To succeed, the office needs financial reports. And it is the manager’s responsibility to see that the doctors pay attention to those reports, that they understand them, and that they take action to keep the numbers on the right track.
Thus, it is not just the reports but how they are drawn up and how they are presented that makes the difference.
Every day is best
Start with basic reports and present them often – preferably daily or at the least weekly. Delay and the numbers become historical rather than current. The office needs current numbers so it can address losses before they become serious and anticipate problems before they occur.
Make the reports as short as a single page so the doctors can glance at them quickly.
Show the amount billed and revenues for the day. Show the new and established patients seen that day and identify them by payer class – Medicare, Medicaid, worker compensation or other.
Show the number of cancellations and no-shows.
When the numbers look askew, the office sees the problem immediately and can stop and ask, “What does that mean?” A high number of no-shows, for example, might mean staff need to confirm appointments or the office might have to charge for missed appointments.
One pediatric practice that saw patients for six months hardly got paid a penny. The physicians were busy so nobody stopped to see what payments were coming in. Meanwhile, patients were not getting payer approval. Daily reports would have prevented that situation from occurring.
More at the end of the month
At the end of the month, give the doctors a more complete report.
Show the overhead and operating costs, the revenue, and the gross charges and receipts to date and compared to last year.
Show too each doctor’s aging accounts receivable, and show it by payer class. What more important asset does an office have than its accounts receivable? The office needs to know immediately if they are being held up. If Medicare is in the over-120-days column, for example, something is seriously wrong.
It sounds mercenary, but the doctors need to know the number of referrals and who is making them along with the dollar value of what each doctor is referring. Then it is possible to concentrate on the sources of good business as opposed to regular business.
The report also needs to show the physicians’ salaries and benefits. However, you should list them separately. Doctors tend to focus on their net salaries and forget to count the benefits they take out of the business such as continuing education, travel, insurance, vacation, and even their bonuses. Those too are part of the salary and the doctors need to see them as such.
Your attention, please
The numbers are only part of the picture, however. Keep in mind two points: Physicians are busy. And they are not accountants. The reports have to be something they are willing to look at.
- Use graphics. Doctors prefer pictures to numbers. Also use color. Color makes anything easier to understand.
- To show relationships, use pie charts. When doctors see a major slice as personal income, they are smiling.
- To show comparisons, use bar graphs. One bar higher than the other is much easier to comprehend than the same comparison in numbers.
- Give percentages. Then the doctors can see that eight cents of every dollar goes to rent.
- It is also effective to present numbers in descending order, such as the highest expense to the lowest.
- In addition, doctors want to see the bottom line. So express the numbers in personal terms, such as, “If you can reduce this expense by X%, that will bring in $Y a year, and all that will go to you.”
- Throughout the report, write brief summaries of why the numbers are what they are. Explain, for example, that the overhead is high because the rent is excessive. The doctors could be working in the Taj Mahal of professional rental property and not realizing it.
Your neighbor is doing better
Another way to get doctors’ attention is through benchmarking. Because doctors can’t discuss their fees, to a great extent they work in a vacuum. The only way they can know if they are doing well is to see how their own practices compare to the rest of the industry.
Research and subscribe to statistical studies on salaries, incomes, patient ratios, expenses, gross charts, accounts receivable, and so on. Those studies do more than show where the office stands; they show where it needs to make improvements.
By themselves, numbers get lost. Comparing them to a benchmark makes them jump out, so the office can identify its problems.
One client office saw that its medical supply expenses were far greater than the national average. It found that the staffer in charge of supplies was buying them through a retail pharmacy rather than searching out better wholesale prices. Had the office not seen a benchmark, that loss would have gone undetected.
Three points about presentation
1 Don’t just email or hand out the reports. The doctors won’t look at them. Instead, meet with the doctors and go over each item.
2 Have detailed figures to back up what is on the report. Once the doctors start talking about any individual aspect of the money they will want to see why it is that way. They want to know what the office expenses cover and whether they can get the printer ink cheaper elsewhere.
3 Capitalize on the victories. When problems occur, doctors tend to blame the manager. They think the manager is in control of everything. So toot the horn. Tell the doctors, “I want to bring your attention to the fact that our phone costs went down because we changed to XYZ company” or, “Our costs here have gone down because we have joined a purchase group.” There may be many negative numbers as well, but harp on the positive points and bring them to the doctors’ attention.
One physician in charge of each
It also helps the manager to have different physicians responsible for different financial aspects of the practice. With one physician in charge of the pension plan and another in charge of office operations and still another responsible for the salaries, the manager always has one person to turn to and does not have to get approval from all the doctors.
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