Part 4: Financial Oversight
This is the fourth article in a series on effective practice management. As noted in the introduction to this series (see Post 1), each of these articles define a building block of effective management and offer actionable strategies and advice for practice owners. So far, we’ve discussed the importance of Management Structure & Planning (see Post 1), Performance Management (link Post 2) and Human Resources (see Post 3). Here, we put Financial Oversight under the microscope.
The 4 building blocks of effective management
- Management Structure & Planning Strategic plan, Organisational structure, Budget, Decision making systems
- Performance Measurement – KPIs, Reporting, Pro-active management
- Human Resources – End-to-end employee engagement
- Financial Oversight – Handling, Reconciling and Optimising
Enjoy end-to-end oversight
Being aware of your practice costs and how it’s running is more than just a back of the envelop exercise. But we often see practice owners checking item numbers and the bank account and forgetting the bits in between (think generating and submitting item numbers, inputting the data, processing and receiving payment and then reconciliation). Without visibility over this whole process, things can go wrong with dramatic consequences.
Case study - $2m lost from faulty item numbers
A busy multisite radiology practice tasked the outgoing front desk person with the training of her replacement with just one week of staff overlap. Eighteen months later, we were asked to perform an independent practice review as financial problems were becoming evident but no-one knew where things were going wrong.
We discovered that the new front desk person didn’t know she could input three or four different item numbers for radiology accounts and instead, had been using a single item number. In this case, it cost the practice over $2 million revenue over two years.
Fortunately, we were able to get back a large part of this revenue. But the lesson was that the practice owners hadn’t made sure training was sufficient and didn’t understand where the real points that activated the engine of their business actually were.
Tools and tracking for end-to-end oversight
There are some great tools that would have helped the practice above gain important oversight of this process. For example, Xero and Myob help with the reconciliation process and can be facilitated using Surgical Partners. And Cubiko provides performance insights so if there’s a big drop off, you can quickly see why that metric is changing. Earlier in this blog series we explained the things you should be tracking. (If you haven’t read the second post in the series, go back and take a look [Post 2]) For example:
- PM time, Nursing time, Administration time
- Utilities, Suppliers
- Room, Nursing time, Real estate
- Individual doctors, Days, Sessions
- Nurses, Reports, Incentivised activities
Case study – understanding the reality of staff costs
Do you have a clear understanding of the real costs of your staff? The calculations below highlight how the team member you think costs $28 per hour actually costs you $44.53 per hour when you factor in the associated costs.
If you’re not tracking that extra $16 an hour, your budget and planning will be out. Since staff are the biggest item on your profit and loss, this is really important stuff.
Let’s extrapolate further. In the graphic below you’ll see that a $40 per hour practice manager is actually costing you $60.50 per hour. This is why paying them for 4 hours to do the bookkeeping ($242) versus a bookkeeper who costs $65 an hour (and does the work in one hour), makes much better business sense.
Case study – saving time and money with automation
A large 24 doctor GP practice had their practice manager perform manual reconciliation. This took the PM 15 hours per fortnight at a cost of $54 per hr ($1620). Surgical Partners and Xero auto-reconciliation software cost the practice $500 per month, saving 30 hours and giving 22 hours ($1120) back to the practice manager.
The importance of financial reporting
Financial reports are an essential part of the modern practice and reviewing them each month is something every practice owner should do. We’re engaged by a lot of GP practices to simply produce and interpret financial reports to make sure that owners understand what’s going on in their business and practice managers have the tools to respond to them.
Good financial reporting allows you to:
- Easily review weekly statistics
- Discuss at formal monthly meetings
- Review financial matters diligently
- Take responsive action to KPIs
- Always track to budget
- Always reference strategy
Take a whole of practice approach to practice management
Do you know why each of your team members work in healthcare? Knowing individual strengths and motivators helps you to activate your team and get the best out of them. We discuss HR in the third post in this series <link post #3>. But in short, this means you can better share responsibilities, and staff can better contribute to patient management and outcomes for the clinic and community improving both retention and morale.
Case study – engaging front desk staff to improve chronic disease management targets
A large 6 FTE doctor GP practice was struggling with chronic disease management only managing to provide 15% of active opportunities. We engaged the front desk staff in the process of identifying patients for chronic disease management. Simply by having them involved in the conversation and closing the loop between nurses, doctors and the patients the practice saw an immediate improvement and active opportunities rose to 40%. The patients felt the benefits as did the front desk staff who loved contributing to this outcome.
A whole of practice management approach means:
- Shared goals
- Buy-in to strategy
- Improved motivation and morale
- Improved professional development
- Improved delivery of care to patients
Establish your building blocks and enjoy a more effective practice
Throughout this blog post series we’ve spoken about different systems, processes and software you can bring into your practice to support your work and responsibilities as a practice owner. Bringing these into your practice may be simple or more complex, but to get clarity we suggest you review your goals and plans (Post 1), and implement the ideas we’ve suggested around performance measurements (Post 2) and HR activities (Post 3). Then imagine your team using documentation systems, software, outsourced support and specialised advice from experts like your accountant or a practice management consultant. Because the fact is, when you establish these building blocks your whole team will feel the benefits. You’ll have less worry and more time to enjoy the rewards of being a community-based doctor who’s making a difference in people’s lives.
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 (here/button to download), or phone us on (03) 8060 4277 to book a meeting with one of our helpful consultants.