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Every priority, every behavior, every decision, every communication, every process, and every system, is either a Profit Maker or a Profit Taker. When it comes to Profit Takers, there are of course “the usual suspects”...
Here are the Dirty Dozen Profit Takers...
1. Business plans and budgets (or lacks thereof) that don’t begin by defining profit.
2. Contracts that don’t allow for a reasonable profit.
3. Insufficient performance standards
4. Not having external performance benchmarks.
5. Measuring performance with the wrong metrics.
6. More time than patients.
7. More space than patients.
8. Too much documentation time.
9. Too little variable expense.
10. Failing to charge or collect for services.
11. Managing in the past tense rather than the present and future tense.
12. Spending too little time managing or spending to much time managing the wrong things.
Health, rehabilitation, and fitness businesses are poised to undergo sweeping changes driven by senior demographics, rising healthcare costs, national health policy, obesity, decreasing reimbursement, new regulations, and tougher competition.
Turbulent times demand leadership, innovation, financial reserves, and predictable profitability.
Are there any “Dirty Little Takers” in your practice? Are all of your Profit Makers fiscally fit?
Profit planning is about creating a performance driven chain reaction in your business and buffer against the unknown. Absent an achievable profit plan one can only react to negative circumstances and hope for the best.
Are you profit planning? ...the clock is ticking.
All The Best!
Bob
(c) Copyright 2009
Performance Builders
Friday, October 30, 2009
Wednesday, October 28, 2009
US Healthcare System Wastes Up To $800 Billion / Year
Interesting article - the scary part is that its believable. Then there are the insurance companies that consume about a third of healthcare premiums.
Take a look... Reuters Article
Take a look... Reuters Article
Monday, October 26, 2009
Profit Makers & Takers - Part 4
Profit is driven by priorities. Whether stated or not, priorities are always perceived and present.
Priority setting should be driven by past performance, current budget, future vision, and relevant performance benchmarking.
Trust-worthy practices, service value, and profitability always top the list of priorities. Setting those priorities and selecting processes, systems and behaviors to support those priorities is the work of management.
Effective management requires implementing performance controls that enable real-time decision support and facilitating value creating behaviors throughout the practice. Managing behaviors is a critical responsibility of management.
There are only four ways to change behaviors.
1. Positive reinforcement – get something you want.
2. Negative reinforcement – avoid something you don’t want.
3. Punishment – get something you don’t want.
4. Penalty – lose something you have.
Only positive reinforcement will contribute to sustainable practice performance.
Profitability is driven by behavior. Behavior is driven by management. Management is driven by vision and values and make operational by processes and systems.
Profitability is the measure of management effectiveness in decision making, communication, and leadership. What are your priorities? What is your score?
More next post...
Bob
(c) Copyright 2009
Performance Builders
Priority setting should be driven by past performance, current budget, future vision, and relevant performance benchmarking.
Trust-worthy practices, service value, and profitability always top the list of priorities. Setting those priorities and selecting processes, systems and behaviors to support those priorities is the work of management.
Effective management requires implementing performance controls that enable real-time decision support and facilitating value creating behaviors throughout the practice. Managing behaviors is a critical responsibility of management.
There are only four ways to change behaviors.
1. Positive reinforcement – get something you want.
2. Negative reinforcement – avoid something you don’t want.
3. Punishment – get something you don’t want.
4. Penalty – lose something you have.
Only positive reinforcement will contribute to sustainable practice performance.
Profitability is driven by behavior. Behavior is driven by management. Management is driven by vision and values and make operational by processes and systems.
Profitability is the measure of management effectiveness in decision making, communication, and leadership. What are your priorities? What is your score?
More next post...
Bob
(c) Copyright 2009
Performance Builders
Friday, October 23, 2009
Quotable - Truth Series
"Today I bent the truth to be kind, and I have no regret, for I am far surer of what is kind than I am of what is true." - Robert Brault
Tuesday, October 20, 2009
Profit Makers & Takers - Part 3
So, how can practices improve financial profitability?
Ultimately there are only four ways…
1. Improve revenue
2. Improve expense
3. Improve asset utilization
4. Improve risk
...These are the Profit Makers.
Revenue improvement is driven by case volume, contracts, fees, treatment plans, service delivery, charge capture, and cash collections. It’s all about an interlinked chain reaction of business processes involving marketing, case management, and billing and collections.
Expense improvement is driven principally by labor costs and occupancy costs. It’s all about managing productivity while balancing fixed and variable costs. Migrating fixed costs to variable costs is an important strategy particularly labor costs.
Improving asset utilization is driven by the optimal exploitation of both personal and business assets. It’s all about getting the most out of the talent, facilities, financial resources and relationships you have. Everyone should do more of what they do best and less of all of the rest! Keep in mind that assets such as facilities and information systems are also assets that should be leveraged for optimal positive contribution.
Risk improvement is involves financial investment, business arrangements (e.g. contracts), and regulatory compliance. It’s all about identifying and minimizing those risks while recognizing that risk is where the reward is. There are risks you can afford to take. Risks you can afford not to take. Risks you can’t afford to take. And, risks you can’t afford not to take. Knowing the difference is priceless! Not knowing the difference is foolishness. A key strategy is risk shifting and sharing where possible - such opportunities are present in every practice.
Enhanced profitability results from establishing priorities and effectively managing these four variables in one’s practice.
More next post...
Bob
(c) Copyright 2009
Performance Builders
Ultimately there are only four ways…
1. Improve revenue
2. Improve expense
3. Improve asset utilization
4. Improve risk
...These are the Profit Makers.
Revenue improvement is driven by case volume, contracts, fees, treatment plans, service delivery, charge capture, and cash collections. It’s all about an interlinked chain reaction of business processes involving marketing, case management, and billing and collections.
Expense improvement is driven principally by labor costs and occupancy costs. It’s all about managing productivity while balancing fixed and variable costs. Migrating fixed costs to variable costs is an important strategy particularly labor costs.
Improving asset utilization is driven by the optimal exploitation of both personal and business assets. It’s all about getting the most out of the talent, facilities, financial resources and relationships you have. Everyone should do more of what they do best and less of all of the rest! Keep in mind that assets such as facilities and information systems are also assets that should be leveraged for optimal positive contribution.
Risk improvement is involves financial investment, business arrangements (e.g. contracts), and regulatory compliance. It’s all about identifying and minimizing those risks while recognizing that risk is where the reward is. There are risks you can afford to take. Risks you can afford not to take. Risks you can’t afford to take. And, risks you can’t afford not to take. Knowing the difference is priceless! Not knowing the difference is foolishness. A key strategy is risk shifting and sharing where possible - such opportunities are present in every practice.
Enhanced profitability results from establishing priorities and effectively managing these four variables in one’s practice.
More next post...
Bob
(c) Copyright 2009
Performance Builders
Traveling
Just an update... I'll be traveling to Adrian Michigan this week for The third and final GIFT Gathering of 2009 (Gray Institute). There will be about a half dozen of us there as faculty with about 70 GIFT Fellows who will be graduating with their Functional Manual Reaction Certification (FMR) and will officially become Fellows in Applied Functional Science (FAFS). We will also be having our first opportunity to see each Fellow's Capstone Presentation.
It's been a great year at GIFT (Gray Institute for Functional Transformation) and as in previous years the class has become very close personally and professionally. The talent is incredible and they together with previous year Fellows ARE changing the world of rehabilitation and fitness.
It has been a privilege to serve on GIFT's faculty for the past 3 years and to be able to contribute to the Fellow's learning in Applied Functional Science and Business management. Excellence in both areas is creating significant opportunities and reward for participants!
If you've not checked out GIFT, you owe yourself the favor!
Bob
(c) Copyright 2009
Performance Builders
It's been a great year at GIFT (Gray Institute for Functional Transformation) and as in previous years the class has become very close personally and professionally. The talent is incredible and they together with previous year Fellows ARE changing the world of rehabilitation and fitness.
It has been a privilege to serve on GIFT's faculty for the past 3 years and to be able to contribute to the Fellow's learning in Applied Functional Science and Business management. Excellence in both areas is creating significant opportunities and reward for participants!
If you've not checked out GIFT, you owe yourself the favor!
Bob
(c) Copyright 2009
Performance Builders
Sunday, October 18, 2009
Friday, October 16, 2009
Profit Makers & Takers - Part 2
Profit provides six critical benefits.
1. It provides a return-on-investment for the owner’s capital investment in the practice and reward for the assumption of related financial risk.
2. It provides financial stability necessary to assure employment security for employees.
3. It provides investment capital to improve and expand services for the benefit of communities served.
4. It establishes practice value when the practice is sold.
5. It provides discretionary resources that can be used for philanthropic purposes.
6. Profit provides discretionary resources to influence issues of importance.
There are three wealth building financial rewards that should be on the mind of every practice owner. The first is personal wage compensation – reward for daily contribution of time and expertise to the practice. The second is profit – reward for the investment of capital in the practice and the assumption of risk. The third is asset appreciation (resulting from sustainable practice growth, profitability, and market demand) – reward for long term investment and effective management. Profitability is the underpinning for each of these rewards. Owners and managers should be concerned with all three.
Many practices (old and new) fail to optimize profitability for the simple reason that they fail to budget for profit. Too often practices begin with expense commitments (e.g. space, equipment, and staff) then hope referrals will materialize along with adequate cash flow to make ends meet.
A more disciplined business approach begins with the intent of securing a defined level of profitability and a conservative estimate of referral volume / cash flow, then assumes and structures expense obligations such that the intended profit can be reasonably achieved with prudent and attentive management - not dumb luck, heroic efforts, or lame excuses.
Profit is both a leading and a lagging phenomenon. It is leading in that one should begin with well defined profit intentions. It is lagging in that profit intentions can only be achieved after a chain reaction of planning, decisions, and operations have been effectively executed and managed.
Without profit commitments it is unlikely that optimal business decisions will be made or even considered.
There is very limited appreciation for the wide variation in profitability that exists in practices. Our performance benchmarking of hundreds of practices shows profitability ranging from -43% to +45%. This wide variation is a reflection of management’s intentions, commitments, decisions, and execution.
The bottom line quite literally is that practices across the country significantly under perform to the tune of billions of dollars annually – rewards and influence that is lost forever!
More next post...
All The Best!
Bob
(c) Copyright 2009
Performance Builders
1. It provides a return-on-investment for the owner’s capital investment in the practice and reward for the assumption of related financial risk.
2. It provides financial stability necessary to assure employment security for employees.
3. It provides investment capital to improve and expand services for the benefit of communities served.
4. It establishes practice value when the practice is sold.
5. It provides discretionary resources that can be used for philanthropic purposes.
6. Profit provides discretionary resources to influence issues of importance.
There are three wealth building financial rewards that should be on the mind of every practice owner. The first is personal wage compensation – reward for daily contribution of time and expertise to the practice. The second is profit – reward for the investment of capital in the practice and the assumption of risk. The third is asset appreciation (resulting from sustainable practice growth, profitability, and market demand) – reward for long term investment and effective management. Profitability is the underpinning for each of these rewards. Owners and managers should be concerned with all three.
Many practices (old and new) fail to optimize profitability for the simple reason that they fail to budget for profit. Too often practices begin with expense commitments (e.g. space, equipment, and staff) then hope referrals will materialize along with adequate cash flow to make ends meet.
A more disciplined business approach begins with the intent of securing a defined level of profitability and a conservative estimate of referral volume / cash flow, then assumes and structures expense obligations such that the intended profit can be reasonably achieved with prudent and attentive management - not dumb luck, heroic efforts, or lame excuses.
Profit is both a leading and a lagging phenomenon. It is leading in that one should begin with well defined profit intentions. It is lagging in that profit intentions can only be achieved after a chain reaction of planning, decisions, and operations have been effectively executed and managed.
Without profit commitments it is unlikely that optimal business decisions will be made or even considered.
There is very limited appreciation for the wide variation in profitability that exists in practices. Our performance benchmarking of hundreds of practices shows profitability ranging from -43% to +45%. This wide variation is a reflection of management’s intentions, commitments, decisions, and execution.
The bottom line quite literally is that practices across the country significantly under perform to the tune of billions of dollars annually – rewards and influence that is lost forever!
More next post...
All The Best!
Bob
(c) Copyright 2009
Performance Builders
Monday, October 12, 2009
Quotable - Truth Series
"The more confident you are in your own truth, the less it matters whether or not anyone agrees with you." - Alan Cohen
Monday, October 5, 2009
Profit Makers & Takers - Part 1
Profitability is a topic that gets remarkably little consideration in the professional preparation of most therapists and trainers. It continues to get little more than passing attention in many practices and studios. Unfortunately, profitability also receives little consideration in our professional literature, conferences, and dialog. Why is that?
In a startling number of privately owned service oriented practices profit is viewed as little more than something left over at the end of the year, like restaurant leftovers to be taken home in a doggie bag. An appreciated treat to be sure, but certainly not the well planned, managed, and earned return on investment and capital for growth that it is in other business sectors. Why is that?
Why aren’t more private practices and studios run more like the businesses that they are? Why is a small profit or even break-even so often considered “good enough? Do such attitudes and financial performance compromise the influence professional service businesses have in their communities and society at large? Do they compromise growth, advocacy, influence, and reward? Of course they do!
Why do so many professional business owners casually give up their birthrights and future?
Why are the very professionals who earn their living providing consultative advice/services to their patients, clients, and customers so prone not to seek the help they need pertaining to business matters? Curious...
Now I’m not saying that quality services don’t come first. I deeply believe that is true. However quality service cannot be sustained or grown in the absence of reasonable profit. Without profit quality service erodes, as does professional staff and customer loyalty. Profit is important!
But, profit takes planning. Now is the time to be planning your profit for 2010. Don’t have time? Then make it – it’s that important. Don’t know how? Ask for help – you can’t afford not to.
Let’s rewind and rethink profitability from the beginning… More next post...
All The Best!
Bob
(c) Copyright 2009
Performance Builders
In a startling number of privately owned service oriented practices profit is viewed as little more than something left over at the end of the year, like restaurant leftovers to be taken home in a doggie bag. An appreciated treat to be sure, but certainly not the well planned, managed, and earned return on investment and capital for growth that it is in other business sectors. Why is that?
Why aren’t more private practices and studios run more like the businesses that they are? Why is a small profit or even break-even so often considered “good enough? Do such attitudes and financial performance compromise the influence professional service businesses have in their communities and society at large? Do they compromise growth, advocacy, influence, and reward? Of course they do!
Why do so many professional business owners casually give up their birthrights and future?
Why are the very professionals who earn their living providing consultative advice/services to their patients, clients, and customers so prone not to seek the help they need pertaining to business matters? Curious...
Now I’m not saying that quality services don’t come first. I deeply believe that is true. However quality service cannot be sustained or grown in the absence of reasonable profit. Without profit quality service erodes, as does professional staff and customer loyalty. Profit is important!
But, profit takes planning. Now is the time to be planning your profit for 2010. Don’t have time? Then make it – it’s that important. Don’t know how? Ask for help – you can’t afford not to.
Let’s rewind and rethink profitability from the beginning… More next post...
All The Best!
Bob
(c) Copyright 2009
Performance Builders
Announcement
I'll be Boston later this week participating in the Gray Institute Chain Reaction Seminar and meeting with clients. I hope to see you there!
