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Urologists are expected to spend more money on building a solid infrastructure and expanding technology at a time when many are concerned about practice economics. Fortunately, there are some actions you can take to improve practice finances.
This article outlines the performance indicators you need to keep an eye on and explains how to sharpen them.
First, get a clearer picture of your position. Compare last year's financial performance to the prior year's, examine shifting trends, and identify why these shifts are occurring. For example, are you doing less of a particular procedure and, if so, is there a reasonable explanation? If one physician's production took a dip, was it due to more scheduled time out of the office, or is it an abnormality that needs to be addressed? Perhaps one urologist's aged accounts receivable has spiked because of a payer contracting issue. Identifying these types of issues is a good start to managing finances better.
In a group practice, it is important to look at the group as a whole but also evaluate specific numbers and benchmarks for each physician. Examine group performance based on the per-physician averages to evaluate and manage income, expense trends, and staff levels. For example, how does the practice compare to the average urologist in the country who utilizes 4.8 full-time equivalent (FTE) employees, representing 20.5% of operating expenses (according to the Medical Group Management Association), and reports gross income of $790,000 against total operating expenses of $397,460 per FTE physician?
Beyond this, it is important to monitor and compare these additional performance indicators between each physician in the practice from year to year:
The old saying, "You cannot manage what you fail to measure" is true. When armed with these data, the practice will be able to better understand its position and know what corrective actions and changes need to be made.
Next, use this information to establish performance goals, raising the bar each year. Of course, the goals must be realistic, and management must establish methods to meet them. For example, if the goal is to reduce staffing costs, are you willing to invest in technology to help staff be more efficient, reduce errors, and increase productivity? If one of the goals is to grow the practice by 10%, are you sure you have that much excess capacity, or will you need to add another urologist or midlevel provider and additional support staff? Will demand support the ability to achieve a 10% growth goal, or will you need to hire a professional to develop a marketing plan and allocate resources to implement the marketing strategies?