OPERATIONS AND ADMINISTRATION

Last week we talked about “Strategy and Viability.” I said that step one is to be consistent in the way you record information in your system.  This week’s column will talk about the KPIs we have available to monitor the data going into the system.  This is another of the Six Pillars of Practice Success and is also fundamental to managing your company with metrics. The objective here is to identify weaknesses in your administrative procedures.  This is not an effort to chastise or assign blame, but rather to measure a key business function and create accountability. With the knowledge obtained, you will be able to determine how long it takes to go from initial evaluation to L-code selection.  Or from evaluation to delivery.  Why is this important?  Remember last week we mentioned patient attrition?  What if we could measure our processes and find out where patients drop out of the funnel?  We could then start to do something about it.  We could decrease our attrition and therefore increase revenue.  What if we could shave a few days off of these timelines?  That shortens our time to reimbursement, thereby increasing cash flow. The details really matter as we move into the new age of healthcare.  Strategically managing your business starts with creating the data that provides the knowledge you need to position the company for long-term viability.

Once we have the data, we need to look at it.  We use our reports to make sense of all the information that is contained in the software.  The way we get good reports is by focusing on the data that makes up the report.  It is essential that the data be accurate and consistent, regardless of how it gets into your system.  Therefore, from an operational standpoint, it is important to have a standard process for how the data is entered and then to test the data going in to the system to make sure it is accurate.

If you are going to measure a KPI such as the percentage of visits that involve repairs, it is necessary that the visit type is recorded accurately.  If the patient was scheduled for a routine follow-up but a repair was required, that should be noted and the visit type changed to reflect what actually happened.  

KPI EXAMPLES

• How long does it take us to get a detailed RX to the referring physician after the L-codes are selected?
• How long does it take between the Initial evaluation and the L-Code selection?
• How many days are between the Fab Complete and Delivery?
• How many K-Levels are missing?
• How many days between WIP completion and Delivery?
• How many “No Show” appointments without another appointment scheduled?
• How long are patients waiting between check in and check out?
• How many accounts are “awaiting authorization” or otherwise delayed?

WHY SHOULD I CARE?

If you start measuring KPI’s such as the metrics above, or creating timelines to show your workflow, you will be able to spot trends and opportunities for improvement in your workflow, your patient and your cash flow management processes. If you think of these timelines, you can really start to understand where the bottlenecks are and work to remove them from your operations. Think about the processes involved with a new prescription:  from the date you receive the new Rx, how long does it take to get to 1) Delivery; 2) Authorization, 3) Billed, 4) Payment?  Is there an opportunity to shorten those times?  Wouldn’t that help improve cash flow?

It is critical that all staff who enter data into your patient management system do so in a consistent and reliable manner.  It’s not enough to just have the policy, people have to understand why it matters that the information is correct.  This is not just some exercise to make their lives miserable, there is actually good and valuable knowledge to be gained from have solid data.  As changes occur in healthcare and margins get tighter, it is more important than ever to strategically manage your business.  Let’s make an effort to understand our business as well as you understand the bio-mechanical forces that you employ to make your patients better.

Originally Published November 25, 2016

BUSINESS PERFORMANCE METRICS

I have reached out to Choice members to find out what is important to you and you have responded!  Sixty-nine percent of you say the most important thing Choice can do is to help you understand business performance metrics.  At the end of October, I did a short piece on Key Performance Indicators and feedback for that was tremendous!  Thank you for your thoughts.  This is the first of a series of articles that will give you practical guidance into becoming a data driven, quality focused company.  These articles will introduce you to metrics and performance scorecards and tools you can use in your practice.  I trust you will find this series informative, valuable and helpful as you manage your O&P practice.

As we strive to understand and implement business performance metrics in our practices, a fundamental first step is to create a culture of excellence.  In “Good to Great,” author Jim Collins examines what differentiates “Good” companies (those with decent growth, customer service and market presence) from “Great” companies (the market leaders).  It boils down to “People.”  Good to great teams were mostly composed of people who had a good sense of balance with the rest of their lives – family, church, and so on. Of course, they had a deep commitment to their companies, but not one that blinded them to the other important things in their lives. The deep commitment comes from internalizing the mission, vision and values of the company.  When the company values and goals are also the values and goals of the people that work there, there is clarity of purpose and a strong desire to achieve the common objective.  These companies also employ some sort of “Performance Scorecard” which is a graphical representation of the progress over time toward some specified goal or goals. I will spend the next several weeks working through the concepts with you and will try to give concrete examples that you can use in your practice.  There are many models and samples for scorecards from which to choose, but for simplicity and consistency, we will use the OPIE Dashboards as our “Scorecards” in these articles. We will also use some OPIE Reports for those elements that do not have graphical representation on the Choice Dashboards.

PERFORMANCE SCORECARDS

Performance scorecards are tools we use to track significant and sustainable improvements across all functions of our businesses. They are populated from metrics called key performance indicators (KPIs) which measure performance on factors considered to be critical to organizational success. Goals are established for each KPI with performance improvement achieved by closing the gaps between goals and actual performance.

In the series we will focus on the Six Pillars of Practice Success: “Strategy & Sustainability,” “Operational/Administrative,” “Clinical,” “Materials Fabrication,” “Financial” and “Patient Satisfaction.”  Each article will look at one of those topics and examine KPIs that you can use to measure your practice.  So between now and next week, take a few minutes to read this article published by the Harvard Business Review “Creating and Sustaining a Winning Culture.” the building block upon which everything we will do is based on your culture and your staff’s understanding of that culture.   The goal of this series is to give you the tools and information you need to start implementing a data driven O&P business model on January 1, 2017. Let’s get started and be ready to ask questions!

Originally posted November 11, 2016

FINANCIAL MANAGEMENT

Because of Thanksgiving, and to keep myself on schedule, I am doing a “two-fer” this week.  I started this series out explaining that step one is to be consistent in the way you record information in your system. Step two is to identify the KPI’s that you can use to measure your performance and start to create some ownership within your team.  In this part I want to touch on financial metrics and why they matter.  This is another of the Six Pillars of Practice Success and is also fundamental to managing your company with metrics.

If there is a single thing, a single activity or a single metric you should care about when building a business, it is your cash-flow. Effectively managing your accounts receivable (A/R) can mean the difference between being cash flow positive or negative for a given period of time. Any company that extends credit to its customers is at risk with its cash flow management. If you do not collect the patient co-pay upfront, you are extending credit to your customers. Of course your A/R doesn’t come from just your patients, in fact, it is due to the fact that you are only eligible to be paid for your services after you have delivered the definitive service. So managing your A/R is probably the most important task you can undertake to control your cash flow.  Some of the metrics I mentioned earlier this week in the “Operations” email will apply here, particularly those focused on the timing of your processes, but the KPI that may be the most telling is here is the “First Pass Resolution Rate.” A low percentage here will most certainly have a negative impact on your cash flow.

There are three types of cash flow, but we will focus on cash flow from operations, which focuses on the cash earned and spent through core business activities. There are two accepted ways to calculate your cash flow from operations, direct and indirect (or have your accountant do this for you!).  Once you have your cash flow report, this should be one of the first metrics you look at when you look at your company’s financial health. As with most metrics, the trends you will discover over time are probably more important than a one time review of the data.

Another important aspect to manage is your “liquidity.”  Liquidity ratios attempt to measure your company’s ability to pay off its short-term debt obligations. This is done by comparing its most liquid assets (or, those that can be easily converted to cash), to its short-term liabilities. In general, you want more liquid assets than short-term liabilities.  This is a signal that your company can pay its near-term debts and still fund its ongoing operations. If your liquid assets are less than your current liabilities, it may be a sign that your company will have difficulty running its operations as well as meeting its obligations.

While there are several categories of financial metrics, the last one I will address is something called “operating performance ratios”  These ratios look at how well your company turns its assets into revenue as well as how efficiently it converts sales into cash. Basically, these ratios look at how well your company is using its resources to generate sales and increase value. With O&P, if you start to benchmark your practice’s financial performance, you need to pay particular attention to your ratio of O to P as this will drastically impact your revenue.  With that being said, a good measure of your overall performance would be to divide your sales by the number of FTE’s you had over that time frame.  This would give you a “Revenue per Employee” figure that you could use to baseline your practice operations.

WHY SHOULD I CARE?

• Metrics Make the Process Objective: Once the goals are established and the metrics understood, it is painfully obvious if the job is getting done.  It is not subjective, it is crystal clear.  This allows for accountability and real discussions about the issues that matter to the business. Metrics help transform the vague job descriptions and functions into a series of numbers that can be used to accurately map the process for its efficiency and effectiveness.
• Improvement Goals are in Terms of Metrics: For the improvement goals to be objective, it is essential that they are measured in terms of numbers. Terms like “good quality,” “bad quality” and “acceptable quality” are vague and may depend on the personal opinion of the person expressing them. Therefore metrics play an important role since they transform both the requirements as well as operational performance to numbers which can be compared. As a result management can objectively state whether the objectives are being met or not.

Originally Published December 2, 2016

MATERIALS MANAGEMENT

This is the fifth installment of the series on business performance metrics.  We have discussed four themes: 1) Inconsistency in the way data is entered leads to reporting challenges;  2) Key Performance Indicators must be thoughtfully implemented to help achieve the company goals; 3) Cash flow is critical as margins get squeezed; and 4) The importance of Patient Satisfaction as we move into the realm of patient centered care.  In this part I want to touch on Materials Management. This is the fifth pillar in the Six Pillars of Practice Success. Each of these pillars is equally critical your your practice’s success, so focusing solely on one or another without ever paying attention to them all is a dangerous game to play.  I like to think of Materials Management in three discreet boxes: Fabrication, Product Mix and Reconciliation.

FABRICATION

Managing the raw materials in your lab is a critical first step.   Who are the people in your organization that are involved in your fabrication and inventory management process? Lab techs? Clinicians?  Both?  Others?  How do you know when a clinician “borrows” a stock item and uses it on a patient? How many AFOs can you get out of a sheet of plastic?  Do you measure this? Do you have a purchasing workflow in your office?  Do you have an inventory management process? What steps might you take in your practice to get a better handle on how materials flow through the office?  How long does it take from the creation of a fab order to completion?  Materials and fabrication management is not only about the movement of materials through your office, it directly impacts the quality and timeliness of the care you are providing to your patients.  Nothing we do is single focused, and virtually every activity you undertake in your office should be tied back to the quality and timeliness of the care you provide.

PRODUCT MIX (SUPPLIERS)

Sometimes we think we are managing our cost of goods well by shopping for the lowest prices.  We probably all know someone who will drive ten miles to save two cents per gallon on gas!  But how much are they really saving? Understanding your buying patterns and concentrating your purchases on a single vendor may make more sense than shopping each order and chasing the elusive bargain.  How much time and effort is going into that effort and how much does it really cost you? In the long run, are you really saving money?  If you understood your patterns and your total volume, could you negotiate a better price? To get a better handle on your product mix, you can use the “Advanced Reporting” feature in the OPIE Purchasing and Inventory module.      Feel free to reach out to me if you want some help here.

RECONCILIATION

Reconciliation is simply the act of verifying that you actually got what you paid for.  It includes verifying the quantities of what you ordered, shipping costs and discounts and requires that you review at least two documents: your order information and the invoice from the supplier.  We talked about cash flow last week and reconciling your accounts is a big part of that puzzle.  You need a firm understanding of how your money is working for you, where it’s going, and what you can do to leverage it to achieve your company’s goals.  So simply ordering your materials and trusting that the supplier made no mistakes, the inventory actually went into inventory, and the material actually made it to the designated patient is a big leap of faith where significant losses can occur if you do not manage the process.

The reconciliation process should not be borne by a single person, though there should be one person responsible for the activity.  This is truly a cross-functional activity that involves clinicians, technicians and administrative staff. Click here for a guide to the reconciliation process in OPIE and Futura.

WHY THIS MATTERS

In a nutshell, the efforts you take to control your costs and manage your business have a direct impact on your ability to effectively care for the people who need you.  And to do that in a way that allows you to keep your staff employed. O&P businesses must understand and implement the appropriate metrics for measuring internal inventory efficiency such as inventory turnover rate, and need to ensure that procurement system tools, inventory management systems, and the patient records systems all tie in together to maximize material visibility throughout the work flow.

 

Originally posted December 16, 2016

Keeping your data safe can seem like a never-ending challenge. New breaches of health data seem to be announced almost daily, and organizations of all sizes — including the government — have fallen victim to data scams.

But there is good news on the data security front, too. The migration of many systems to the cloud means that much responsibility for security is now handled by true experts who focus on that task —rather than practice owners and managers who are overseeing a lot of other important priorities.

There are also a number of quick, easily implemented tactics for reducing many of the most common risks of data loss. Here are a few for your practice to consider:

1. Is your hardware physically secure?
Managers and practitioners often worry more about hacking, but physical loss of computers and devices containing private health and financial information is the most common way data is lost or stolen. Make sure laptop and desktop computers in the office are secured to a fixture, such as with a cable and lock system, which will at least slow down a would-be thief. If you have an on-site server for your practice management system, consider further securing it within a locked room. Make sure anyone who takes a device containing valuable data offsite understands how important it is to keep the device itself secure (i.e., no leaving it in the car!).

Be sure to protect data against non-theft losses, too. Floods, fires, and other disasters can destroy computers and wipe out data. Simple measures like avoiding placing servers on the floor and setting up remote back-ups can help – but the physical risks to data are a good reason to consider a move to a cloud-based version of your practice EHR/practice management system.

2. Are physicians and staff trained to avoid phishing?
Have you noticed that some of the most newsworthy data breaches in the past year or two have involved phishing? For hackers, the strategy of luring users to give up their credentials willingly is straightforward and irresistible. It’s up to you and your team to thwart them.

Make sure all of your employees know never to download any files or click on any links from users they don’t know. None of your employees should be accessing personal email accounts or social media from their work computers. And even when a request to change a password or update other information seems legit, the only safe way to do it is to log in to the website directly from a browser to change your password — never to click on a link in an email.  These protections are easy to forge, so a quarterly refresher training session is a good idea.

3. Backups for data and personnel
Most practices know by now that a backup of your EHR and practice management data is essential. Make sure those backups are kept in a secure place, offsite, so that a physical threat to your original (like a fire or break-in) doesn’t also imperil your backup.

Besides redundancy of your data, make sure you also have a backup for the personnel who take care of it. Smaller practices often rely on a single person (e.g., an external IT consultant) to manage their entire tech set-up. But what happens if that person goes out of business? Make sure you’ve got a “plan b” in case your “expert” is no longer able to help you. Maintain physical documentation of your technology set-up, to allow a new technology manager to step in to quickly help you. And remember your internal controls — just as with your financial processes, you can reduce internal theft risk by avoiding giving a single individual complete control over your patient and billing data.

4. Keep software up to date
Conventional wisdom used to hold that it was smarter to delay upgrades to avoid the hassles of unreported bugs and the need relearn how to use key features. But these days, updates (e.g., patches) are often necessitated by security issues, putting them off for too long can dramatically increase your risk of a breach. And even major upgrades (such as to your operating systems) can be important for data safety, since older versions may no longer be supported or patched.

Name a tech liaison in your practice who will have responsibility for monitoring IT news from the vendors you work with, so that security-related updates to software and hardware are not missed. It’s okay to wait a few weeks before major upgrades, to confirm no debilitating bugs have been found. For small updates via patches, make sure staff know they should download and install them when they become available.

5. Use encryption where appropriate and unique logins/passwords
If you’re storing data on your own computers or a server in your office, encrypt those devices to minimize the possibility a thief can access the data on them. Remember, encrypting is much more secure than the basic locked screen — so store a written record of passwords in a safe place, in case retrieval is needed, such as if an employee leaves your practice and you need to regain access to their workstation.

Cloud-based systems reduce the need to encrypt devices, but you should still have an encrypted email option available for secure messaging. Keep in mind also that basic password hygiene means each person has a unique ID and login for any system they need to access. Insisting that staff use their own ID will allow you to check logs and track access to sensitive files in the event you are ever concerned that a data theft may have occurred.

Excerpted from Physician’s Practice

Sexual harassment can come from several different places and is not limited to one gender. In O&P, the harassment can come from co-workers, patients, supervisors or referral sources, just to name a few.

As a leader, you must take charge of the dialogue around sexual harassment in your organization and there are some practical tips you can take to establish a safe and healthy culture surrounding the issue, writes Amy Gallo in an op-ed for the Harvard Business Review .

Here are the eight steps every leader can take to create a comfortable environment for their employees to discuss sexual harassment in the workplace:

1. Know your goal. Unless you understand what you are trying to achieve with a conversation, there is no way that conversation can be productive.

2. Consider whether you will share personal experiences. In matters as sensitive as sexual harassment, it can be difficult to share personal experiences. Decide ahead of time whether you plan on doing so and prepare yourself accordingly.

3. Expect the uncomfortable. Conversations around sexual harassment are bound to stir up feelings of discomfort, but do not feel as though they must be avoided.

4. Listen. More than anything, it is important to listen and make sure your employees feel heard.

5. Assume positive intent. These conversations can be tricky, and if someone says something seemingly off-base, give them the benefit of the doubt initially. Assuming positive intent will allow people to speak freely without feeling shutout.

6. Take the pressure off. Make sure everyone knows that they are in a safe space and can speak without fear of adverse consequences.

7. Have language ready. Sexual harassment is a sensitive issue, so come prepared with language that will frame the conversation correctly.

8. Put yourself in the other person’s shoes. It can be easy to get defensive during these conversations but have empathy and try to imagine what the other people in the room are experiencing.

NOTE: If you have any questions about this topic or other human resources matters, don’t forget the Choice relationship with our HR Firm.  We encourage you to reach out to this free resource!

Ode to Drucker

In these newsletters, I write a lot about principles of management and of metrics. These things aren’t really taught in O&P schools and as the healthcare economy is stretched and pulled and reformed, we are finding that those skills are increasingly important as you keep your business running.

This week, the Wall Street Journal published a list of the “top 250 firms.” But this is not your typical list…this list is compiled based on metrics culled from years of Peter Drucker’s work. Interestingly, Peter was concerned that the “normal” metrics focused too heavily on the short term…a “how much money can we make for our investors this quarter?” mentality.

It’s the Future

His point was that we need to build sustainability into the equation somehow. So his team went to work. Now four years later, the Drucker Institute has created a new set of metrics designed to provide executives and investors a “more complete, longer-term view of how a company was being managed.” The Institute identified five key areas of focus:

• Customer Satisfaction,
• Employee engagement and development,
• Innovation,
• Social responsibility, and
• Financial strength.

On the surface, those certainly make a lot sense. And we have talked about all of them, with the exception, maybe, of social responsibility. But the very nature of your business, for most of you, implies some degree of social responsibility and I do think we have talked “around” the topic.

So Now What?

The Drucker Institute has identified 15 different principles that cover the five dimensions of performance. Principles like “To satisfy the customer is the mission and purpose of every business.” And “Developing talent is business’s most important task.” If you think Peter Drucker’s 39 books and roughly six decades of work might merit some examination, then hang with us here at the Choice Network as we look at these principles and apply them to O&P operations.

We have spent a lot of time talking in our education and writing in these blogs about creating processes in the O&P practice to increase efficiency.  We have talked about accountability, transparency, repeatability and all kinds of really powerful tools to help in the management of independent practices. Ultimately, our goal is to increase productivity.  We identify Key Performance Indicators, we measure, we tweak and we measure again.

If you look at the top job skills that will be required beyond 2020, highly ranked is creativity.  Wow!  Creativity is highly disruptive, it appears to break the boundary of process, it can’t be measured, tweaked and repeated. So can we create a business culture that not only values process and productivity, but encourages creativity at the same time?

If you’ve labeled yourself as a “non-creative” person, but your strength lies in problem solving and connecting the dots with seemingly disparate information, and putting the best ideas together to propose a complex patient treatment plan, guess what? You’re a creative person.   Most likely, you’re that person whose creative juices flow best in a non-process orientation. It’s when you’re pulling a socket or modifying a cast and your mind is free to wander. When you least expect it, while you’re having those irrelevant daydreams about digging your toes into white sand — bam! You experience a creative breakthrough and are off to the races.

What is really cool about the systems we are teaching is that creativity is actually built in…it’s not in opposition to process, but rather, allows you to capture the best ideas and put them into your processes systematically so that the whole organization benefits from the inspiration.  Process is often translated “Lean” and Lean is a very robust approach to driving waste out of an organization built upon decades of experience with the famous Toyota Production System.

We are using fundamental Lean steps, but infusing them with dynamic processes that inspire teams to produce innovative solutions to some of the very complex challenges we face in our profession today.  Our MasterMind teams are a perfect example of creating teams of people to solve “big-picture” practice management problems.  Now, through our education efforts, we are bringing those concepts to the practice management level.  Learn more about our education programs here.

If you’ve ever hesitated to offer critical feedback to a colleague, you’re not alone. Even when we perceive a problem, we often stay silent to avoid being seen as an interfering know-it-all. You can get over this discomfort by setting up “speed dating” feedback sessions with your coworkers. Meet one-on-one with a teammate for 20–30 minutes. Take turns offering your observations of each other’s leadership effectiveness or strategy execution. This is your opportunity to provide feedback that helps your coworker get back on track — and to listen to their advice about how you can improve in your own role. Repeat this process with each teammate, making plans to follow up as needed. Checking in with your coworkers and offering constructive feedback sets the expectation that you all share responsibility for each other’s success.

Read More: “How to Make Raising Difficult Issues Everyone’s Job,” by Ron Carucci

Pay Attention to the Trends Inside Your Company

When we think about trends that affect our business, we often look to things happening outside our companies. But it’s just as important to pay attention to internal signals that may present opportunities or challenges right in front of you. Watch for signs related to people, process, products, and strategy: Have there been any new hires or departures of key employees in the company? Are there patterns in the comments or requests you’re receiving from stakeholders (patients, referrals, etc.?)

How might a change in your ratio of orthotic services to prosthetic services affect your  business?  Does a greater understanding of the value of your patient data change the way you run your business? Have you been exposed to new ways of doing things that inspires you to make changes in your daily workflow? After reflecting on questions like these, consider the implications of the trends. Ask yourself, What might these changes mean for me and my department/company? The answers to these questions will help you identify where your own strategy and priorities may need to adapt.