Sometimes, healthcare practices don’t notice that the wheels have totally come off until it’s just too late. You’ve likely seen all the signs: Office spaces and technology are out-of-date, doctors are burned out, employees constantly call in sick and training is routinely pushed to the backburner.
Katie Nunn, MBA, CMPE, is CEO of Bright Ideas Medical Consulting, LLC, based near Richmond, Virginia. She recently spoke to MGMA Sr. Editor Daniel Williams on the MGMA Insights podcast about preventatively treating the various symptoms of medical practices needing major financial check-ups.
Nunn said there's a laundry list of telltale signs that desperately require outside assistance – be it cashflow problems from light schedules and underutilized providers, fraud or theft, upticks in both accounts payable and receivable, or a full-blown Medicare or Medicaid audit.
Signs and symptoms
But as she noted: “Having any one of these signs and symptoms doesn’t mean that your practice is in financial distress, but it is important that you know the reason behind any of these symptoms. I would describe financial distress as anything from not being able to pay your bills or make ends meet each month. The most distressing scenario is when a practice owner is unable to pay themselves after they pay all the other expenses that they have.”
Nunn, who comes from a long history as administrator and director of operations with a variety of healthcare providers in Virginia and Georgia, now supplies management consulting to private medical groups, focusing on clinical operations, healthcare IT, strategic planning and physician leadership development, among other areas.
“Healthcare management is complicated,” Nunn says in her website bio. “Practice managers and administrators wear a lot of hats every day. Many will have HR responsibilities, compliance duties and financial obligations every day while also leading, coaching and encouraging their staff. Not to mention answering to physicians and other providers and trying to keep them happy and productive. Oh, and don’t forget the patients, the whole reason people start in healthcare, to begin with.”
Examining the issues
Nunn said issues can also be more complex than just financial mismanagement and are often associated with the kind of culture created by problems as simple as outdated equipment or office space.
“Some things that you might see are employees that are unhappy, complaining, calling out, leaving or really high turnover rates,” she said. “Maybe they’ve had a long-term lease, and they’ve never really updated anything. It’s kind of a turnoff to patients, so it’s slowly in decline.”
In other cases, Nunn said issues can also stem from providers who aren’t working enough. This is in large part due to a lack of new patients, which, consequentially, is often the direct result of a lack of modern marketing.
“I’ve been surprised to see so many of these small practices that have been around for a long time, and they don’t have websites, so they don’t have any visibility,” she said. “That’s how the newer generations are finding their providers. If they don’t have a website, patients won’t even consider them as an option.”
Like a patient visiting a doctor, Nunn said she and other medical management consultants often begin the process of fixing a “broken” clinic with a practice assessment – a periodic check-up that can be critical to a practice’s success.
“What I’ve been doing is starting off by doing a head-to-toe physical exam, if you will, and figuring out what’s going on, looking at their finances … seeing if you can identify trends or things that pop out,” she said. “And then trying to come up with a plan, like, ‘OK, here we are and then this is where we want to be. Is there a way we can get there, how long will it take, and how much?’ Because it’s often that you have to put some money into it in order to get to being profitable and totry to figure out if those avenues are possible or not.”
Working with staff to examine financial plans or even analyzing efficiencies in billing practices requires forethought, and Nunn said the secret to success is to treat a medical business as just that a – business. The proper help is always priceless, too, of course.
“It’s all about having a plan,” she said. “That’s kind of a basic business concept. Most businesses need or should have a business plan. But medical practices in the past, it was you go out there and hang your shingle and you were going to make money, right? I think the days of that are gone, because healthcare’s so complicated now. You need to have a plan. ... I think that’s just good business practice.”
Learn more about financial distress from Katie Nunn in this episode of the MGMA Insights podcast
- "Staff empowerment essential to revenue cycle management process" (MGMA Insight Article)
- "Using business intelligence to improve your bottom line" (MGMA Podcast)
- "Essentials of Financial Management 100 Level" (MGMA Online Course)
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