How to Tell if Your Medical Practice is Well-Managed
What are the hallmarks of a well-managed practice? There are many, but here are 10 basics.
- The practice has foundation documents appropriate to the corporate structure and written agreements describing how income and expenses are shared by physicians and/or other providers and how partners enter and exit the practice. The owners of the practice and management meet monthly.
- The practice has documents that set the guidelines for operations such as a compliance plan, disaster plan, personnel handbook, job descriptions and requirements for annual evaluations, raises, bonuses and progressive discipline. Management and staff meet monthly.
- The net collection percentage is 95% or more. This means that of the expected collectible dollars, 95% is collected.
- The practice has a budget and variances are addressed.
- The unfilled appointment percentage is 5% or less. This is in retrospect, so it includes no-shows. The practice has a marketing budget and a written marketing plan.
- The practice has a line of credit or other means to draw upon in the case of unexpected cash flow drop.
- A single commercial payer comprises no more than 50% of the practice business.
- Employee turnover rate is 10% or less. New employees are onboarded with training, coaching and competency testing.
- The practice has the ability to produce management reports to track and trend production, payments, adjustments, and denials. Process Improvement (PI) is used to address negative trends.
- Patient satisfaction is prioritized and measured, and improvement is valued.
What other hallmarks would you add?
What a great list! Thanks for sharing.
Possible additions: minimal patient attrition (depending on practice type, eg primary care), goal-setting/continuing ed for key employees, auditing and internal controls (eg, around check-writing and cash management).
I like your additions – especially the internal controls – they are crucial.
Excellent… I also believe that job satisfaction and an enjoyable atmosphere is critical to practice success, so I would add a Happy Staff to my list…
I definitely agree that Happy Staff can make or break a practice. Good addition!
This was a well-written article which gives a direct punch, no frills approach on medical practice management. It is sad to believe that health care needs to be treated as a real business but in this day and age – this is the new reality. I would want to believe that it is possible to have an effective, ethical medical practice and be profitable.
Perfect! I wouldn’t change a thing. Thanks again Mary Pat. I keep a library of your articles. They are always on-point.
Thanks, Ron. I always appreciate feedback!
Revenue Cycle — I would also look at how fast the practice is collecting from Medicare, Medicaid, self pay and Commerical Insurance as well as third party liabilty and workers compensation. How often are claims being submitted for payment? What percentage of the claims are clean? How many uncollected dollars are sitting int he A/R and over 90 days? A practice truly needs to understand how the revenue cycle affects the cash flow of a practice.
Very valid point! You could be collecting 95%, but collecting it so slowly that it is losing value.
Thanks for commenting.
Excellent, to-the-point information and every bit true. Appreciate the article.
Thanks, Lisa! I always appreciate hearing from readers that I hit the mark.
Very well put and succinct points here, Mary Pat. Thank you. I would consider also adding projected revenues and losses for the upcoming two or three years – especially taking into consideration technology expenses. AND, I would also encourage practices to keep their employees dedicated to continued education in order to remain on the cutting edge of providing quality care. Perhaps a self-development requirement would be appropriate for practices to put in place.
When I first started in healthcare it was not unusual to have a 5 and 10 year plan, but now everything is so uncertain that I believe it’s unrealistic to plan more than 12 months ahead. I agree with your point about continuing education.
Thanks for your comment!