The rise of managed care over the past decade or so has caused physicians to consider the need for better fiscal management.
One common strategy is the creation of a sound business or strategic plan. Over my 25 years of financial and practice management, I have determined that there are two types of physicians.
First, doctors who own their practice. They have a vision but spend a good share of the day putting out fires. Second, doctors who have abandoned a vision of ownership and either work for an established practice or a HMO and more recently, private or public hospitals.
The goal for this article is to encourage physicians who own their practice to work on not in their practice, which can be accomplished by adopting a strategic business plan in concert with a financial life plan that will assist in creating vision, goals, and aspirations for their practice and themselves. A coordinated strategic business and financial life plan will then assist in increasing efficiency and reduce stress through an organized process and system that will be repeatable on a daily basis.
“Sixty-seven percent of physicians do not have a strategic business plan”, according to Dick Hansen of Medical Group Management Association. This leads to three questions physicians should be asking themselves in order to develop a road map for their practice:
According to Judy Capko, a Practice Management Consultant in Chicago, the top ten reasons why medical practices fail to maximize revenue are:
- Most office systems and procedures are weak
- Bills contain inaccurate and outdated codes
- Fee schedules are not updated
- Physicians miscode their level of services
- Accounts Receivables are not collected consistently
- Financial procedures are weak
- Staff are underutilized and ratio to physicians is low
- Physician productivity is not maximized
- Patient service is not top priority
- Practices do not have a business plan
In addition, Peter Lucash, author of Medical Practice Business Plan Workbook – Second Edition and blogger, lists his top ten concerns that medical practices may face now and in the future:
- Flat and declining reimbursements
- Pressure to improve and measure quality
- Patient demand for more time with physicians
- Incomplete data about patients
- Risk of being sued for malpractice
- Revenue cycle that is inefficient and uncertain
- Unraveling of traditional physician- patient relationships
- Loss of status, prestige, and income
- Widespread dissatisfaction with work of physicians
- High and increasing overhead load
I have added one more major concern – the new health care legislation. Are you prepared for all the possible mentioned consequences?
Peter Levinson, a noted author concerning medical practices points out, “the margins of management error have dramatically decreased, with low reimbursement and increased practice expenses, even a small management misstep can mean a fiscal mess.”
So, let’s take a journey back to medical school. Your professors assisted you to become an excellent, competent and caring physician. However, probably none of them had any idea what steps it takes to build a successful and efficient medical enterprise. You have become an effective technical practitioner versus a successful entrepreneur who works balanced hours, has little stress, leads a rich family and financial life that is diverse, fulfilling and provides a continuous return on your investment. How does a physician create a strategic business plan or road map to success that will assist in meeting personal goals and aspirations along with adopting a vision for a successful medical practice?
Consider developing a team approach that consists of the following:
Have the team, including the physician, spend time discussing your vision, goals, and aspirations for your practice and personal life.
Transfer this information into a written plan that will put all the business principles in one place.
As an example, identify the key functions of your practice, along with essential processes that link those functions. Identify the results your team have determined your practice will produce.
Consider engaging your staff in this process with weekly review meetings. I have a physician who meets every Wednesday morning with the office management group to discuss current issues, solutions, and opportunities. Consider annual retreat for the entire staff, not only as a reward for an outstanding year, but to assist in adopting next year’s business plan while reviewing and evaluating the previous year’s results.
By adopting an annual strategic business plan your practice will develop a road map to success while avoiding major pitfalls while also increasing revenue and efficiency that should provide a healthy and happy work environment for your employees and you.