Part one: staff and revenue
Medical practices face many different risks and some of these can cause severe profit loss. Understanding these risks and adopting good corporate governance is an important aspect of running a successful medical practice. It's about having proper supervision and processes in place to mitigate risks and, ultimately, ensure a well-run business.
While this is not a complete list, there are some key risk management steps practice owners should take. In the first of two articles on this topic, I'd like to address issues relating to staff and revenue.
Staff risk management
Most medical practices we know have a few reliable, long-term administrative staff members but struggle to maintain high-performing, casual or part-time staff members. Some steps you can take to reduce any risk to your practice from staff are below.
1) Document staff performance criteria and ensure regular reviews.
It's important to outline your employees' expected performance standards with written and agreed staff performance criteria. Regular (annual or bi-annual) reviews are important to let employees know how they are doing and to keep them motivated and engaged. Through a developed process, you can gain and provide feedback on what further development or training team members may need to improve.
2) Ensure employment contracts are drafted and signed off.
Employment contracts are an important aspect of protecting your business and managing employer-employee relationships. Employment contracts need to clearly set out staff roles and responsibilities, working hours, leave entitlements and overtime policies. A well-drafted, written contract of employment is an important tool to regulate and protect your business.
3) Don't let problems fester if issues arise with staff members, ensure they are dealt with in a timely manner.
If a staff member is making mistakes, it may create a legal liability risk for the business. And if action is not taken, your practice could be exposed. Make sure any problems are dealt with promptly in order to minimise disruption and protect yourself.
4) Make sure you are taking the appropriate steps to embed staff policies and procedures. And don't let your standards slip.
If you have a policy and it's not being adhered to, it's not really a policy at all. Be sure to implement policies and hold people accountable. I recall one situation when a practice staff member was turning up late and going home early and regularly not doing their allotted hours. This was neither reported to the bookkeeper nor processed as leave taken through the business's payroll system. As a result, the employer had no way to recover that lost money. Make sure if staff are sick they report it and there is a process to track it.
Revenue risk management
Without a reliable revenue stream and effective financial planning, your practice wouldn't be able to operate. We've outlined some key areas when it comes to managing revenue below.
1) Make sure you invest in managing and monitoring billing systems and processes.
Medical practices rely on generating income from consultations. And billing software is integral to managing this. Make sure you monitor and understand the quirks of your software. Invest in staff training and don't assume the software's always right. For example, we've found with one well-known software tool, if adjustments are made to patient billings in one period, this can affect income reported in a prior period.
Also, keep in mind, billing administration can significantly impact on service activity and this should be considered in the service fees charged by the medical practice. From experience, we know that usually more than 50% of administrative time is spent processing and following up medical billings with Medicare, health funds, etc.
2) Maintain strong invoicing policies by enforcing payment at the time services are provided.
Regularly monitor outstanding debtor levels, and allow administrative staff time to follow up, as this is essential work.
3) Talk to your accounting and tax advice professionals for more information on financial planning and management.
A key part of our financial services offering is helping medical professionals plan ahead and budget for expenses so even when the unexpected happens, your medical practice has the resources it needs to operate.
Of course, this list is by no means comprehensive, and every medical practice owner faces their own unique challenges when running a surgery. But by using these two articles as a guide, you should be able to avoid some of the most common issues we see facing many medical professionals resulting in a productive, profitable and well-functioning business.
If you'd like to find out more about our specialist advisory services and how we assist medical professionals and practice owners achieve the best business and tax outcomes, please contact our Brisbane-based team on (07) 3363 5800.
|Tags: Profitable practice Staffing Risk management Revenue|
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