship. While efforts have been made to ensure the accuracy of the information presented, it may not necessarily reflect the most current legal developments or regulations and does not provide a complete representation of all associated legal and compliance considerations for any given topic. Therefore, readers are encouraged to seek professional legal advice or consult with appropriate professionals regarding specific legal issues or concerns related to their individual circumstances.