The warning signs of office deficiencies leading to profit leaks are numerous and common. Eight employees texting just 15 minutes a day can add up to profit loss of $9,000.
A medical practice’s human resources department is one potentially problematic area where profit leaks exist. In my article “
,” which ran in August of 2010, I noted the importance of developing your team with a focus on accountability. Now, we will explore how to identify the deficiencies that exist in your practice with respect to human resources and how to correct them.
An Action Plan for Plugging Profit Leaks in your Practice
When I conduct my initial discovery meeting with a new client the first questions that I ask are “Do you know what your staff does on a daily basis?” and “Is there a system of accountability and measurement?” The answers I get can range from “I have no idea what my staff does” to “I do not interact with my staff at all.”
Enforcing employee accountability in the workplace can be a challenging task. Physician business owners are experts at excercising proper bedside manner and often find themselves in a position of having to deliver life changing information to their patients. However, put them in a position that requires enforcing accountability with their staff and they often prefer to do nothing and simply hope for the best. Unfortunately, taking this position costs practices a significant amount of wasted time and money.
The warning signs are numerous and often common among offices. They consist of patient complaints, high employee turnover, frequent absentism, office staff conflict, getting to work late, texting, stealing time and, ultimately, interruptions in your day due to poor office and front desk management. All of these items will cause profit leaks, impact your office’s net income and productivity, and they could cause a 10% to 15% decline in net profits. For the physician-owner this particular type of profit leak is more difficult to measure in terms of dollars which is often the reason the problem is not addressed properly.
The first step is to acknowledge the problem exists. Next, identify a measureable area for improvement and assign a dollar amount to the profit leak you want to address. One example would be employee texting in the office.
If you have eight employees and each employee spends 15 minutes a day texting, it would add up to two hours per day of unproductive time. Do the math and now you are looking at 10 hours per week or 520 hours per year. Now take it a step further and calculate this number using your average wage rate. For the purposes of this article let's use $18 per hour. What seems like harmless texting (only 15 minutes per day) is costing the practice over $9,000 per year.
Of course, this is a simplified example, but you can apply this methodology to other profit leaks that involve human resources, such as patient insurance benefit verifications or pre-certifications, proper patient demographic intake and the cost of employee turnover and retraining. Then, you will realize that there are significant costs to not maintaining a proper system of human resource internal controls.
Changes to make
The task of implementing change in an effort to establish employee accountability begins with managing expectations and then communicating to your employees not only what you expect from them in terms of productivity, but also what they can expect from your as their employer. If you are not able to communicate your expectations, then it is your responsibility to share the blame if poor employee performance exists in your practice.
Incorporate job descriptions and written job functions for each position into your practice. Job descriptions will provide an employee with an outline of what the duties of his or her position encompasses. More importantly, written job functions will give your employees the information they require on how to complete tasks.
Create a "how to" folder on your computer system that employees can reference when necessary. Anytime time a job function comes up that initiates a question, take the time to have the solution documented and saved on your server. The initial time required to have the solution written up will save you countless hours and will improve productivity in the future.
Establish measurement system
Measurement is the key to establishing a successful system of management and helps facilitate employee accountability. The question often asked is what to measure? This can range from the obvious, such as average wait time for a patient to be seen and patient satisfaction surveys to accurately capturing current patient demographics and benefit verification information, as previously mentioned.
After your system of measurement is established, develop achievable goals for your employees to accomplish. Your team should develop an understanding that the work they do is important to the profitability of the practice. It is important that you communicate results to your employees and the relevance of a job well done. Achieving and surpassing measureable goals should be rewarded with some form of incentive. Alternatively, lack of accountability and poor performance should be met with consequences such as stagnant wages, demotion, reduced responsibility and, if necessary, dismissal.
To record and monitor employee performance, develop written performance reports to review with your employees bi-annually, or annually at a minimum. It is your opportunity to communicate your measurement of their achievments and manage expectations for the future.
Recipe for success
Creating a system of employee accountability is paramount to a successful office culture and environment. Maintaining a system of open dialog and communication with your staff will empower them to keep you informed, plus will improve the profitability of your practice. The physician business owner needs to embrace the changes required to improve practice profitability wherever it is achievable.
Marc H. Lion CPA, CFP, is the founding member of Lion & Co., CPAs LLP, an accounting and consulting firm, and also a proud member of the National CPA Health Care Advisors Association, a nationwide network of CPA firms devoted to serving the health care industry. Its members provide proactive solutions to the accounting needs of physicians and physician groups. Marc can be reached at
Lion & Co. is also a proud member of the National CPA Health Care Advisors Association. HCAA is a nationwide network of CPA firms devoted to serving the healthcare industry. Members provide proactive solutions to the accounting needs of physicians and physician groups. For more information contact the HCAA at