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Accounting Firms Diagnose Doctors’ Financial Situations

Doctors may be able to diagnose their patients’ health conditions, but that doesn’t necessarily mean they can detect the health of their practice.

Accounting firms have developed methods to present information that can help physicians and clinics steer the business side of the practice in the right direction.

According to an Escondido-based accounting firm, physicians encounter several common problems with the financial information used to manage their practices.

Doctors may face too much information, find an inappropriate level of detail, rely on anecdotal and episodic data, and lack the skills to interpret the information, according to Grice, Lund & Tarkington, LLP, certified public accountants.

“Time is very important to physicians and most of them do not have a lot of time and energy to review their financial situation,” said Ron Mitchell, a CPA and a partner of GLT.

Also, many physicians don’t understand financial statements and how that information directly affects their business, according to Mitchell.

– System Compresses

Operations Information

As a result, the GLT Consulting Group has developed the Physician Information System. The PIS was developed and designed to provide doctors with a snapshot of the most important information needed to run a practice, he said.

The PIS can be adapted to any size practice, Mitchell said, adding that it is a tool that can interpret raw financial data.

Compressed into one or two pages, the firm helps physicians identify the key practice indicators and what they mean, he said, adding that there is a fee for the service. The indicators are presented in figures and by graphs.

“I use it as a teaching tool to instruct physicians on how to interpret financial data and to know when items become a trend,” he said.

Production, collections, collection percentages, write-offs and accounts receivable are indicators presented both in total and by payor such as an insurance company.

The PIS also provides overhead costs as a percentage of revenue, operating costs relative to full-time equivalent physicians and other information.

– Physicians Can

Adapt A Model

Physicians are encouraged to use the service and GLT can also build a model and teach physicians how to fill in the information by pulling the necessary data from financial statements and other documents, he said.

So far, the response to the PIS has been positive, Mitchell said. “It helps them feel like they are more in control.”

Although the system is used internally for GLT’s clients, Mitchell said that many firms have similar systems of their own.

Clients of RSM McGladrey’s National Health Care Consulting Group can participate in a benchmarking process, which provides individualized reports with meaningful financial indicators, according to Shawn Schwartz, a manager at the Minneapolis-based group. The accounting firm has an office in San Diego and the National Health Care Consulting Group supports local operations.

– Benchmarking Process

Successful For Clinics

This process has proven to be successful for small clinics of 20 to 150 staff and for larger ones as well, he said.

Single physicians would not really benefit from this type of report, Schwartz said. “They have different strategic and financial issues at work than, say, a multi-specialty group.”

Each clinic pays a fee to participate in the process and provides certain data to the firm. McGladrey processes the information and normalizes the figures so that clinics can be compared against each other, he said.

Data for each department within the clinic is also presented. With overall figures for a group practice, “some of the financial lulls can be hidden by a well-performing department,” Schwartz said.

Each participant will receive an individualized report, with its clinic figures compared to other peer clinics, he said. Although data about other clinics is provided, identifying information is not included and all participants agree to the process.

– Committee Determines

Performance Indicators

A committee determines the key indicators to measure performance, such as “very specific costs from a financial standpoint,” Schwartz said.

Depending on the clinic and its goals, certain data may be more useful, he said.

“Large clinics use it to hone in on very specific areas of either waste or production shortfalls,” he said, adding that the departmentalized data is more beneficial to this group.

Smaller clinics, on the other hand, want to know how departments are doing compared to other clinics, he said.

These participants also look for general trends and try to pinpoint the reasons that make one clinic perform better than another, he said.

The firm also sets up groups in which clinics can share their best practices, he said.


University Study Finds Link Between Debt and Stress

Researchers at Ohio State University recently found a link between credit card debt and health.

People who use several credit cards and owe a lot of money to credit card companies were in worse physical shape than people who live within their means and owe little or nothing, according to a study that was published in the February journal Social Science & Medicine.

Credit card debt was also connected to higher levels of physical impairment, including everyday activities such as climbing stairs or carrying groceries, stated the study, which was based on more than 1,000 telephone surveys.

“We agree there’s a strong relationship between debt stress and personal health,” said Jack Thompson, president and CEO of Consumer Credit Counseling Service of San Diego and Imperial Counties, a nonprofit organization that provides free education and counseling about money management.

“It makes sense that stress from owing money on your credit cards and paying high interest rates on the balance can be bad for your health,” he said. “We see it in our clients every day.”

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