As a physician, you are responsible for monitoring not just the health of your patients but also the health of the clinic, practice, or organization in which you work. And, not unlike the value of consistent check-ups for your patients to monitor their medical conditions, your practice can experience positive well-being and improved performance through intentional and disciplined financial benchmarking.
A financial check-up is a helpful process by which you can periodically review set financial indicators, and monitor the performance and trends of each. This doesn’t replace monthly financial reporting but, instead, it’s an efficient way to integrate higher level strategic tracking of the key financial indicators that are most critical for your specific practice.
You’ve heard the mantra of famed management guru, Peter Drucker, “what gets measured gets managed”. I can think of few principles better suited for the topic of financial performance.
There are a variety of benchmarks that can be used to set goals and measure success in a medical practice; production, operating expenses, staffing ratios, receivables aging, collections, etc. Benchmarking provides the opportunity to:
- Quantify performance measures
- Quantify the gap between your organization and “best practices”
- Make operational improvements using an objective basis for your decision making
Sources for benchmarking external to a medical practice include the Medical Group Management Association (www.mgma.com), the Healthcare Financial Management Association (www.hfma.org), Medicare (www.cms.gov), the National Commission on Quality Assurance (www.ncqa.org), or data from your specialty’s professional Academy or Association.
But, merely comparing one’s practice performance to external benchmarks does little to change outcome. And using your own prior history as a means of judging performance may cause you to simply repeat poor practices without ever realizing the missed opportunities of true success.
Each practice is unique, but once you’ve identified a few key problem areas or sources of stress in your financial performance, get intentional about monitoring and improving in this area. The simple act of paying attention to something may allow you to make connections and identify trends, opening opportunities to improve.
I’ve always leaned on the practice of completing an annual strategic financial review, plus several smaller, quarterly or monthly dashboards to monitor key items – these can include fee schedule, aging by payer, productivity by physician, key expense categories, or physician comp, to name a few.
With a fiscal year just closed, now is a great time to establish some new financial benchmarking processes. Per Drucker’s advice, start small so that you don’t become overwhelmed or discouraged. Choose three metrics to monitor this year, and report on them monthly, digging into one more intensely each quarter. You want to build small wins, lock them so they become automatic, and then expand.
In today’s financial environment, every physician practice should be setting and intentionally measuring certain core business and strategic practices in an effort to drive financial outcomes. Formulation of specific practice goals, whether financial or process-driven, will drive discussion toward improvement. Monthly or quarterly board or staff meetings often provide a good forum for discussing benchmarks, data comparisons and improvements.
Taking your practice’s financial pulse regularly can help prevent negative impacts to your business, and aids in immediately diagnosing and treating any troublesome benchmarks. Remembering to stay intentional and disciplined in your reviews will ultimately lead to a strengthened and financially healthier practice.
From original article in Physicians Bulletin, a publication of the Metro Omaha Medical Society. Written by Matt Senden, Core Bank’s Vice President, Healthcare Banking.