It is now more important than ever for physicians to understand the financial ramifications of their practice efforts. Practice profitability and financial condition has previously been of little concern because the profitable conduct of a medical practice was easy to achieve. Many practices today suffer operating losses, possess deficits in their equity positions and have doctors who are incapable of generating sufficient individual revenue to cover practice overhead and provide for the salary and benefits they desire. Physicians are able to understand the necessary financial concepts when they are presented in a cogent and relevant fashion and this understanding can motivate them to better performance effort.
The effective presentation of financial results to physicians requires selecting the right time, the correct audience and offering the right information. Doctors are under mental siege with changes in diagnosis codes under ICD-10, questions about the sufficiency of their chart documentation, challenges to the dispersion patterns of their E&M codes, mandates that they accomplish the meaningful use of their EMR, required performance criteria under PQRS, and achieving high patient satisfaction scores. It is little wonder that doctors tune out those who take their time, at the end of a long day, to review their financial performance results. They have about the same ability and inclination to interpret and apply this financial information as we do our lab results when presented them.
The art of this communication begins with providing only selected data which flows from their efforts, and which links to the rewards they take home to their families. Hospital administrators or designees from the central billing office miss a teaching opportunity when they send an email to a physician with financial results attached or, even worse, expect a doctor to remember to look on an internal web site to find his or her results from the prior month. A financial review and discussion meeting can help them understand that their fast starts on Monday and Tuesday enabled them to cover their share of practice overhead by Wednesday morning. Wednesday and Thursday work efforts generated the salary and fringe benefits provided to them, and the Friday clinic is stockpiling income which will be their bonus. Show them how cost containment, such as the use of a medical assistant rather than an RN is enabling the completion of overhead coverage to happen sooner in the week. There is a direct correlation between financial results and physician behavior, and the responsibility to evidence this correlation falls with the administrative team or manager of the practice, not the doctor.
Use comparisons when possible to motivate physicians to better behavior. Physicians are high achievers and competitive. They out performed their peers to be accepted to the best undergraduate schools, competed to get into medical school and outperformed others in their medical class for slots in the additional training they desired. It is a stinging insult to many of them to be informed that they are only average in performance. We compare our medical practice groups, and the individual doctors, to national averages for their specialty, to other doctors in our market, to other physicians in their own group and to their own performance in prior periods. A physician unhappy with their recent bonus will reluctantly understand if you can show that their production is lower than the same time last year, or how their two week extended vacation caused their patient encounters to be lower. One surgical practice posted a schedule of surgeries and used a different highlighter color for each doctor. When a physician saw that his color was minimal in comparison to his partners on the board, he would open his appointment availability to see more patients. Utilizing physicians’ competitive nature also served a practice when the manager met with all the doctors monthly to review their respective professional courtesies written off during the prior month. The doctors who gave away too much were singled out when this habit was discussed.
Bad financial news needs to always be served on paper in the form of a schedule to take the blame. Physicians are evidenced based decision makers and bad news needs to be fact based, not the opinion of a liaison staff member who tries to tell the doctor what went wrong. Reduce it to a mathematical illustration on a worksheet where the numbers are supported by reports the doctor has seen and the worksheet incorporates agreed upon assumptions. Serve bad news privately, or give the MD recipient advance notice that it is part of the group meeting discussion. Financially ambushing a doctor in the presence of their partner group is not beneficial to your relationship with them, or behavior modification on their part.
Keeping it simple, relevant, frequent, and comparative to others are key to the delivery process. What financial information should you give them? Warren Averett provides practice profitability, practice net worth, production for the group and each doctor, comparison of collections by MD for this accounting cycle versus prior periods, collection to charges ratios compared to others in the group, expense variances this cycle versus prior periods, ancillary revenue profit center results, overhead as a percentage of collections, overhead as a dollar amount per provider, overtime paid to staff, profitability of new physicians, and other items when they are relevant to the financial results of the practice. It is important to interchange the data points to keep presentations fresh. Stale financial formats delivered in tired narrative can make even good results boring. Help your team celebrate financial success. I have said in physician meetings “this is a good time for high fives all around because you all worked hard and worked smartly.” On one occasion for a new practice, I took a cookie cake to the next physician group meeting after their monthly practice collections exceeded the amount needed to cover overhead and regular physician salaries.
Physicians have a growing respect for the business side of their practices so honor that respect with timely, useful information with actionable recommendations for improvement. Show them the numbers but tell them what the numbers mean. Illustrate how their past efforts resulted in these numbers but provide examples of how future efforts could improve future results. In the language of financial reporting, you may be their only interpreter.