Growing Pains In The Practice?

By Lisa Kianoff, CPA.CITP, CGMA


First there were just 2 doctors and business wasn’t too complicated. Soon the practice grew to 4 doctors and then an opportunity to add in a specialist. Well, now there are 9 physicians, 3 nurse practioners, MRI, ultrasound equipment and talk of opening a second location. Things have become complicated. What has not changed in this healthcare practice that now employs 36? Still running the business and paying bills with the $299 accounting system bought at the office supply store years ago. Sound familiar?


As your practice grows so too do your needs. The question is: When do your needs exceed the capabilities of - or break - your systems? From 3 decades of supporting healthcare organizations, here is what we see as the Top 5 triggers that signal business pains are impacting the health of a practice.

1. Hard to Get Information: You find yourself anxious for information you’ve been told is too hard to get. You need specifics to understand what’s happening financially from a business view. You’d know better how to react if you could track such metrics as revenue or expenses per patient visit, revenue per employee, or monthly labor costs of each professional by category.

2. Too Many Moving Parts: You will never be able to see a complete view of your healthcare practice because your Patient Billing system doesn’t talk to your Accounting system. Your staff still manually enters revenue, accounts receivable or payroll data from other systems. Patient refunds impact both patient billing and corporate accounting so managing patient payables is time consuming and complicated. You know that distributing expenses to doctors and/or practice departments would provide more meaningful financial information; but you have no easy way to allocate these expenses to make it happen. Truth be told, your entry level system simply can’t handle this critical piece: Using both fixed and variable allocations to automatically assign expenses for rent, salaries, overhead and more.

3. Financials May Not Tell the Whole Story: Sure, you get Income Statements and Balance Sheets, but in a format a decade behind the times. Your practice is now multi-faceted but your financials don’t reflect that: Where are the comparisons of locations and labor costs, specialty metrics across all locations, or Revenue per FTE (Full Time Equivalent)? Where are the physician centric reports? Oh, for some dashboards showing current data, metrics and views that help turn your financials into a true management tool. That entry level accounting software is too basic to let you look beyond the General Ledger, with limited or no tools to create reports or analyze data from subsidiary modules to offer metrics related to vendor analysis, inventory costs or labor detail.

4. Labor Costs Need Oversight: The biggest expense in healthcare – like any business – is payroll. How well do you understand that expense? Where are the detailed views of payroll expenses in relation to revenue, specialty, department or FTE? How many systems, mostly manual, do you use to keep up with certifications, trainings, benefits, reviews, grievances, ACA reporting and more. And the big one: How comfortable are you that you are correctly keeping up with staff splitting time and taxes across locations, departments or profit centers? So much to manage and monitor. Fact is, an integrated business management and accounting system, with tools for managing payroll and HR, is flexible enough to meet those needs. And bringing payroll in-house means you have all that needed labor information at your fingertips and in your control.

5. Lenders Aren’t Impressed: You are ready to buy some vital new equipment or to expand, but your banker is not so sure. You can talk about potential, but lenders want to see the diagnostic reports on the health of your business. You feel caught in the Catch-22 because you don’t have the flexibility to produce reports that provide the needed information most effectively to make your case for financing.


Your answer to a patient who asks about best practices for treating his ailment today is different that it was a decade ago. So too is the answer for how to bring Business Intelligence to your healthcare organization ( http://www.kianoff.com/solutions/industries/healthcare/ ).


If any of these triggers sounds like your current operation, maybe it’s time for a checkup on your systems. Integrating your patient billing with today’s powerful business management and accounting systems gives visibility into what services are profitable – when, where and how. In one place you have the complete view of the business side of your organization and all the critical revenue and operational information you need to manage it effectively. You do want to keep that practice healthy!


Lisa Kianoff is Founder and President of Kianoff & Associates.