Like many problems faced by a medical practice or any other business, an answer to a problem can often be hidden in plain sight.
This was the case when I undertook a management consultancy towards the end of last year.
It concerned a Midlands based medical practice who asked a very straightforward question:
Why was the cash being received considerably lower than the amount of work they were doing?
It seems straightforward enough.
If the invoices are being raised and sent out correctly there should be no reason why the cash receipts should be lower.
Of course, the obvious was happening and the invoices were neither being raised nor sent out correctly.
But the reason WHY this was happening was more interesting.
hidden in plain sight.
The practice had been started in 2012 by two consultants. Their original secretary was still with them and since 2014 as the number of patients had increased year on year, another part-time secretary had been employed to help out.
When a business starts it is normal for there to be a very small team working running the business. In the case of the medical practice in question, originally there were two consultants and a medical secretary.
Since then, however, the number of patients has increased by around 600% whilst the ONLY administrative support within the business has been increased by 3 hours per day for 4 days a week.
No Surprise
The cause of the cash issue is hidden in plain sight.
By all means, look at how both the full time and part-time secretary are working.
There may be scope for something to be done along with the premise of working smarter rather than working harder.
There will be scope for some increases in efficiency because there always are. That said it is unlikely the sort of productivity gains required even if they can be found will be enough to retrieve the situation.
Moreover, even if they are, in my view that would be merely wallpapering over the cracks anyway for the business has outgrown its own support mechanism.
The growth problem
As any medical practice grows it is important to ensure that the support mechanism is increased in line with the growth of the business.
It is both short-sighted and a false economy not to.
If a business does not, the likelihood of gaps, mistakes, and backlogs increase dramatically.
There are no short cuts to running a business efficiently. There are no short cuts to running a medical practice efficiently. By all means, keep a very close eye on costs but not at the risk of ruining the business.
That is precisely what the two consultants had allowed to happen and was the cause of the “missing” cash.
The invoices were not being raised as they should. They contained numerous errors and were often declined for payment.
The correct solution was to bring in extra resources to make sure the invoices were produced correctly.
By employing this extra resource and after 60 days, the additional cost of managing the invoice and billing process had increased by an average of £375 per month.
But the cash input to the business had increased by around £10,000 per month.
Thus the problem and indeed the solution to the problem can be said to have been hidden in plain sight all along.
pete@medicalhealthcaremanagement.co.uk