Variables affecting the financial viability of your practice: a case study

Utilizing the discussion of variables affecting practice financial viability, a case study is considered. The case study reveals the relative impact multiple variables have upon the bottom line, including: practice capacity, percentage of capitation, and fee-for-service in the practice, as well as patient visit rates and patient churning. This article presents basic financial information through a case study model, utilizing a series of worksheets that can be adapted to any practice situation to encourage improved financial viability.

Variables affecting the financial viability of your practice

Financial viability of physician practices depends upon multiple variables: capacity of the practice, the mix of managed care contracts, cost of care, make-up of patient population, patient visit rates, and utilization of alternate methods of patient interaction. This article presents an introduction to these ideas; the second in this series will expand on the groundwork with a case scenario for a typical family practice. The articles present basic financial information in a practical manner, utilizing a series of worksheets to determine how these various items affect the bottom line.

Rethinking incentives

Financial incentives focused on individuals represent a naive understanding of the complexity of human motivation. This article recommends rethinking monetary incentives and moving toward the creation of workplaces that enable and allow the natural excellence that most individuals desire to achieve. Despite their wide use and superficial logic, monetary incentives have features that are toxic to systemic improvement and high performance. They often erode opportunities for true improvement, breed an atmosphere of expectation, decrease innovation, injure intrinsic motivation, and damage teamwork. When monetary "incentives" are used, we suggest directing them to a whole group or team of individuals to inspire teamwork, learning, and greater productivity.

Improving efficiency in office practices

Office practices are very busy places. However, a large degree of inefficiency and wasted effort is embedded in all of that activity. Improving efficiency enhances an office's ability to provide care in a more organized, comfortable environment for clinicians, staff, and patients alike. It improves access to care and allows more time to be spent on important clinical issues. Improving efficiency improves an office's work capacity without adding resources and, therefore, improves its financial performance as well.