{"id":6705,"date":"2025-08-02T08:00:00","date_gmt":"2025-08-02T16:00:00","guid":{"rendered":"https:\/\/huddlestontaxcpas.com\/?p=6705"},"modified":"2025-08-04T16:59:46","modified_gmt":"2025-08-05T00:59:46","slug":"ways-to-increase-medical-practice-profitability","status":"publish","type":"post","link":"https:\/\/huddlestontaxcpas.com\/blog\/ways-to-increase-medical-practice-profitability\/","title":{"rendered":"What\u2019s a Good EBITDA Margin for a New Medical Practice?"},"content":{"rendered":"\n<p>When launching a <a href=\"https:\/\/huddlestontaxcpas.com\/cpa\/medical-professionals\/\">medical practice<\/a>, understanding your financial benchmarks is essential\u2014especially your <strong>EBITDA margin<\/strong> (Earnings Before Interest, Taxes, Depreciation, and Amortization). This metric reflects the profitability of your operations before non-operational expenses and can help you measure your practice\u2019s financial health.<\/p>\n\n\n\n<p>According to the Medical Group Management Association (MGMA), the <strong>average EBITDA margin for U.S. medical practices was approximately 17.5% in 2021<\/strong>. However, that average masks a wide range of variability depending on <strong>specialty, size, location, and maturity<\/strong> of the practice.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What&#8217;s Considered a &#8220;Good&#8221; EBITDA Margin for a New Practice?<\/h3>\n\n\n\n<p>For <strong>fledgling or newly established practices<\/strong>, an EBITDA margin between <strong>10% and 15%<\/strong> is generally considered healthy. In the early years, margins tend to be lower as practices invest heavily in:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Equipment and technology<\/li>\n\n\n\n<li>Staff and onboarding<\/li>\n\n\n\n<li>Marketing and patient acquisition<\/li>\n\n\n\n<li>Leasehold improvements or office build-outs<\/li>\n<\/ul>\n\n\n\n<p>Moreover, some specialties like <strong>plastic surgery, dermatology, and outpatient surgical centers<\/strong> tend to command higher EBITDA margins due to elective, cash-pay procedures and higher reimbursements. Conversely, <strong>family medicine and primary care practices<\/strong> often see thinner margins.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How to Increase Your EBITDA Margin<\/h3>\n\n\n\n<p>Improving your <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/considered-a-healthy-ebitda\/\">EBITDA margin<\/a> means increasing revenue, controlling expenses, or ideally, both. Here are actionable strategies tailored to medical practices:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">1. <strong>Expand Revenue Streams<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Introduce Telehealth Services<\/strong><br>Offer virtual visits for follow-ups or chronic care management. Telehealth can attract patients from rural areas and reduce no-shows.<\/li>\n\n\n\n<li><strong>Leverage Remote Patient Monitoring (RPM)<\/strong><br>Use wearable or connected devices to monitor chronic conditions like hypertension or diabetes\u2014boosting patient engagement and generating additional billable services.<\/li>\n\n\n\n<li><strong>Offer Chronic Care Management (CCM)<\/strong><br>Provide ongoing care coordination for patients with multiple chronic conditions, a program often reimbursed by Medicare.<\/li>\n\n\n\n<li><strong>Add Behavioral Health Services<\/strong><br>Integrating <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/is-therapy-deductible\/\">mental health services<\/a> (e.g., therapy, counseling, or psychiatry) into your practice addresses a growing need and increases billable hours.<\/li>\n\n\n\n<li><strong>Focus on Preventive Care<\/strong><br>Encourage screenings, vaccinations, and annual wellness visits. These services are often covered by insurance and contribute to better patient outcomes.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">2. <strong>Control and Reduce Expenses<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Negotiate with Vendors<\/strong><br>Regularly review vendor contracts for medical supplies, software, and services. Don\u2019t hesitate to shop around or renegotiate terms.<\/li>\n\n\n\n<li><strong>Automate and Streamline Operations<\/strong><br>Use practice management software to automate scheduling, billing, and follow-up reminders. Reducing paperwork and manual entry saves both time and labor costs.<\/li>\n\n\n\n<li><strong>Right-size Your Staff<\/strong><br>Ensure your staffing levels align with patient volume. Cross-train employees to improve flexibility and coverage without overstaffing.<\/li>\n\n\n\n<li><strong>Optimize Your Office Space<\/strong><br>Sublet unused office space, or consider shared locations if you\u2019re not operating full-time. Flexible leases or co-working spaces can reduce overhead.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">3. <strong>Improve Collections<\/strong><\/h4>\n\n\n\n<p>Outstanding patient balances and slow insurance reimbursements can severely impact cash flow. Work with your front office to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Collect co-pays and deductibles upfront<\/li>\n\n\n\n<li>Send timely statements and reminders<\/li>\n\n\n\n<li>Automate follow-ups for unpaid balances<\/li>\n\n\n\n<li>Use billing software to flag claims needing attention<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Consult a Financial Expert<\/h3>\n\n\n\n<p>If your EBITDA margin isn\u2019t where you want it to be or you\u2019re unsure how to benchmark your performance, consulting with a <strong>CPA or <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/medical-practice-start-up-tips\/\">healthcare financial advisor<\/a><\/strong> can be invaluable. A specialist can help you:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Set up proper accounting structures<\/li>\n\n\n\n<li>Forecast cash flow<\/li>\n\n\n\n<li>Analyze your cost structure<\/li>\n\n\n\n<li>Recommend strategic tax planning tools<\/li>\n<\/ul>\n\n\n\n<p>Launching a medical practice is a major undertaking, and profitability doesn\u2019t happen overnight. But with strategic planning and the right financial oversight, you can steadily grow your EBITDA margin and build a thriving, sustainable practice.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When launching a medical practice, understanding your financial benchmarks is essential\u2014especially your EBITDA margin (Earnings Before Interest, Taxes, Depreciation, and Amortization). This metric reflects the profitability of your operations before non-operational expenses and can help you measure your practice\u2019s financial health. According to the Medical Group Management Association (MGMA), the average EBITDA margin for U.S. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":7574,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[230],"tags":[],"class_list":{"0":"post-6705","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-medical","8":"entry"},"_links":{"self":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts\/6705","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/comments?post=6705"}],"version-history":[{"count":2,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts\/6705\/revisions"}],"predecessor-version":[{"id":7575,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts\/6705\/revisions\/7575"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/media\/7574"}],"wp:attachment":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/media?parent=6705"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/categories?post=6705"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/tags?post=6705"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}