9. Successful Physicians do THIS with Their Revenue Line

Most physicians open up their profit and loss (P&L) statement, glance at the top, and see just one line: Revenue. One neat little number that seems to say it all. But while that number may look definitive, in reality it's only showing you part of the story.

When all your income is bundled together, you miss the chance to see which services are truly driving your clinic forward… and which ones are quietly draining your time, energy, and resources. Without that clarity, making smart decisions about growth feels like guesswork.

In this post, we'll dig into why dissecting your revenue line is so important, how to break down and track your different income streams, and what those insights can unlock for your profitability, strategy, and even your day-to-day energy as a physician-owner. By the end, you'll see that your "revenue line" isn't just a number, it's one of the most important tools for building a sustainable, thriving practice.

The P&L Statement Doesn't Have to Be Intimidating

First, let's demystify the profit and loss statement itself. I work with plenty of physicians whose eyes glaze over when we start talking about P&Ls, and that's completely normal. The P&L is simply a summary that shows whether your business is making or losing money over a specific period (e.g. a month, quarter, or year).

The structure is straightforward: revenues at the top, expenses below that, and then your net profit or loss at the bottom. You'll often see comparisons to previous periods so you can track whether you're growing, shrinking, or staying steady.

Note: in small business, we call it a "profit and loss statement," but larger organizations typically use "income statement." It's the exact same document, just different terminology. Don't let that confuse you!

Why Your Revenue Line Tells a Story

When I review a client's P&L statement, one of the first things I examine is how their revenue is structured. This tells me a lot about how both the physician and their accountant are thinking about the business.

If I see all revenue captured in a single line, it usually means one of three things:

• The owner only has revenue from one activity
• They haven't bothered to split their revenue sources into categories
• Their accountant hasn't separated the revenue streams in the reporting

The problem is, many physicians don't realize their clinic actually has several different revenue sources running simultaneously. And when those sources are detailed separately in your P&L, it becomes incredibly useful for strategic decision-making.

You're Already Running Multiple Mini-Businesses

Take a typical dermatology practice, for example. What looks like "one business" is actually three distinct operations:

Medical dermatology - Patient visits, often through insurance (unless it's direct care) 

Cosmetic dermatology - Cash-pay procedures that don't run through insurance 

Product sales - Sunscreens, retinoids, and other items sold to patients

Each of these functions like a separate mini-business with different cost structures, staffing needs, and profit margins. The medical visits might require basic exam rooms and standard supplies. The cosmetic procedures could need specialized equipment and higher-end facilities. The product sales require inventory management and upfront purchasing.

But it's not just dermatology. I have clients who run educational programs for other physicians, offer coaching to the broader community, do consulting work, or participate in clinical research trials. These are all very different activities with unique requirements and profitability profiles.

The Power of Gross Profit Margin Analysis

Here's where breaking down your revenue gets really interesting. When you can see each revenue source separately, you can start calculating gross profit margins for each one.

Let's say you're selling skincare products in your dermatology office. You buy an item for $10 and sell it for $20. Your gross profit calculation shows you made 100% profit on that item. Now, this doesn't include all your overhead expenses or the staff time needed to stock and sell those products, but it gives you a ballpark figure for profitability.

When you have multiple revenue sources listed separately, you can suddenly compare them to each other. Which one brings in the most money? Which has the highest percentage contribution to your total revenue? But more importantly, you can start asking deeper questions about the true costs involved.

The Questions That Matter Most

Once we've broken down the revenue streams, I walk through a series of questions with my clients to understand what each revenue source really requires:

Infrastructure needs - Do you need special equipment? Additional exam rooms? These are costs that eat into profitability.

Supply requirements - Is it just basic supplies like gowns, or do you need expensive medications? I think of oncology clinics that spend millions on drugs for their infusion centers.

Labor costs - Consider your time as the business owner, plus any additional providers, support staff, or administrative help needed.

Complexity level - Is it a simple consultation or a complex procedure? Generally, more complexity means higher associated costs.

Your energy levels - This might be the most important factor. What energizes you throughout your day? What leaves you feeling drained?

Your Energy Matters More Than You Think

This last point about energy is crucial and often overlooked. All of my physician clients got into medicine to help people in some way. If you find yourself drifting away from that core mission—even if it's highly profitable—you're not creating a sustainable business. You're creating another form of employment that might leave you feeling resentful.

Someone who's growing a clinic but feels exhausted at the end of the day, irritated with staff or patients, is not running a successful strategy. Even if the numbers say that's the most profitable path forward, we need to find another approach.

The Critical Question Every Physician Should Ask

After we complete this revenue analysis, I ask each of my clients: "Based on all the information we have, what's the revenue source you think we should grow first and why?"

They have to genuinely like their reasoning because the highest profit margin isn't necessarily where you want to put all your time and attention. Sometimes your highest margin activities are things like selling sunscreen in your front office. But the volume you'd need to run your entire business on sunscreen sales would transform your clinic from a medical practice into a product distributor.

That's an example of how focusing purely on profit margins can lead you toward a business you never intended to create and don't want to run.

Getting Started: Clean Up Your Revenue Line

If you're ready to gain this clarity in your own practice, start by working with your accountant or bookkeeper to separate your revenue sources in your P&L reporting. Make sure your EMR system and point-of-sale systems are feeding accurate information into your books.

Then begin tracking and comparing your different revenue streams. Look at the dollar amounts, but also consider the infrastructure, supplies, labor, complexity, and energy required for each one.

The goal isn't to find the single "perfect" revenue source, but to understand what you're actually working with so you can make informed decisions about where to focus your growth efforts.

Your revenue line isn't just a number. It's a roadmap to building the practice you actually want to run while maintaining the profitability you need to sustain it.

If you're ready to gain clarity on your revenue streams and make strategic growth decisions for your clinic, I'd love to help. You can email me at [email protected] or book a free discovery call at www.amandasabicer.com. Let's talk about how to break down your financials, identify your most profitable services, and build a growth strategy that aligns with both your goals and your energy so you can build the practice you actually want to run.