[VIDEO] What radiologists need to know about finances.
In my 25 years, it is currently, financially, the most challenging time in radiology, Suresh K. Mukherji, MD, told Diagnostic Imaging at RSNA 2014.
Mukherji noted the push for doing things faster with an eye on the bottom line. In order to address these constraints, radiologists need to know about the financial statements – what are they? What do they say?
Most important, he said, is the balance sheet, the income statement, and the cash flow statement. “These are the three pillars of financial accounting,” he said.
These documents are the language of business, he said. And radiologists need to be introduced to this language. So he broke it down on a 101-level.
Cash flow statement: Determines how much cash comes in and comes out. This is very similar to your online banking account, Mukherji said.
Income statement: Determines how much cash comes in but also determines any other income you have. This statement looks at all expenses, whether they are cash or noncash expenses. This is measured over a specific time interval. It’s analogous to our tax returns, he said. “When we look at a tax return, we determine at the end of the year, in a one-year interval, how much money we made and how much money we lost,” he said. If you made money, then you have to pay taxes on it.
Balance sheet: Looks at one point in time and determines net worth. “From a radiology practice, if you do own your assets, if you do own your equipment then you have to understand what a balance sheet is, that tells you what your worth is,” Mukherji said.
“If you’re not interested in this, you should be,” Mukherji said. “Beause that really is our future right now, as our incremental reimbursements decline, we need to know what CMS is doing, we need to react to how the payors are reacting to the CMS reductions, and that specifically translates into our cash flows."