Implementing Financial Controls within Your Vein Practice
Today more than ever, the plea from physicians that I work with around the country is, “Help us manage and/or reduce our overhead!” To maintain their incomes in today’s healthcare environment, physicians have two options:
1. Increase EVLT, ultrasound and/or sclerotherapy revenues; or
2. Decrease expenses
It is sad but true, that payor reimbursements show little hope of increasing to offset rising administrative and clinical expenses necessary to run your vein practice. Therefore, physicians need to focus carefully on overhead. While many physicians believe that there is very little fat left to trim within their medical practices, savvy consultants can reduce costs through inventive, resourceful means, resulting in higher profits for the practice and loyalty and appreciation from the physicians.
Cutting costs, however, is no easy task. Rarely does our firm find a practice with staff taking leisurely breaks or standing around with nothing to do. Most practices have a lean workforce with few obvious expenses to cut. The stepby- step process outlined in this synopsis will help you plan your strategy for evaluating your overhead and improving your practice’s bottom line.
Review Internal Controls
Financial controls are crucial for reliable data. The practice must know how much money is flowing out of the business in order to control expenditures. While most people think of internal controls as a means to safeguard against fraud, they actually are the key to making sound management decisions. Proper internal controls help prevent and detect errors. Medical practices today are fast-paced, complex businesses. Mistakes happen. A good system of checks and balances helps minimize mistakes. In addition, the mere presence of formal control procedures encourages adherence to policies. The staff can sense when an office environment emanates a lack of accountability and controls. The end result is that sloppiness proliferates and financial data becomes useless.
Internal controls require segregation of duties and a system of checks and balances. The larger the practice, the easier it is to segregate duties and install a system of checks and balances. The larger the practice, the easier it is to segregate key financial duties. Even in a small group practice, a minimum amount of segregation is possible. Physician involvement (or at least the appearance thereof) is an effective enforcement method. If you’re not sure how strong the practice’s controls are, perform an internal control study. Based on results, you can determine how much you can rely on the practice’s data and adjust your analysis accordingly.
Perform Due Diligence
Determine where the practice stands in relation to its peers. It’s very difficult to assess the appropriateness of expenses if you don’t have some benchmark data to measure against. Gather the necessary reports – financial statements,month-end and year-end management reports, billing reports, and budgets. Study the trends from year to year and month to month. Compare your data to specialty-specific industry statistics, first making sure that you group your data the same way they do. Analyze and explain variances between your practice and the associated benchmarks. For example, look at ratios of expenses to revenue, amounts per-physician or per-provider, and full time equivalents (FTE s) per-physician or per-provider.
Carefully Review Your Largest Expenses
Focus first on overhead items that represent the largest individual expenses. For most vein practices, clinical supplies, marketing costs and staff salaries are the largest expenses. Be sure that current staffing levels are appropriate in relation to the number of providers in the practice. Whenever possible, allocate personnel to broad groupings such as front office, clinical staff, and back office or even individual job categories. Consider the practice’s overall productivity (volume) in your analysis of staffing. I recently performed a staffing analysis for a client who insisted he was overstaffed. When we compared his provider-to-staff ratio to similar
practices, his analysis appeared to be correct. His annual charges and receipts, however, were almost double that of similar practices, thus creating more work and higher staffing requirements.
If you believe your practice is overstaffed, take the time to construct creative ways to reorganize. Rather than eliminate personnel, investigate to see if existing staff can be used to make the providers more productive. Look for efficiencies and delegate tasks to the lowest wage possible. Once you have examined the number and mix of the staff, look at