Striking the perfect balance: how a virtual CFO can help your practice increase profits and improve patient satisfaction
04 May 2023
While medical practice owners have always faced time constraints, balancing seeing patients with managing and growing their practice, the constraints have never been greater than at present.
The ongoing shortage of doctors nationally combined with delayed diagnosis and treatment of patients has added to the burden put on medical practices. It is not just doctors that are under strain, but the practice mangers as well.
This is why Findex created a Medical ‘Virtual’ CFO solution.
We have been working with clients all throughout Australia for a number of years and a Medical Virtual CFO has already proven to be of great value to several medical practices. We don’t just look at the surface of the financials of your practice, we look at billing items, referrals, doctor remuneration, nurse remuneration, practice structure, benchmarking, KPI setting, tax planning and so much more and we meet monthly to discuss the performance and direction of the practice using the live data. By presenting information in a succinct and easy to understand way, we provide the tools that allow you, the practice managers and owners to make the right decisions for the practice.
What does this look like? A case study
In 2017 we started working with a practice that needed assistance with fee setting, doctor attraction and retention, remuneration packages, and practice growth.
Review current practices
The first step was to review their current billing practises. We did this by extracting the billings both by doctor and item code from the practice management software. From this information we quickly identified that some doctors were billing a lot more general consults, and other doctors were billing more care plans and additional patient services – indicating a lack of consistency on how the doctors were coding their consultations.
From here, we worked with the lead doctor to create an approach that meant all doctors knew the correct item codes, and that each doctor looked at the patient’s whole health rather than dealt with the issue brought to them on the day. This created better patient care, increased patient retention and subsequent increased billings through a more in-depth service, such as health care plans. Ultimately, this resulted in better financial returns for the doctor and the practice.
Review fees and remuneration
Secondly, we reviewed the fees. We compared the fees being charged to fees being charged to patients, and the method in which fees were collected. We reviewed the total costs to operate the practice and calculated the “gap” fee that needed to be charged to make the practice profitable while still providing patients with the best care. We were then able to compare this rate to rates charged by similar practices in similar locations and set the “gap” fee for the practice accordingly. This resulted in better cashflow for the practice, better remuneration for doctors, a more profitable practice, without compromising care for the patients.
Next up was reviewing remuneration. Because of how successful the first two reviews were and with billing practices now better aligned for profit, the practice was able to reduce the percentage of gross fees doctors were receiving and still have them receive substantially more than they did before. It also created an opportunity to put in place incentive schemes for doctors who were outperforming benchmarks, which leads to both greater doctor retention and workplace attraction
We also undertook a review of other staff remuneration and overall spending, to make sure it was appropriate for the practice. Again, this allowed us to offer incentives to staff that previously had not developed KPIs, aligning the goals of the staff to the goals of the practice
Once we had these fundamentals in place, we looked at the bigger picture and growth of the practice. This included room utilisation, referral networks, practice expansion and business development.
We continue to meet monthly with this practice and although we still review and refine aspects such as doctors billing and overheads, a lot more of the focus these days is on the expansion of the practice group and the wealth generation and protection of the owners.
Securing personal finances, too
Lastly, it is critical that the doctors are looking after themselves. Time after time we hear of doctors and their employees not having the time to ensure their personal finances and risk insurance is up to date and their taxation is take care of. Usually, their structure is no longer meeting their needs, and they haven’t had a moment to think about whether their superannuation and investments are being optimised.
You may or may not need the depth of review we went through with the above practice but working with our Medical Virtual CFO service provides you with a clear understanding of where your practice is currently, what direction you want to take it in, and what simple or more complex changes can be made to get you there. We can help locate and guide you through the necessary steps without taking too much time away from the running of your practice and giving your patients the best possible care.
Find out more about the ways our Medical Virtual CFO can make a difference in your practice and contact our team to discuss your practice’s position and needs here.
The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex Group Limited.