Business, Management

New financial year – time for reflection

KAREN CROUCH says forecasting for the ‘new normal’ could require a more conservative outlook as the national economy battles its way through an expected recession.

A new financial year is here again, not to mention other significant distractions such as world turmoil following US protests and riots. And, of course, we have the coronavirus which will eclipse the economy and naturally have an impact on every industry and business, including the manner in which practices will have to consider plans for the upcoming financial year.

I trust you all enjoyed a fruitful 2019–2020, at least until about February when the whole world changed. Regardless, practices must be fully prepared for yet another financial year which could look quite different to previous ones.

The beginning of a new financial year usually triggers some navel gazing, personal reflections on events of the past 12 months and formulation of new resolutions in preparation for the year ahead.

Growing unemployment will limit funds available for medical attention, possibly resulting in deferral of
non-critical attention.

By contrast, 2020/21 may require some crystal ball gazing as client finances and related buying capacity may have a notable impact on ‘business as usual’ projections. Naturally, resolutions, objectives and budgetary settings are aimed at improvements on the previous year’s achievements and targeted better performance for the next year.

However, forecasting what the ‘new normal’ may look like could require a more conservative outlook as the national economy battles its way through a forecast recession.

This ‘self-audit’ process is relevant for health practices. While individual plans and resolutions may be amended ‘on the fly’, Business Plans deserve deeper planning, more time to affect changes and alignment with longer term Strategic Plans.

Practices, like other businesses, are comprised of a few essential factors which operate in tandem and direct relationship to each other:
• Plans/goals (financial, non- financial, clinical, strategic).
• Administrative (client service).
• Personnel (employees, owners).

The most obvious aspect that deserves attention at the end of a financial year is the annual review of progress to date and performance against targets and budgets, regardless of the hitherto unpredictable events of the second half of 2019/20. Consequently, results may be poorer than projected following nearly half a year of COVID-19 impact.

Accountants should construct a snapshot of progress to the end of the financial year, reflecting not only performance to date, but also trends indicated by the past 12-month ‘actuals’. For example, does performance to date suggest similar goals will be reasonable for the upcoming financial year? Probably not as growing unemployment will limit funds available for medical attention, possibly resulting in deferral of non-critical attention. Will there be a pressing need to increase performance outcomes, such as competitive, marketing, even price discounting? In light of the new environment, what budgetary or business management changes are required to ensure targets are met or, preferably, exceeded?

Of course, not all targets are financial in nature. For example, did client surveys, if conducted, reflect the desired level of satisfaction with clinical and administrative service quality? Has the efficiency/speed of pre/post consultation client service improved or, as a minimum, not decreased below previous year levels? Have any variations, positive or negative, been analysed and appropriate actions captured in the next Business Plan?

And let’s not forget requirements of the ever-present COVID-19 which will require changes to working habits and maintenance of the practice working/ living conditions. These include social distancing in the waiting room, hand sanitisers in several areas and general monitoring of client, staff and visiting tradesmen health while in the practice.

On the clinical front, have there been notable changes to government regulations that require rewriting policy and procedure manuals? Do technological advances adopted by other practices deserve investigation/investment to defend the practice’s competitive position?

In respect of business development, marketing plans deserve review. Have there been notable changes in community health conditions that demand new treatment methods or employment of new equipment? And, of course, the need to maintain close ties with all referral sources is a matter for ongoing consideration to ensure a reliable client pipeline.

While the ‘practice business’ usually receives most attention in annual reviews, it’s most important resource, employees, must not be overlooked. Is it time to consider whether an effective staff appraisal system is in place and well-planned to occur during upcoming months? Is the appraisal program well-documented and performance reviews planned? Were individual staff appraisals undertaken as failure or delays in completing them often results in staff dissatisfaction?

And, as the current financial year’s Business Plan is reviewed, attention should also be given to the practice’s longer term Strategic Plan. Did the 2019/20 Business Plan performance results align with longer term goals? Or does the Strategic Plan itself deserve tweaking and is it still achievable?

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.