Physical Therapy Business Control | How Do You Get What You Want in Your Own Clinic? Part 1
Chris Martin interviews Diane McCutcheon
Chris: In your experience, what are the top 3 reasons for sub-optimal practice performance, Diane?
Diane: Any service has 3 key components: process, people, and technology. When the practice owner neglects any one of them or fails to operate all three of them correctly, the practice starts operating sub-optimally, or bleed cash.
The cost of doing business will increase without a concerted effort on the part of management and staff to focus on the company’s mission and vision by working smarter not harder.
Steps to developing a well-organized and seamless operation will take time and effort on the owner’s part to learn signs and symptoms that are indicative of problems or concerns. This skill is key to insuring that matters are handled immediately – before they get out of hand and begin costing the practice money.
Let me give a few examples for typical reasons for sub-optimal performance:
- Processes not conducive to a seamless operation – for instance, no set procedures in place that commit to follow through.
- No system to set goals, lacking understanding what outcomes help to identify deficiencies in the system, e.g., denials, referral and authorization management.
- Untrained or incorrectly incentivized staff – Staff is “shown what to do” instead of being trained on the methodology behind the processes in place.
- The staff and owner not understanding what is needed to run a seamless operation.
- The staff receiving a flat hourly salary regardless of practice collections or their performance.
- Weak technology – out of date hardware and software. Staff fear of moving from paper to electronics.
- Insufficient software functionality, or conversely, multiple systems instead of an integrated approach that eliminated redundant data entry and identifies errors.
Chris: Diane, you said there are three parts to any service: process, people, and technology. Let’s talk a little about the people component. Isn’t this kind of obvious: we just look for nice and diligent people who work hard and accept low salaries? What else do we need to know about hiring the right staff?
Actually, the people component of the service starts with the practice owner. Again, control is key aspect. The question is: how to set their incentives and how to select your personnel in such a way that you can make adjustments midstream, every time when you discover that you are going to miss your goals?
Hiring the right staff is a major component to success. You can hire anyone to perform functions but if they are not performing functions that result in quality work then you don’t need them as they will cost you money. An owner has to know what function each staff member is performing, how long it should take to perform tasks, and what constitutes success. If staff is aware that they know much more than the boss at some point they will take advantage of that – it happens all the time.
Training must be part of orientation, standards must be set and staff must be held accountable. You cannot control what you don’t know. You cannot manage what you don’t know.
Chris: What would be the ideal way to align your staff incentives with your own?
Have them work on commission. Is it easy? Well, in some cases, yes.
Some incentives are based on percent of arrival, minimizing cx and ns, keeping slots in the schedule full. If they are doing in-house billing staff may be incentivized on keeping all accounts under 120 days or less. Sharing profits with staff on any one of these things is an excellent way to keep them motivated. If your staff is working hard to keep slots filled, reduce cx/ns and make sure the schedule is maximized more profits will come in to the practice – if staff is not motivated to do this revenue will be lost. Sharing profits is more cost effective in the long run.
And in those other cases, when it’s not so simple, think out of the box. Why do you need staff who refuse to align their incentives with yours?
Staffs who refuse to align incentives with owners (which happens all the time) is almost 100% because the owner is not an effective leader, they do not understand the value of the incentives and present a “look what I’m doing for you” attitude and do not promote a team environment.
