A. Texting your spouse
B. Checking e-mail
C. Stepping out to make a call
D. All of the above
Traditional financial reports of a balance sheet and income statement were conceived 150 years ago during the Industrial Revolution to facilitate railroad financing. Although their intent is to communicate the financial health of a business, the reports are spoken in the language of accounting, a language foreign to many physicians. Historical by definition, the statements are often presented weeks, if not months, after the fact.
Much like driving while looking in the rearview mirror, it’s no wonder no one is paying attention.
To address this comprehension void and time lag, many medical practices rely on an assortment of ad hoc financial reports fueled by the PC revolution: key performance indicators; benchmarking; retrospective RVU analysis to make Henry Ford proud; and the most recent iteration, EHR dashboards designed by software engineers. Although providing number-centric feedback, this data tsunami drowns out the essence of your practice’s financial success and most important asset: physician time.
In this article, I’ll lay out three steps that wed the concept of physician time with financial management, promoting physician understanding and ownership of financial performance.
Step 1: Doctor Days
Build the foundation of your practice’s financial management, budgets and projections on physician and optometrist time, or “doctor days,” rather than relying on accounting department edicts or RVU-based budgets. Simply put, calendar out doctor days (or half days) by type of service: clinic; ASC; and hospital. This process links, in an easy to understand manner, financial performance with the investment of physician time, while de-emphasizing esoteric accounting reports.
Applying estimated gross charges and net revenue by doctor day by type of service closes the loop, producing accurate and predictive budgets in the aggregate, and by individual physician and OD type of service and location. One payoff is the ability to evaluate the ratio of doctor time to various financial and patient-care metrics. For example, 19 percent of total doctor clinic time is invested at a particular location providing 11 percent of patient visits.
Divorced from procedure volume and RVU-driven mock-ups, the doctor day model is an effective tool to evaluate and negotiate value-based contract proposals from payers. Historical fee-for-service data, converted to doctor days, can be developed to determine an acceptable return on the investment of physician time for anticipated covered lives and patient encounters, the cornerstone of any successful risk-sharing contract negotiations. Level the playing field against health plan actuaries, and negotiate with confidence.
Finally, aside from patient-care and outcomes considerations, make informed decisions to opt in or out of government incentive programs based on incremental doctor days required to offset penalties in the event you opt out. For example, from a time perspective, 1 percent of 200 doctor days per year is two days, or about 1.3 hours per month (20 minutes per week, 4 minutes per day) assuming 100 percent government payer mix.
Step 2: Real-Time Reports
While the argument has been made that profit margins on many surgical procedures render real-time financial reporting unnecessary for medical practices, common sense and the current health-care reimbursement environment suggest otherwise. Lack of timely, actionable information masks and enables a multitude of sins: payer and contracting issues; clinic workflow and appointment scheduling; front desk proficiency and business office effectiveness; and yes, unscheduled physician time off.
Focus on these three words and follow their corresponding rules: simple; time; and visual.
• Rule #1. Simple. Keep reports simple and relevant: production; cash collections; a few key patient-care barometers, e.g., visits, cataracts and refractive
• Rule #2. Time. Present data in terms of time, e.g., cash collections are 1.2 days behind month-to-date budget
• Rule #3. Visual. Present information visually with intuitive charts, rather than raw numbers or text explanations.
Step 3: On-Line Access
Establish a secure one page Intranet for one-click access to real-time and historical financial reports from a smartphone, tablet or laptop. Notification of time-sensitive updates can be pushed out via e-mail or private Twitter feed. Granted, while most physicians prefer to “just practice medicine,” this step democratizes the financial reporting process and fosters a culture of transparency and accountability.
Both the Intranet and real-time report templates can be updated and maintained by current staff utilizing Word, Excel and existing practice management software, bypassing cumbersome Sharepoint altogether. Finally, the best kept secret in the EHR industry: pre-loaded and license-free Internet browser reporting tools are available for EHRs running on Microsoft’s SQL server platform.
Although these simple steps won’t render traditional financial reports obsolete, taking mind-numbing numbers, meaningless minutiae and disjointed data off the table removes the psychological barriers to financial comprehension, encouraging healthy physician and management dialogue regarding both short-term clinic operation objectives and long-term strategic financial planning.
You can now relax guilt-free and text your spouse, check e-mail and make calls during the HR director’s presentation!
Stop driving by the rearview mirror using Industrial Age financial management and reporting tools, and embrace the Information Age. You already know where you’ve been. Keep your eyes on the road, your hands upon the wheel: Know where you are today (Steps 2 and 3) and where you’re going (Step 1).
Focus on your most important asset—physician time—and strengthen and grow your practice’s financial health by responding to changing circumstances in the here and now, built on the foundation and communicated in the language of time. REVIEW
Mr. Kroll has 20 years of health-care experience, including 11 years with Minnesota Eye Consultants, P.A., providing financial management and consulting CFO services to independent and hospital-affiliated specialty and primary-care medical clinics. Contact him at email@example.com or on Twitter at https://twitter.com/CharlesPKroll.