How to Strengthen Your Audiology Practice Finances

Authored by: Frank Vinopal – Partner, CPA

Running a private audiology practice involves more than just providing patient care. It requires attention to financial well-being. I’ve spent a considerable portion of my career working with healthcare professionals, and I understand the balance between clinical care and business management. One of the most common discussions I have with practice owners revolves around profitability, not as a buzzword, but as the foundation that allows for high-quality patient care. While financial performance may not always be the first priority, having a solid grasp of key financial indicators can help identify areas for improvement and highlight opportunities for growth.

Understanding the financial side of your practice doesn’t mean shifting focus away from patient care. Instead, it provides a clearer picture of where your practice stands and where small changes could lead to meaningful improvements. By monitoring the right financial metrics, you can make informed decisions that support both the health of your business and the quality of care you provide. Below are some of the most important financial factors to consider, along with practical ways to strengthen your practice’s financial position.

Revenue per Patient

Many practices rely heavily on hearing aid sales for revenue, but this approach may overlook other significant sources of income. A patient’s total financial contribution extends beyond the initial sale to include diagnostic assessments, follow-up care, and counseling. A 2022 survey by the Hearing Industries Association (HIA) found that hearing aid sales make up only part of the overall revenue picture.

Source: The Hearing Review

To build a more comprehensive and sustainable financial model, consider:

Offering bundled services to maximize patient value
Optimizing appointment scheduling to increase efficiency
Reinforcing the value of additional care through patient education
Encouraging regular check-ups and adjustments for better long-term support

Cost per Patient Acquisition (CPA)

Every dollar spent on marketing should contribute to building relationships with new patients. Understanding CPA helps determine whether marketing efforts are leading to actual patient growth or if resources are being wasted. The Medical Group Management Association (MGMA) reports that medical practices typically spend 4-6% of their gross revenue on marketing, but the return on investment can vary widely.

To improve CPA and marketing effectiveness:

Track referral sources, patient demographics, and engagement levels
Compare digital marketing with traditional print advertising to determine cost-effectiveness
Focus on patient education and community outreach to increase word-of-mouth referrals
Optimize online presence through search engine optimization (SEO) and social media engagement

Gross and Net Profit Margins

Profitability benchmarks give a clearer picture of financial health. According to the Academy of Doctors of Audiology (ADA), a net profit margin of 15-25% is common for audiology practices. If your margins are lower, it may be worth examining operational costs and pricing structures.

To improve profit margins:

Regularly review supplier agreements and renegotiate service contracts
Identify areas where spending can be adjusted without sacrificing quality
Analyze pricing strategies for services and products to ensure profitability
Reduce unnecessary overhead costs, such as excessive staffing or redundant software subscriptions

Patient Retention Rate

Acquiring new patients is important, but keeping them engaged over time is even more valuable. Research indicates that increasing patient retention by just 5% can lead to a 25-95% increase in profits. Patients who return for ongoing care not only contribute to consistent revenue but are also more likely to refer others.

Ways to improve retention:

Provide high-quality service and strong communication
Follow up after appointments to check on patient progress
Implement a recall system to remind patients of check-ups and adjustments
Train staff to engage with patients about their long-term hearing health needs

Average Transaction Value (ATV)

Increasing revenue doesn’t always mean raising prices. Instead, consider whether patients are being offered additional services or products that align with their needs.

Ideas to increase ATV:

Offer accessories such as hearing aid dehumidifiers, batteries, and cleaning kits
Provide comprehensive hearing wellness programs and tinnitus management services
Introduce membership-based maintenance plans for long-term patient support
Review past sales data to identify opportunities for expanding service offerings

Accounts Receivable (A/R) Turnover

Waiting too long for payments can create financial strain. The Small Business Administration (SBA) recommends an A/R turnover of 30 days for most businesses, yet many audiology practices struggle with outstanding invoices.

To improve cash flow:

Establish clear payment policies and communicate them to patients upfront
Offer multiple payment options, including online and automated billing
Send timely reminders for outstanding balances
Regularly review billing processes to identify and resolve inefficiencies

Operating Expense Ratio

Spending on operations is necessary, but excessive costs can eat into profitability. Comparing expenses to industry standards can highlight areas where adjustments may be needed.

To keep operating expenses in check:

Periodically review staffing costs, office supplies, utilities, and software subscriptions
Assess whether technological investments, such as automated reminders and EHR systems are providing real value
Reduce unnecessary expenditures without compromising patient care
Identify opportunities for bulk purchasing or supplier discounts

Hearing Aid Return Rate

A high rate of returned hearing aids can indicate issues with patient expectations, improper fittings, or a lack of education on device use. Returns not only impact revenue but can also affect patient trust and satisfaction.

To reduce hearing aid returns:

Analyze return data to identify patterns and problem areas
Improve the fitting process to enhance patient comfort and satisfaction
Provide clear instructions on adjustment periods and proper device use
Offer follow-up appointments soon after fittings to address concerns early

Staff Productivity

Your team plays a significant role in the success of the practice. If productivity levels are low, it may be due to unclear workflows, insufficient training, or administrative burdens that take time away from patient care.

To boost staff productivity:

Evaluate appointment scheduling and patient flow to reduce bottlenecks
Clearly define staff roles and responsibilities to improve task delegation
Conduct regular training and performance reviews to identify areas of improvement
Use technology where appropriate to reduce administrative workload and allow staff to focus on patient care

The Bottom Line

Taking a closer look at financial performance allows for better decision-making and long-term stability. Regularly reviewing these key metrics provides a clearer understanding of where the practice stands and where adjustments can be made. Even small changes can have a significant impact over time.

At MBE CPAs, we work closely with private practice audiologists to help them make sense of these financial metrics. Our team provides guidance on everything from improving cash flow to optimizing profitability. I personally attend audiology conferences across the United States to stay up-to-date on industry trends, ensuring that we offer relevant and informed advice. Whether it’s analyzing patient retention strategies or identifying ways to reduce overhead costs, we’re here to help you build a stronger, more financially secure practice. If you’d like to discuss your numbers and what they mean for your business, reach out. We’re always ready for a conversation.