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4 things every practice owner should know about effective practice management – Pt2

Part 2: Performance management - benchmarking, reporting and agility

This is the second article in a series on effective practice management. As noted in the introduction to this series Part 1, each of these articles define a building block of effective management and offers actionable strategies and advice for practice owners. In our last article we discussed how management structure and planning are vital to your business health and growth, see  Part 1. Here, we put Performance Management under the microscope.

‘You can’t manage what you don’t measure’. It’s a well-known phrase and yet if you’re a practice owner who’s just measuring money in the bank, you’re not alone. But the fact is, this isn’t a particularly sophisticated way to look at your business. And it doesn’t take into account other important measures of effective practice management, such as office operations or satisfaction when it comes to both your patients and your staff.

The 4 building blocks of effective management

  1. Management Structure & PlanningStrategic plan, Organisational structure, Budget, Decision making systems
  1. Performance Measurement – KPIs, Reporting, Pro-active management
  2. Human Resources – End-to-end employee engagement
  3. Financial Oversight – Handling, Reconciling and Optimising

How do KPIs help?

KPI’s are measurable values used to track how your practice is achieving its business objectives. They ensure that your team’s performance is supporting your goals and are front of mind when business decisions are being made. While every practice and its goals may be different, KPIs should always be things you can measure and respond to.

Good KPIs:

  • Trigger management conversations
  • Have a logical relationship to performance
  • Should be straight forward to measure
  • Prompt action that impacts outcome

Indicators of practice performance

When GPs were asked how their practice was going in CommBank’s GP Insights report August 2021, survey responses revealed a majority of practice owners were experiencing:

  • static or decreased revenue
  • reduced profits
  • increased number of patients
  • increased proportion of bulk billed patients
  • increased operating costs

These are the headwinds – conditions that lead to a decrease in value or growth. They are the things you should be measuring inside your practice on a day-by-day, week-by-week, month-by-month basis. Knowing you’re not alone in experiencing these sorts of headwinds may be something of a comfort. But if you can measure them, get insights and respond to them, you’ll practice and your profits will be better off.

How to choose the right KPIs for your practice

There are many KPIs you can measure, but having worked with hundreds of doctors’ practices across Australia, here are the ones we recommend as a good place to start.

Staff cost
e.g. Ratio admin staff per session, Total admin cost per session, Total admin cost per patient.

When measuring staff costs, actual numbers can be derived from information you’re probably already managing inside your business. They’re easy to calculate when brought together in a benchmarking tool or a reporting process, and deliver valuable insights as shown in the case study below.

Case Study

While doing some business management and optimisation for an eight doctor Sydney-based GP practice with three admin seats at front of house, we asked, ‘How do you decide how many admin staff work on any given day?’ Their approach to rostering was ‘No empty seats’.

 

Our analysis revealed the simple cost of staff per session was higher on Friday mornings and Wednesday for reasons around room occupancy and the type of activities on those days. By tracking the cost of staff and how much staff was needed, we suggested they could leave empty seats on those days and move some activities to other parts of the week.

As a result, the practice now pays less for staff while keeping the quality of care for patients and doctors high.

Doctor revenue per hour
e.g. MBS item number analysis, $ per hour, $ per session, Admin cost per $ revenue

By tracking these metrics day-by-day, week-by-week, month-by-month trends will become clear to you and then they can be optimised. Some metrics will be derivative calculations but if you’ve got this information coming in, it’s a powerful way to watch how the practice changes. A system like Cubiko can help.

Case Study

A five FTE (full-time equivalent) GP practice in Melbourne had a standard session of 12.30 – 5pm. One of the doctors had begun leaving at 3pm to pick up her school aged kids and as a result, was bringing less revenue to the practice. It was an important change in activity and the practice was taking less money for the room and per admin staff as a result. While a profitable business may be happy to have some downtime in the room and could consider reducing admin staff, charging the doctor more to keep the session was an option. Controversial maybe, but worth considering particularly in a marginal business.

What other KPIs can I measure?

KPIs should highlight all the moving parts of your business and capturing data gives you performance insights which act as a guide to help you fix the leaks. Here are some more examples of KPIs you could be measuring.

Patient experience

Doctor performance (Metric: patient satisfaction surveys)

Patient booking methods telephone/online (Metric: cost of administration vs. technology)

Staff performance

Activities compared to position description (Metric: team competency)

Staff engagement

Staff feedback (Metric: management effectiveness, culture, staff turnover)

Practice manager time allocation

Do you know what your practice manager is doing and how their activities compare to their position description? (Tip: If they’re spending time on bookkeeping, payroll, HR or on the front desk it’s a very expensive way to run a business!) Three metrics to measure here would be:

Metric: value for money for PM

Metric: competency of PM

Metric: comparison against outsourced options (bookkeeping, payroll, HR consultant)

Hypothetical case study

The practice owners of a six FTE doctor metropolitan bulk billing practice want to move to a mixed billing model. Though there will be some anxiety about losing patients, asking these questions will help:

‘What’s a GP appointment worth?’

‘What does the patient want to pay?’

‘What’s the cost to the practice?’

‘Can we justify the change we’re asking of the community?’

 In our experience consulting medical practices, we’ve found that moving to dynamic pricing is an easy way to take that step from bulk billing all patients towards valuing sessions differently. For example, many patients are willing to pay for convenience. In this scenario, this is what we’d suggest:

Step 1: Rank consulting times according to demand

Step 2: Plan higher fees for times of highest demand

Step 3: Introduce OOP fee for times of highest demand

Step 4: Gradually introduce OOP fee over months to cover more time

Adding just $5 OOP for 10 highest demand hours will deliver more revenue, and increased hours and fees can be planned for while retaining several hours bulk billed at the least busy times of day. Data analytics will show what success you’re having in terms of revenue per session, as well as patient satisfaction and engagement. These can be optimised with timely adjustment.

KEY TAKEAWAY: Invest in data analytics

Bogged down by the day-to-day, many practice owners don’t prioritise sitting down to look at   

important metrics. But it’s vital to understand the data if you want insights into the health and progress of your practice, and make informed decisions about improvements.

Data analytics is an easy way to have information at hand that helps you respond when and how you need to, and there are a number of tools that can help you get the data you need. If you or your practice manager don’t have the time or capability then seek external expertise. Getting help to develop meaningful KPIs via a little a bit of consulting can quickly reap benefits bringing you thousands of extra dollars of revenue and relieving you of hours of hassle down the line.

Next time we’ll be looking at the third essential building block of effective practice management – Human Resources – and how you can stay ahead of the curve to attract and keep top talent.

If you’d like to find out more about how you can streamline your medical practice with outsourced support, feel free to download our eBook, or phone us on (03) 8060 4277 to book a meeting with one of our helpful consultants. 

CONTACT

Hoxton MPM
Suite 2.02,
116-118 Thames Street
Box Hill VIC 3128
Phone: 03 8060 4277

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