Monday, April 27, 2009

Developing a Prospective Revenue/Expense Budget

The management of a busy medical practice is challenging.  With declining reimbursements physician owners are looking for strategies to boost revenues and to cut costs.   Effective practice management requires the evaluation of potential threats and opportunities confronting the practice.  Good financial information allows the physician-owner to act in a decisive and timely manner.    The ability to quickly assess, develop and apply proper information and analysis provides the avenue for greater success.  The ability to continually measure actual performance as compared to forecast helps take the guess work out of overall practice management.  The development of the Prospective Revenue Budget is the start of a successful practice management strategy.

 The year-to-year visibility of selected financial metrics offers a solid basis with which to plan future investments, projects, and new products or service initiatives.  The review of historical financial data should be your first activity when developing a prospective budget.  Key metrics to consider are:

  • Net Collections per Encounter
  • Total Annual Patient Encounters per Provider
  • Average Patient Encounters per Day
  • Number of Providers and Available Working Days

It is with these key metrics that the Prospective Revenue/Expense Budget is created. 

The Prospective Revenue/Expense Budget is a straight forward financial control tool.  It provides the physician-owner and practice manager visibility to revenue expense control opportunities.  Top line sales can grow through a number of avenues; adding a provider, adding new service lines, increasing patient encounters aggressive third-party payer contract management and managing practice expenses.  Controlling expenses becomes a more manageable task once you know where the money is going and how expenses compare to national benchmarks.

 Furthermore, the Prospective Revenue/Expense Budget provides the mechanism for physician owners and practice managers to collectively discuss the financial health of the practice, set and prioritize practice goals, and helps focus the practice management team on specific annual objectives, while simultaneously managing the expenses.

 Developing a Prospective Revenue/Expense Budget requires the collection and evaluation of the following components:

  • Examination of historical financial and production data,
  • Assessment of current and future productivity,
  • Events that impact productivity, e.g., provider vacation, holidays, conventions or meetings,
  • Current daily average of patient encounters per provider.

The Prospective Revenue/Expense Budget utilizes condensed expense categories.  By doing so, unnecessary detail is avoided, providing a “big picture” view for each category. Understanding the big picture and its relationship to benchmarks values is the starting point for proactive financial management.  Key benchmarks, represented as a percentage of net collected revenue, to examine include:  support staff payroll, support staff benefits burden, occupancy rent, furniture and equipment, administrative supplies and services, medical supplies, professional liability insurance, other insurance, professional fees, and advertising and promotion.

Next, it is common that each expense category be divided by twelve, thus apportioning an equal expense budget for each month.  This serves as a starting point from which the office manager can add or subtract from each category based on market influences, days the providers are absent or even based on the number of “selling” days for each month. 

By using the monthly apportionment, the practice can manage expenses in an interventional way.  For example, if the actual monthly payroll expense exceeds the budgeted amount, it may indicate increased overtime expense or unscheduled provider time off.  In these cases, the office manager could perhaps adjust staff scheduling to minimize the payroll spend.    

Expenditures are typically presented as percentage of net collected revenue (gross charges minus adjustments).  As such, it could be inferred that increased net collected revenue always results in increased expenses.  This is not necessary true.  It is also important not to make decisions based on a single metric.  Instead,  look at the whole picture to see how one performance metric influences another.   

Practices that proactively utilize the Prospective Revenue/Expense Budget gain enormous control over financial performance.  Aspects of positive practice behaviors or results can be congratulated and rewarded.  Likewise, deficiencies can be corrected.  Prospective financial management provides the confidence for the physician owners and office managers to anticipate revenues and expenses.

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Tuesday, April 21, 2009

Encourage the Heart

The final installment in this blog series touches on the fifth component of leaderships as described in The Leadership Challenge, Encourage the Heart.  

This is an overlooked key to leadership excellence. We are too often bogged down by the day-to-day routine to recognize the contribution of others. Recognition can be as complex or as simple as your imagination will allow. One physician I know uses “sticky notes” affixed to the employees computer screen during lunch to recognize that employee’s contribution. It costs nothing, but the return can be immense. Other practices use complex incentive compensation packages to reward the contributions of the employee or the entire staff. The sky is the limit. Be creative. Encourage the heart by:

  • Fostering high expectations of those you lead. Be reasonable, specific and action-oriented with your expectations.
  • Institute a reward system in your office. Be creative.
  • Never forget the two most important words in the English language: “Thank You.”
  • Identify ways to connect high performance with reward recognition.
  • Offer your employees consistent and regular feedback. This provides the employee the confirmation that they are on the right track or that an adjustment is needed.
  • Get involved and be your own cheerleader.

This series on leadership illustrates that leadership is a skill that can be learned and developed. The concepts presented in this blog series are only the start of your learning and skill development process. Making a conscious and concerted effort to be the best leader possible can have a significant positive impact on you, patients, staff … and your practice’s bottom line.




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* Adapted from The Leadership Challenge, James M. Kouzes and Barry Z. Posner* Adapted from The Leadership Challenge, James M. Kouzes and Barry Z. Posner



Sunday, April 19, 2009

Model The Way

The Leadership Challenge presents five attributes of modern leadership.  My previous entires presented the first three attributes of excetional leaders: Challenge the Process, Inspire a Shared Vision, and Empower Others to Act. This submission touches on the forth attribute, Modeling the Way.


Model the Way

Leaders always demonstrate their beliefs and values by their actions and by setting the example. For instance, if you expect your staff to arrive at work on time, then it seems reasonable for you to be ready to go for the first appointment of the day. By modeling the way, you show others how they should behave.  Here are suggestions to help you visualize how you could and should model the way:

  • Do what you say you are going to do.
  • Be available for the staff. If you have a large office, be sure to connect with the front office staff on a regular basis.
  • Communicate the rules. This can be done through vision statements, mission statements, and a comprehensive and up-to-date personnel manual.
  • Communicate your values and beliefs. Develop a purpose statement for your practice that can be recited in less than 30 seconds. Concisely and to the point, this statement should reveal what your practice is all about.
  • Focus on your priorities, that is, your business priorities. If you have a new marketing initiative, be sure to be upfront about the status of the project. Don’t be invisible.
Modeling the way goes beyond words.  Actions in how you behave illustrate for your team your expectations for their behavior.   Over the years, I have conducted many efficiency studies for physicians interested in improving their bottom line.  What we ultimatley identify is the lack of standards, and more specifically, the lack of support for the standards.  When physicians and practice managers overlook poor staff behaviors, or, they themselves demonstate something less than ideal behavior, it sets the tone for other staff members to behave in similar fashion.  The sure fire way to improve your efficiency, profitability and to create a better patient experience is to hold you staff and yourself to the standards of the practice.  You can begin by modeling the way.



* Adapted from The Leadership Challenge, James M. Kouzes and Barry Z. Posner

Friday, April 17, 2009


News Release

Robert Rosser, President                                               
PRIMORO, Inc.
robert@primoroinc.com
www.primoroinc.com
404-394-0014

Robert Rosser Announces the Founding of PRIMORO, Inc. 

  

Fayetteville, Georgia, April 17, 2009 - - Robert Rosser, today announced a new alternative for physicians seeking practice consulting services in these recessionary times; the founding and launch of PRIMORO, Inc.   The incorporation was finalized on April 2, 2009.  PRIMORO, Inc. serves physician-owner clients in the Georgia, Alabama, South Carolina and North Carolina markets.   

PRIMORO, Inc. specializes in medical practice management consulting with experience in financial analysis, business processes, human resources and customer relations. Primoro, Inc. provides the client with thoughtful management consulting with the benefits of personalized service and unsurpassed value. 

“This is an exciting day for PRIMORO, Inc. as another choice in medical practice consulting service is available for the physician-owner,” said Robert Rosser, President.  “PRIMORO, Inc. is a niche company and provides its clients with the best in personalized service.  Unlike other consulting firms, PRIMORO, Inc. serves a relatively small number of clients offering each client customized solutions in concert with the client’s business culture.”

 

About PRIMORO, Inc.

PRIMORO, Inc., with headquarters in Metropolitan Atlanta, Georgia, is a consulting organization offering its clients with “thoughtful medical practice consulting.”  Improvement in the cornerstones of business operation, financial analysis, business processes, employee relations, customer relations, drive behaviors beneficial to the physician-owner and the patient alike.  The context of your business to develop and implement the strategies necessary for success in today's market driven climate is the focus of PRIMORO, Inc.

 

 

Additional Information

PRIMORO, Inc is registered as a Corporation in the State of Georgia. 

 

 

Contact Information

PRIMORO, Inc.

Robert Rosser, President

404-394-0014

robert@primoroinc.com

www.primoroinc.com

Tuesday, April 14, 2009

Empowering Others to Act

The third element to Kouzes's and Posner's, The Leadership Challenge is the concept of enabling others to take action.  Learning this skill can take some patience, but it can pay huge dividends for you and your practice.    

Empower Others to Act
Effective leaders find ways to make others feel important and let them know their contributions matter. Gaining the support and assistance from those whom you lead creates human resource capital.  

Here are a few tips to help you empower others to act:

Recognition:   Giving your employees recognition for their work is very empowering.   Good leaders set the course for the business, then let their people make it happen.  It is very important to understand to "recognize the effort," not just the result.  By effectively empowering your employees, you cultivate the environment for innovation.

Decision Making:   Allowing your staff to make decisions creates power.  Staff members very often indentify better business processes within the practice.  Too often, these processes are not implemented because the staff does not feel it is "their place" to suggest the change.  It is your responsibility as the leader, to encourage decision making. 

Important Work:    Your staff needs to know their work is important.  Every role within a medical practice is important.  Make sure that when you delegate a project, you let your employee know your expectation and that this work is needed, not just busy-work. Lastly, make sure their staff has all the tools and proper training to do their jobs.  

Team Building:   Connecting your employees as team members is critical.  There are many resouces available discussing the value of teams and team building.  Getting started with understanding behavioral traits is a good place to start.

Actions that will help you empower others to act are:

  • Always say we
  • Create the interaction between individuals, e.g., front office with the back office
  • Look toward the wins; do not dwell on the losses
  • Develop work teams that are involved with the planning and the problem solving
  • Communicate; do not leave your employees in the dark
  • Make their work valuable and critical to the success of the practice
  • Do not micro-manage your followers; provide them with discretion and autonomy
  • Be available for your team(s)

* Adapted from The Leadership Challenge, James M. Kouzes and Barry Z. Posner

Wednesday, April 8, 2009

Inspire a Shared Vision

Leadership can and is often a learned skill.  In my last installment, I presented this first trait of true leaders and offered some suggestions on how you could hone that skill, "Challenge the Process.  Today we will explore the next trait of good leaders and, again, offer some suggestions to help you build the skill, Inspiring a Shared Vision. 

Let's first explore what a "Vision" is and how you can create a your vision that has life and vitality.  It is important to recognize that visions all share these common themes.  Great visions describe the ideal state in which you want your practice to thrive.  Visions should be unique to your practice.  You should rejoice in being different from other providers in your area. Describing the future of your practice, where you want to go, is a crucial element of your vision.   How many of you agonize over the decor of you practice?  While decor is not a vision, it clearly illustrates how using a mental picture aides you in developing the image you are trying to achieve.  And lastly, having a solid vision creates the common purpose you need to enlist employees to come together.  

It is important to effectively communicate your vision.  Your employees expect it.  They are looking for positive and optomistic views of the practice.  And, that could not be more true than in these recessionary times.  Communicate your vision with words and actions, not a memo. Good communication comes from the heart, not a poster or email.

My experience shows that most physicians spend far too little time in planning their business -- that is, asking themselves what do I want this practice to be like in five years, in ten years? Most leaders, on the other hand, spend quite a bit of time in considering the possibilities, creating the mental image of how they want their business to be. Then, through their own enthusiasm, effective leaders inspire others to embrace the possibilities. The two essential elements to inspiring a shared vision are:

  • Envisioning the future
  • Enlisting others

From that inspiration, you can create action if you:

  • Act on your beliefs
  • Test assumptions
  • Know who your followers are (and enlist their help)
  • Communicate the common purpose for the practice
  • Illustrate that meeting the practice goals are in everyone’s best interests
  • Be expressive when you communicate
Spending some quiet time thinking and developing your vision can be a tremendous asset for your practice.  Communicating the vision effectively to your employees and patients does two things.  Your employees become engage in the business of your practice, helping you grow. Secondly, your patients see, feel and appreciate the energy you and your staff present.  This, in turn, results in more referrals and an improved bottom line.


* Adapted from The Leadership Challenge, James M. Kouzes and Barry Z. Posner


Saturday, April 4, 2009

Leadership: A Critical Practice Success Factor*

Everyone agrees that strong leadership is a key component of a successful practice. The work by James M. Kouzes and Barry Z. Posner in their program, “The Leadership Challenge," is a great place to start.  

So how can one define leadership, or, better yet, can one learn to be leader?  The answer to both questions is yes.  It is fairly easy to identify business people or politicians as “good leaders,” it can be difficult to determine precisely how they achieved their leadership status. Is it a genetic trait?  Maybe.  But in all likelihood these individuals learned how to be good leaders. While “natural” leaders do exist, most successful leaders have learned through trial and error and understand how to assimilate experience into their leadership style. Almost anyone can become a good -- if not a great -- leader by following a number of general guidelines which “teach” those in charge what it takes to be a good leader.  Today, I will explore the first key principle to leadership as defined in The Leadership Challenge.

Challenge the Process

By default, physicians are the leaders of the medical practice.  Most want it that way.  Many physicians became physicians because of the entrepreneurial and pioneering aspects of owning and operating a business.  The very nature of practicing medicine leads physicians to search out new opportunities and assist patients with outcomes.  The mental, physical and emotional demands of running a practice require the physician leader to always be prepared.  Are you?  I have yet to meet a physician who was not quite comfortable in challenging a medical process.  In fact, most physicians are quite creative in developing innovative treatment plans.  But, do you treat your business with the same creativity?  In other words, “Do you challenge the process? Answering these questions can help you determine your "challenging the process" quotient.

  • Do you treat every aspect of your practice as a journey, or are the various business tasks status quo?
  • Do you assign meaningful and, sometimes, challenging assignments, or, is your day one of routine?
  • Do you recognize individuals in your office who take well-calculated risks or are your employees hesitant to deviate from the norm?
  • Do you look for ways to improve the work you do?  Does your staff?  Do you empower your staff to look for ways to improve business processes? 
  • Are you looking for ways to stay up to date with new technologies to improve work flow?

If the answers to these questions indicate you are leaning towards, "Yes, I challenge," then you are on way to solid leadership. If not, think about how you can integrate a “challenge-the-process” philosophy of leadership in your practice.  Think about these suggestions to aide you in challenging the process.

  • Look at your practice as an adventure for you and you staff.
  • Look at how you currently do things, e.g., patient scheduling, how you answer patient inquiries,  If some process could stand improvement, do it.
  • Reward and recognize those staff members who take risks.  Remember, a well thought out risk that fails, still deserves recognition.

My next installment to PrimoroBlog will explore the next step in effective leadership, "Inspiring a share Vision."

* Adapted from The Leadership Challenge, James M. Kouzes and Barry Z. Posner