Good business reporting is a fundamental tool that can help health businesses to monitor their systems and improve overall performance.

Charles Larosa, Partner at chartered accounting group HLB Mann Judd, Brisbane, says better reporting goes beyond software by combining effective management, supervision from owners and collaboration with advisers.

He finds the common gaps in health practice reporting are:

• The accuracy of item numbers. Wrong item numbers cause a considerable waste of time when practice managers have to follow up with Medicare and health funds, and disrupt cash flow when payment is disputed. Practices need regular reports on the frequency of disputed payments to identify the source of the issue and consequently work to reduce errors.
• Billing that does not itemise the cost of treatment. This can be an issue if the practice employs locums or front-office staff who are unsure of what to add to the bill. Veterinarians, for example, need to ensure they recover their costs by including everything involved in treating an animal, including injections and overnight stays. Monitoring the costs-to-revenue ratio will indicate if a practice is billing correctly.
• Procedures for following up outstanding invoices. The practice manager needs timely debtor information so they or a designated staff member, can follow up.
• Electronic interface. Larosa says that one of his first tasks with new clients is to ensure they’re using HICAPs and electronic banking as these enable faster payment and give practice managers current information.

Benchmarking

Larosa says businesses can become more efficient by using their information for benchmarking. Businesses of a similar size can vary widely in the cost of wages to revenue and he often sees overstaffing in health practices.

“If your cost of wages to revenue is not within the standard benchmarks, you should be looking at why,” he says.

Many practices have addressed this by multi-skilling staff. In dentistry, nurses have taken on equipment sterilising and some administration tasks, while nurses in general practice often assist with certain medical procedures.

Other practices use agency help to manage peaks, which allows them to streamline costs. By building a relationship with an agency, they can hire staff only when needed.

Being wide of a benchmark does not necessarily spell trouble. For instance, a business within a retail village might pay higher rent than one in a suburban street but feel that busy custom justifies the cost. On the other hand, says Larosa, a higher figure might signal that the practice could use its space more efficiently and should consider calling in a consultant for advice.

The human element

Larosa says good administration is a function of owners, practice managers and advisers working in partnership – not just the responsibility of practice managers. He suggests holding regular practice meetings to give partners the opportunity to monitor business efficiency and gather information and advice on finetuning systems.

Larosa has found many practice management IT systems don’t interact well with accounting-based systems. The solution is to have an experienced bookkeeper or practice manager providing the information that an accountant needs.

To make this happen, owners can either give staff access to a Practice Management course or consider doing a course themselves to sharpen their business skills.

For information about relevant courses contact the Australian Association of Practice Managers or  the Royal Australian College of General Practitioners.