Proper timing of financial reports adds transparency, builds confidence among providers

By Kyle D. Matthews, CMPE, MGMA Board member
October 1, 2017
Body of Knowledge Domain(s): Financial Management

Imagine you are hired at a practice under extreme financial duress. How important are the financials to the physicians? Now picture a practice that is financially sound with no foreseeable issues. Are the financials any less important?

To doctors, financial reporting can be like tires on car — they may glance at them and make sure they are there without taking the time to ensure they contain the desired strength. Typically, it takes a failure or a flat to garner the proper attention. When that occurs, you could be faced with physicians who may question the integrity of the whole operation. This often ends badly for those whose responsibilities include ensuring the financials were strong and intact.

So, how often should practice leaders provide financial reports?  The answer is more than simple:  weekly, monthly, quarterly and annually. See? Simple. For those who want a more detailed answer, this is the recommended breakdown, keeping in mind some organizations will require different timing.

Weekly: Dashboards can be your best friend. When you give a weekly dashboard to the physicians, they get used to seeing the natural ebbs and flows of production and cash flow. If charges are included, a direct effect of physician time out of the office can be observed and allow you to show that while efficiencies and overhead can be managed, top-line revenue is almost always directed by providers. Admittedly, weekly reports may be seen as overkill and may be overlooked. Honestly, that is not the point. When you or your staff prepare weekly reports, you as a practice leader have an almost real-time understanding of your organization’s financials and are better prepared when (and we all know it is when, not if) the tough questions land on your desk.

Monthly: Especially when the cash is strong and operational issues are the priority, practice leaders are tempted to skip or scale down financials. Do not do this. Without prepared monthly financials, you risk losing the entire financial picture. Furthermore, when a physician asks where the reports are from a prior month, this casts doubt whether you are fulfilling your obligations to ensure monthly reports are completed and available. While we may get frustrated when physicians do not review financials after we spend so much time preparing them, our responsibility is to complete and review them as managers. Monthly reports can be emailed or placed on physicians’ desks for their review, fulfilling your duty.

Quarterly: Having a designated quarterly financial meeting for your board or physicians is the best way to keep physicians and managers engaged in the overall financial health of your organization. The obvious exceptions would be for those lucky enough to have a finance subcommittee or in times when a financial issue or strategy is a key focus of your physicians. In times of financial success, some physicians might request to bump or skip this designated meeting. Explaining to the physicians that they are the drivers of top-line revenue and your desire to assess your team’s work at least quarterly should convey the importance of a quarterly financial review.

Annually: Most medical organizations have a year-end meeting to satisfy corporate regulations, review the enterprise’s results and set priorities for the next year. An annual financial review should be a part of this meeting or conducted separately after outside accounting prepares consolidated financials. Here is a recommendation you may not like: Excuse yourself from this portion of the meeting and let a CPA or external financial reviewer conduct this portion of the meeting. When you offer to leave, you are expressing complete confidence in your financial leadership and illustrate you are not anxious for them to ask difficult questions regarding your performance. If you have optimized the financial reporting process, the physicians will not receive any surprise answers solidifying your position as a competent leader.

With financial reports, transparency is the secret sauce. If you are concerned with generating too many reports, ask for feedback on which reports are helpful and if there is any information they feel is missing. After time, you will find a routine set of reports that are produced weekly, monthly, quarterly and annually. When this is achieved both you and your physicians will possess the required knowledge and confidence to ensure the overall success of your practice.

Kyle D. Matthews, CMPE, MGMA Board member, chief executive officer, Phoenix Heart PLLC

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