Friday, October 14, 2011

Maximize Efficiency, Minimize Loss

Profit and loss is such a fun topic that it deserves several posts. Giving P&L a real world application helps one to understand what it is, but it does not help us to apply in the business of healthcare...And there are a TON of applications in the business of healthcare.

Over the years, I have worked with medical facilities and private physician practices in medical billing, management consulting, and now healthcare information technology. In every aspect of every business, there is an opportunity to apply profit and loss concepts to improve profit and minimize loss.

There are two things to look at with profit and loss - those are profit and loss. Ok, that sounds obvious but people often do not realize the control you have over loss, how loss is incurred, or what loss really is. So to begin, I will focus this post strictly on loss. Since this a big topic, it will span several posts and I hope provide some ideas about minimizing loss in a healthcare setting.

Rule: Minimize Inefficiencies and you WILL maximize profit

This can be a challenge because you have to be able to see inefficiencies and unfortunately, when one is stuck in a routine inefficiencies are not always obvious. Perhaps this post will point out some things you do not see and help improve profitability.

Here is a basic concept to keep in mind while you read this post. Time = Money. If your time is not wisely spent, you ARE losing money. This applies to the most basic concepts and the most complicated. In this post, I will note some obvious inefficiencies that cost a fortune in the long run. Again, using the medical practice as an example.

First lets look at office layout. I once worked for a practice where the front desk was at the front of the office and the fax machine was in the kitchen at the back of the office. Back then, we were heavily dependent on faxes for test results, surgical clearances, and sending reports out. In order for the staff, who worked in the front of the office, to retrieve a fax, we had to walk to the back of the office to get to the kitchen. Go ahead, laugh...’she is complaining about walking 20 feet to retrieve a fax. Ok, I see why you would think this is an foolish complaint; however, there is more to it. First, I had to leave my work, interrupt a project to go check the fax regularly as we never knew when emergent information may come over.That interruption happened upwards of 15 times a day.

Now remember, the fax was in the kitchen... well while I am there, let me just get a cup of coffee, use the bathroom (just next door), oh, and Barbara is on lunch in the kitchen so “let’s chat for a second about the latest office gossip”. So now, the trip to the fax takes 3 minutes. No biggie, right? Let’s do the math: 3 minutes times 15 times per day = 45 minutes per day lost to the fax machine. That’s a lot of time that translates to “I need to stay late tonight (and get paid overtime) because I have so much work to finish”.

Next, lets look at interaction with patients. The practice I mentioned above was a surgical practice. As such patients had questions about surgery including administrative questions. The doctor would answer the questions as best he could, then the patient would ask the front desk staff again because, facing surgery their mind was not clear and what the doctor said didn’t sink in. Later that day, the patent's husband/daughter/grandson/nephew would call with more questions the patient failed to ask.

Now, you are thinking well if you give them a pamphlet about the procedure they are having, you wouldn’t have to answer all these questions. I agree, however, patients asked other questions, unrelated to the procedure. For example: . can I donate my own blood, when will the hospital call to schedule testing, will you tell my primary care doctor, did you know I see a cardiologist,, should I stop my aspirin, do i need to call my insurance, and so on. The biggest problem was the the questions were repeated again and again with the patient and the concerned family members.

This was such an investment of time to a single surgery! So, here’s what we did. We developed a surgery FAQ (frequently asked questions pamphlet) and the surgical coordinators sat down witht the patient for about 5 minutes or so to go over the contents. This served two purposes. First, the coordinator used it as a check list (remember to send the chart for precert, check if the patient is on blood thinners, etc) so that the coordinator didn’t have to do things twice. Also, the patient walked away with a list of FAQ to reread later or to give to the concerned family. Lastly, the meeting with the patient to go over the FAQ made the patient feel safer.That is a huge time savings.

As you can see, it is really little things that make a difference. Now, these examples are only few yet there are millions of possibilities to save time once you really understand that time = money. To improve profitability, you must examine every detail of the work-flow. Even if it is working well - could it be better still? At times this can be very hard. That’s why consultants sometimes play a big role in such improvements, they can be objective in their assessment. Just remember, in profitability every second counts because time is money.


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