Fact Check: Measuring Production Efficiency Does Not Matter

In the third part of a series looking at common practice management claims made by physicians, I will discuss office efficiency. 

Claim #3: Things happen because they happen. Measuring production efficiency doesn’t matter. 

“Stuff” happens in our practices. That is a given. Many times, this is the result of something we have done (and should not have) or have notdone (and should have). In other words, ”stuff” is a consequence of our actions. Nevertheless, if we fail to measure our actions, we cannot manage our actions. While one could measure everything in a practice to some degree, regrettably, we often do not take this initiative. 

Let me be clear. No one, not even fastidious practice management consultants, expects you to spend all of your time and energy crunching numbers or monitoring activities. You have patients to treat! Still, there are certain metrics your practice should track on a regular basis. It is necessary to keep a finger on the pulse of your practice. With these measurements, you can identify growth patterns or areas of weakness that need improvement. 

Pertinent Pearls In Evaluating Podiatric Staff

Some businesses insist employee productivity must be measured based on a formula of total output divided by total input of assigned projects. In my opinion, podiatric medical staff do not necessarily fit into this formula. Calculating how much you pay them is black and white. However, unlike medical equipment, whichcomes with a price tag, it is difficult to attach a revenue-producing dollar value to what and how staff contributes to a practice.

Think about that. You can’t track staff worth like you can a marketing effort because the extraordinary patient care (translation: the human element) they deliver on your behalf cannot be quantified by dollars. What you can do is determine a payroll ratio for the practice by computing what percentage of your expenses are staff-related. This should include wages, taxes, bonuses, insurance, perks, uniforms, etc. All things considered, we typically look for an ideal range anywhere from 22 to 25 percent. Of course that percentage is not rigid and offices that fall outside those parameters can certainly be successful. Much depends on goals, the degree of staff utilizationand implementing traditional or progressive practice methods. Also, don’t underestimate the value of the face-to-face employee performance evaluation. Measuring their individual performances helps to improve their productivity and, in turn, the productivity, efficiency, and ‘general health’ of the practice. 

Staying On Top Of Financial Benchmarks

Too often, when I ask a client specific revenue questions, I am told to meet with the biller for that information. In other words, the doctor/owner of the practice has no idea. 

How can you manage cash flow unless you track money in and money out? Do you have routine, consistent billing methods? Are there policies to follow? Have you found snags in the process? If so, where? Are a majority of outstanding accounts hung up in insurance or patient payments? Are insurance claims filed in a timely fashion? Are denied claims being appropriately appealed? Are all write-offs first approved by you? How much of your aged accounts have gone beyond the point of collectability? These are things you should be aware of.

Someone in your practice, such as a biller or office manager, should prepare monthly reports for accounts receivable, aged accounts, net collection revenue and days in accounts receivable. Then he or she should make arrangements to discuss these in detail with you soon after. Reports encourage honest handling of monies and accounts, and they paint a pretty compelling picture. Monitoring the direction of financial trends can be eye-opening to those unaware.

Evaluating Daily Processes Within Your Practice

Let us move on to overall operations. Can you diagnose where the system breaks down. Where are the bottlenecks in efficiency in your practice? Is it patient flow, staff effectiveness, role identification, job delineation, surgical scheduling, disregard for policy, time management issues, front desk inefficiency or telephone operations? If so, there is a remedy in each case to fix what is broken. For example…

• Time aligned appointments, time and motion studies, flow mapping, proper technique and controlled scheduling policies are all designed to manage patient flow. 
• Employee handbooks and policy guidelines encourage consistency and preferred behaviors. 
• Clinical protocols bring about consistency, repetitive directives and desired standards of patient care.
• Job descriptions and staff training programs lead to accountability and expected outcomes.

Yes, “stuff” happens. That part is true. Dragging your feet and expecting it all to come together on its own is not the answer. Fix it one issue at a time. Be determined. Your actions today could be the start of something great tomorrow!

Ms. Homisak is the President of SOS Healthcare Management Solutions in Federal Way, WA.