Game Changers - Profit Planning

Leading practices understand that profit is the life blood of their practice. It is what enables them to improve and innovate, attract and retain talent, and earn a reasonable return on their investment and risk. Profit, or the lack thereof, is a huge Game Changer. Profit is particularly important during challenging times of change, such as we find ourselves in now, because it enables options and choice in responding to new challenges.

Profit is the ultimate measure of a practices relevance, service, knowledge, judgment, skill, discipline and planning. Profit is too important to leave to chance. To be optimized profit must be planned.

Too often practice owners and managers think of profit as something that is leftover rather than built in. When that is one’s perspective, performance always falls short of potential. It’s amazing how many practices operate without a coherent strategy or financial plan. Its startling how few practice owners and managers even know their intended and actual profitability.

Profit begins with planning.

Planning involves establishing expectations, positioning operations for success, managing behaviors, and delivering results.

So what factors into planning?

Most practices define expenses first, then chase revenue with hopes of achieving a profit. Leaders use a different approach – they define intended profit and realistic revenue first and then manage expense within predetermined constraints. Doing so empowers them to manage by making disciplined decisions.

Capitalization, equity, debt, credit, cash flow, pricing, contracts, and collections are obviously important factors. Then there are labor considerations including staff levels, mix, assignments, compensation, training,  and productivity. Facility related matters are also part of the plan – location, size, design, and occupancy expense. Operational factors such as policy, procedure, workflow, offerings, services, utilization, communications, and marketing are also critical. Each factor has its own impact but together the impact can be exponential. These are just some of the big rocks.

Other factors involve performance history, competition, vision, market changes, and comparative performance benchmarks.

Every factor and every decision either enhances or diminishes potential profitability.Whether one earns a profit or not is simply a matter of choice!

Leading practices are Game Changers for their competitors.  Through profit planning Leaders strengthen their positions, their choices, their influence, and their advantage. They set the pace and widen the lead. They do so at their competitors expense. They do so to their community's benefit. That’s what makes them leaders. It begins with intent, commitment and planning. Profit follows…

Profit planning has never been more important than it is today. A growing market and eroding reimbursement demands innovation and profitability to implement it. It’s not just about surviving it’s about thriving.

There is nothing more strategically important or financially rewarding than Profit Planning! It’s impact is immediate.


You’ll be surprised by its potential.


“Profitability is not the purpose of, but a limiting factor on, business enterprise and business activity. Profit is not the explanation, cause, or rationale of business behavior and business decisions, but rather the test of their validity”. – Peter Drucker

All The Best!

Bob

© Copyright 2010

Performance Builders

Quotable - Truth Series

 “There is a profound difference between hearing someone say this is the truth, and hearing someone say this is my truth.” - Krista Tippett

Game Changers - Documentation

Leading practices have realized that clinical documentation is a key strategy in a Game Changing practice environment where efficiency and productivity are becoming ever more critical and service justification essential. Why? Because documentation takes time away from service provision and revenue production; and third party payers are always looking for ways to reject payment.  

There are five primary reasons for clinical documentation.

1.  For  continuity  and  quality  of  care  –  Clinicians  forget  things  and  sometimes need  to  have  someone  else  provide care. 
2. For  reimbursement  –  Payers  want  to know  that  services  are needed, appropriate, beneficial,and delivered. 
3. For medical‐legal  liability – Occasionally things  go  wrong  and  need  to  be investigated.  Truth  is,  too  much information  can  be  as  harmful  as  too little and therapist malpractice rates are a testament to low risk.  
4.  For  research  –  Learning is  important. But fact is that very few practices or clinicians are actively involved in clinical research, so many practices track far more information than they gain value from. 
5. For marketing – optimized documentation tells a story of efficiency and effectiveness that can be used strategically for competitive advantage and growth.

 Documentation is another Goldilocks Issue – not too big, not too small, not too hard, and certainly not a bear! It needs to be kept “just right”! Too big wastes time, while too small compromises clinical care and reimbursement. “Just right” adds value!

So what does “just right” look like?

It begins with three simple rules:

1. Do all and only what needs to be done. 
2. Do it once and do it right.
3. Do it fast, cheap, and accurate.   

Then certain key strategies are leveraged…

1. A standardized minimum data set captures all and only what information is needed.
2. Exception reporting is leveraged to reduce volume and simplify content
3. Workflow offloads tasks and simplifies administration and management
4. Computerization is deployed strategically, not as an end in itself - yes there are things that should not be computerized
5. Data is interpreted and not just dumped on recipients
6. Reports are audience specific and tailored to their need to know
7. Narratives are replaced by information mapping
8. Repetitive tasks, content and analysis  are templated and automated
9. Accountability is built in - think progress against stated discharge criteria - not just goals
10. Documentation is completed in real-time but never at the expense of patient interaction

Inefficient documentation is common, even where computerization has been implemented. It wastes valuable resources and undermines service capacity. Good documentation systems add multidimensional value.

Optimized documentation is more a matter of strategy than software.  So it’s no surprise that so many (most) practices are disappointed with their software investments.  

The solution is revolution not evolution.  

Leading practices recognize the need to do more for less and that in matters of documentation less is more! When done well, the cost of documentation can be reduced by half or more while revenue is improved. No wonder its caught the attention of leading practices.

I have strong opinions on documentation. It comes from working on clinical documentation systems for over 20 year. I've had the privilege to design and implemented several proprietary computerized clinical documentation systems. Systems that were built from the bottom up with productivity built in. The opportunities came because my clients found they were unable to find commercial systems that provided the functionality, features, and efficiency they were seeking.  

Commercial clinical documentation systems are designed to allow customers unlimited customization - the only limit is what the client can afford to spend for customization - usually customization only perpetuates inefficiency and unnecessary expense. There are are better ways. What I've shared here is the tip of the iceberg.

Optimized clinical documentation is a dependable Game Changer that can yield a positive return on investment every day. Documentation is one game that most practices need to change. Its not about computerizing old habits but rather about innovating better and more efficient habits. The former is equivalent to paving wondering cow paths - that latter is like building a multi-lane expressway between point A and point B.


Is it time to get strategic? Is it time to reduce cost and increase profitability with every patient encounter? Is it time to realize a built in competitive advantage? Now you've got the idea!


Next Post - Profit Planning.

All The Best!

Bob

© Copyright 2010

Performance Builders

Quotable - Truth Series

 “As soon as human beings pick up a piece of the truth, they make their mark on it. They codify it and literalize. They distort the rest of the picture to fit their chosen center. This happens with every version of the truth.” - Krista Tippett

Game Changers - Utilization

Leading practices across the country are taking a fresh look at Utilization. Why? Because Utilization is a key indicator of care planning and management, service value and outcomes, resource consumption, professional contribution, and financial performance.  Utilization tells an important story for those who are willing to hear it and are committed to excellence.

As we have discussed previously in this Game Changer Series, the twenty-first century healthcare environment is defined by the rapidly rising consumption of health services, increasing consumer expectations, exploding health care costs, and eroding provider reimbursement. These are not passing trends but rather the new normal.

Utilization metrics incorporate three core performance parameters that are relevant to care services, strategic planning, and financial management  – Visits/Case, Units/Visit, and Expense/Unit.

Utilization is all about goals, outcomes, right-sizing, and efficacy. Let’s consider each of these briefly…

Goals establish priorities, define expectations, and set direction. They are defined in care plans, implemented with scheduling, evaluated throughout the service cycle, reported in documentation, validated to justify reimbursement, cited for marketing purposes, and rewarded by compensation. Goals drive utilization. Utilization is dependent upon one's intervention focus – education, home instruction, pain relief, isolated segmental restoration, holistic functional rehabilitation, re-injury prevention, or performance optimization.

Goals involve both qualitative priorities (improved balance) and quantitative outcomes (Olympic gold medal on the balance beam).  Outcomes consider how high one sets the bar. Outcome expectations and their achievement often become self-fulfilling prophesies. What would patients want if they understood the difference between what was permitted, probable, and possible? What expectations are your utilization standards creating? What innovation are your standards driving?

Utilization decisions are influenced by who has knowledge,  power  and control over the intervention priorities and outcomes that are/can be established – the payor, provider, or patient.

Utilization constraints can be artificially introduced by payor benefits as in examples such as: 6 visits/case, 2 units/visit, or $75/visit. Such constaints are prone to protect payor profitability at the expense of patient needs.

Utilization can also be constrained by providers using one-size-fits-all planning and scheduling. When utilization is routinely defined as, “one-on-one for 60-minutes, three times a week for 4 weeks”, the primary constraint is that of provider habit where preference trumps possibility. One size does not fit all.


Utilization constraints such as a client’s community, family responsibilities, travel distance, transportation, work schedule, financial resources, insurance or lack thereof, benefit plan, and even the weather also affect utilization.

With all those utilization variables there are a lot of opportunities for a perceptive and innovative manager!


As Goldilocks discovered, in The Three Bears' world of “too big or too small”, “too hard or too soft”, “too hot or too cold”, there is tremendous value in “just right”. Right-sizing recognizes that utilization is influenced by constraints within an infinite spectrum of possibilities. Utilization must be actively and creatively managed.


Efficacy involves effectiveness and optimization – doing all and only that which will produce the best benefits in the shortest time, for the least resources. Often efficacy is assumed, with interventions being based more on matters of training, tradition, protocol, economics, and egos than on scientific evidence. Efficacy always impacts utilization either favorably or unfavorably. There is room for improvement. It is interesting that  nearly every professional claims/believes that they provide superior efficacy – just ask them! However, statistically we know with certainty that 75% of professionals do not. Utilization is greatly impacted by, as Will Rogers said, “What we think we know that just ain’t so.”

So what story is utilization telling us?

1.       1. Utilization increases when outcome priorities shift from pain relief to functional restoration.

2.       2. Utilization decreases when outcome priorities shift from functional restoration to payor profit.

3.       3. Utilization is optimized when priorities shift from medical diagnosis to functional impairment.

4.       4. Utilization is optimized when focus shifts from symptom relief to biomechanical cause.

5.       5. One-size-fits-all utilization dosage won’t work, doesn't work, and never did.

6.       6. Industry leaders will be those who understand the complexity of Utilization and get it right.

7.       7.  Industry laggards will be those who won’t let go.

Industry leaders understand that utilization management, like investment management, is optimized in the context of a portfolio where diversification, risk mitigation, short and long term goals, value, performance, and return on investment considerations are all interlinked. The simplistic management of utilization fails to deliver value! They recognize the complexities and opportunities of utilization and strategically optimize utilization for the benefit of those they serve.

The lesson of utilization is simply, “play smart or go home”.

All The Best!

Bob

© Copyright 2010

PerformanceBuilders

National Healthcare Reform

Washington's legislative efforts to restructure the US's $2.5 trillion healthcare system may have stalled, but pressure to control costs, expand access and improve quality continues to build. Healthcare's share of the gross domestic product grew in 2009 at its fastest rate in 50 years; and healthcare spending will nearly double by 2019. One thing is certain - the status quo is not sustainable.

Quotable - Truth Series

“Whoever undertakes to set himself up as a judge of Truth and Knowledge is shipwrecked by the laughter of the gods.” - Albert Einstein

Game Changers - Productivity (Part 3 of 3)

Like it or not, the Game Has Changed. So too must productivity. To simply maintain productivity is to fall further behind every day. Why? Because reimbursement continues to erode - a trend that is certain to continue given rising healthcare costs.


By way of a recent example, California experienced a significant decrease in Anthem Blue Cross reimbursement for PT providers ($75/visit cap) this month (Feb 2010). Meanwhile Anthem also announced premium increases for members of 39%. Then of course there is the proposed 21+% decrease in Medicare fees for 2010... Will there be more cuts? Count on it!


With eroding payments productivity must increase if compensation and profits are to be maintained, much less increased. And of course, increased quality of care does not come without investment!


So what does it take to improve productivity in practices today?


1. It begins with acknowledgment that: the “Game has Changed” and that the pace of change is quickening and irreversible... that productivity in current business models is not stable, sustainable, or scalable... that it's time for decisive action.


2. It progresses in dialog with key stakeholders with whom tough realities are discussed candidly and unemotionally, and implications are explored broadly. A consensus is formed and articulated as nonnegotiable business principles.


3. The dialog then expands to engage staff in a series of conversations (not presentations or proclamations) through which realities are explored, shared understandings are formed, implications are considered, loyalties are tested, and commitments are volunteered.


4. It is through talking, dreaming, debating, and yes, arguing that comprehensive plans are formulated and funded.


5. The Game Changes. The implementation of priorities, performance standards, training, responsibilities/accountabilities, work processes/flow/deliverables, information systems, advancement and compensation are all part of the process.


6. Finally, those Changes are leveraged to secure new business opportunity and competitive advantage for profitable growth!


Anything less, is less than serious. Anything is will predictably fail. The cost of not improving productivity is high.


The need for such change surpasses individual practices and encompasses the profession in its entirety; including professional and trade associations, universities that prepare professionals, continuing education, and even vendors. But first, it will take root and form in a small nucleus of practices that will set the pace for the profession and will find considerable opportunity and reward in doing so.


Productivity is a potent Game Changer and potency is what the current market environment demands.


Futures are being determined in the productivity decisions that are made and in the actions that are being taken, whether those decisions are consciously intentional or not.


The automobile industry is being framed by fuel efficiency and value; and so too is the health industry.The game has moved from the friendly, comfort, and predictable to the aggressive, competitive, and chaotic. The new game is fueled by productivity and innovation. The market demands that we lead, follow or get out of the way. Which will it be?


Are you a Game Changer? Got your game face on? Got your game on?


Get productive!


In the next Game Changer post we'll consider Utilization...


All The Best!


Bob

© Copyright 2010
Performance Builders

Quotable - Truth Series

"Truth is always the strongest argument." - Sophocles

Game Changers - Productivity (Part 2 of 3)

To repeat where we left off...


While external factors have had their impact on productivity, there have also been critical internal factors at play – education and training, infrastructure investment, management priorities, and matters of professional comfort and convenience.


Despite the elevation of entry level education to the doctoral level for PTs, most enter the profession with little if any business orientation; this despite the fact, that healthcare accounts for 1/6th of the US economy.


Most therapists also arrive with little if any structured training or experience in delegation to support staff – even to staff who are credentialed professionals (e.g. PTAs). Task stratification, work assignments, and supervised delegation are cornerstones of productivity but remain under leveraged at best and unleveraged at worst within the profession. The result is underperformance and unnecessarliy constrained capacity within practices and the profession as a whole.


Infrastructue investment has been another internal detriment to productivity. Simply stated there has been too little. There are also matters of investment with good intentions but disappointing results. A prime example of that is the current rush toward the perceived need for electronic medical records in rehab with too little regard or understanding of productivity and return on investment implications. (more about that in another post).


It is extremely rare to find practices strategically and systematically investing in making their people more productive. That despite the fact that practices are service based with labor the single largest expense. Optimizing staff productivity and capacity through training and infrastructure investment should be the primary expense management strategy of practices but seldom is!


Too often productivity improvement is no more than owners, administrators, or managers periodically mounting their bully-pulpit or soap-box to threaten, admonish, cajole, plead, or beg staff to work harder or longer or to bill more units. Staff without adequate understanding, training, systems, resources, performance standards and accountability are not to blame, and thus are not the primary solution.


Productivity begins with purpose, leadership, strategy, and investment. It begins with an end in mind and is executed with passion and attention to detail. Only then can the benefits of productivity be harvested and respect for individuals be protected.


That is not to say that front line clinical professionals are not a critical part of the problem and of the solution. Professionals are afterall people first. All people have a tendency to do what they perceive to be in their own best interest. Work related comfort and convenience are important.


Change takes energy and comes with uncertainty. Lives are busy. One-on-one services packaged in one hour appointments for all patients, without delegation responsibilities are comfortable and satisfying for the professional on multiple levels. But, it is neither a clinical or business model that is financially stable, sustainable, or scalable! That’s the simple truth.


Let’s be honest and respectful with each other – it’s the way professionals relate. There is a significant culture of comfortable productivity that dominates the rehabilitation profession. That culture is protected and perpetuated whenever the quality trump card is played in productivity discussions.


Why does it have to be quality or productivity? Why not quality and productivity? It is where quality and productivity intersect that value is created, patients and communities benefit, professions are advanced, and future opportunities are secured. Professional advancement, job security and financial prosperity is dependent on value creation as measured by clinical and business outcomes – not one or the other, but BOTH.


Only by enhancing productivity and value (i.e. providing better results for more people at less cost) can professional security and prosperity be expanded. The simple reality is this: the need for health, rehabilitation, and fitness services is increasing rapidly and will continue to do for several decades. Those who expand capacity and value will be well rewarded. Those who don't will eventually be replaced. It is the way of the market. There is no place to hide. It is true for professionals, practices, and the profession. Evolve and adapt or go extinct.


Productivity is a measure of contribution, relevence, value, and vitality. Productivity is a matter of professional pride and possibility. Productivity means potential and prosperity. Productivity is a Game Changer!


Leading practices are Changing the Game today! They are doing so from the inside out while they have time. They are not blaming others and are not waiting for the inevitable. They are listening to the worries, needs, and preferences of the communities they serve. They are responding with new services provided in new ways with enhanced value to more people. And, they are being recognized and rewarded. They are sparking a revolution.


It was during the American Revolution that patriot Thomas Paine said, "Lead, follow, or get out of the way!"  And so it is today with productivity in healthcare...


To be Continued...


All The Best!


Bob

© Copyright 2010 Performance Builders

Quotable - Truth Series

"Fear has silenced the voice of truth in your world, and this is the anguish with which you struggle." - Emmanuel/Pat Rodegast