Amid the daily hustle to run an eye clinic, Karen Crouch says it’s vital to break this cycle to map out the practice’s tactical and strategic objectives. She details a structured approach to follow.
When the New Year rolls around, it’s an ideal time for practices to look inward. Reflections and resolutions to improve performance should be a priority, alongside analysis of lesser achievements for implementation during the upcoming year.
“Consider emerging community or patient demands to be accommodated or opportunities to differentiate the practice by introduction of new services.”
Practices are comprised of certain essential factors that operate in direct relationship to each other, such as:
• plans and goals (financial, non-financial, clinical, strategic)
• administrative (client service, service efficiency)
• personnel (employees, owners – human resource management).
The most obvious consideration at this mid-point of the financial year is a half yearly review of progress to date, as well as achievements to targets and budgets.
Accountants and practice managers should construct a snapshot forecast of likely progress to financial year end, reflecting performance and trends indicated by past six month actuals. For example, does performance to date suggest targets will be met or exceeded? Are changes required (New Year resolution) to ensure year-end targets are met? Not all targets are financial.
• Client surveys: if regularly conducted, do they reflect targeted levels of satisfaction, clinical and administrative? Do responses reflect satisfactory client opinions including pre and post consultation?
• Regulations: consider changes to government policy that require rewriting of ‘policy and procedure manuals’. Do technological advances deserve investigation to maintain competitive positioning?
• Marketing: have there been notable changes in community health conditions that require new treatment methods or employment of modern equipment?
• New business: is the practice maintaining close ties with all referral sources by ongoing relationship management?
• HR: is an effective ‘staff appraisal’ system in place, well documented, and well planned to occur during upcoming months?
Business Plan
As a starting point, let’s look at the business-as-usual structure of the annual ‘business plan’ that typically comprises two main sections: tactical (micro level) and strategic (macro vision). One is short term operational, the other targets are longer term practice owners’ objectives.
Tactical:
This is the ‘business-as-usual’ framework by which practices function (healthcare, services, revenue generation, expense management) to ensure financial viability and support for initiatives to achieve strategic goals, including:
• Expenses: line-by-line budgets, based on historical experience or educated guesstimates for start-ups, remembering cyclical peaks and CPI increases;
• Income: revenues based on practitioner numbers, working hours, charging rates and consultation/treatment numbers. Any shortfall or excess should be carefully analysed as both are vital to maintaining a viable practice;
• Measuring: tracking mechanisms that measure performance to targets, including ‘variance explanations’, are vital to ensure performance is on track, or requires adjustment. Monitoring is achieved through measurement of:
– KPIs: performance rates e.g. 90% patient satisfaction, patient numbers, individual staff performance targets;
– Ratios: (e.g. salaries-to-expense, overheads-to-expense) benchmarked to industry norms;
– Analysis: better-than-budget performance highlights repeatable practice strengths; poorer outcomes present opportunities to analyse problems and remedy them;
• Non-financial: it may be necessary to adjust, or introduce new clinical and administrative procedures to ensure compliance with changing business imperatives or external factors;
• Human Resources: this vital element covers plans to develop staff and practitioners, targeting ‘employer of choice’ status;
• Capital: if expansion or upgrades are planned, related costs such as borrowing, and repayments should be factored;
• Profit & loss: expenses vs. income reflects the likely year-end result. Current ‘year-to-date run rates’ across the upcoming month are a useful indicator.
• Landscape Changes:
– Competition: Have new practices opened in the area? Do they offer services your practice may not? Apart from product or service differentiation, perhaps consider something more client focused; for example longer opening hours, including weekends. Consider emerging community or patient demands to be accommodated or opportunities to differentiate the practice by introduction of new services.
– Technology: has new technology improved patient care, productivity or reduced costs? Has cost benefit of new technology justified investment from a financial or competitive perspective?
– Previous year’s results: if objectives have been exceeded, higher goals, including stretch targets, should motivate success and the practice mantra that ‘satisfactory results are not enough, we aim to exceed expectations’;
– Continuous improvement: have employee meetings and forums been adequately focused on operational productivity and the general theme of ‘working smarter, not just harder’?
Strategic:
Vital to growth prospects is the optimisation of new opportunities. This could include business expansion by acquiring another practice, or reputation enhancement by becoming recognised field leaders.
As the current ‘business plan’ is reviewed, concurrent attention should be given to the longer term ‘strategic plan’. Does it also deserve tweaking and is it still achievable?
If strategic plans cover three year periods, annual business plans should target progressive completion of stated goals so aspirations are successfully achieved by three years.
About the author: Karen Crouch is Managing Director of Health Practice Creations Group, a company that assists with practice set ups, administrative, legal and financial management of practices. Contact Karen on email kcrouch@hpcnsw.com.au or www.hpcgroup.com.au.
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