business

What Is A Key Performance indictor?

A Key Performance Indicator (KPI) is a type of performance measurement used to monitor the success of targets in set categories within your business, which in turn calculates the performance and success of the activities and the business.

Why Have Key Performance Indicators?

Your KPIs should be linked with your key goals and strategic priorities. By evaluating the data gained from the KPIs it will lead to an understanding of the general practice’s position. Identify irregularities and guide future decisions. KPIs can help to:

  • Focus on continuing improvement
  • Ensure that practice activities are linked to overall strategies
  • Provide an early indication of emerging issues that may require remedial action
  • Plan for the future
  • Ensure staff know the direction and expectations of the practice and work towards those goals.

What Should Your Practice Measure?

Every general practice is different and will have different priorities. Priorities should be linked to the practice’s goals and strategies and should be relevant measures that can, over time, provide evidence or demonstrate performance results.

Where to Start?

There are no right or wrong KPIs for medical practices, as they should reflect the individual practice’s goals. However, all KPIs should be clear, focused, relevant and measurable in order to be comparable over time.

 

There are four basic methods used for measuring performance:

  • Costs – e.g., doctors service fees, support staff wages, practice expenses, administration expenses.
  • Profits – e.g. the amount of surplus after all expenses are paid
  • Quality – e.g. the aspect of meeting patients’ expectations
  • Time – e.g. the efficiencies relating to the number of patients seen per hours/session/day


A good starting point is to establish processes to record figures. Most information required may be extracted from your practice software.

 

Figures could be extracted daily or weekly for practices with multiple doctors, while smaller practices and solo doctor patients may prefer to use monthly system.

 

The information gained can be recorded and charted by tables, graphs and / or reports used as a tool to plot trends and identify anomalies.

Examples of Key Performance Indicators for a General Practice

Areas that could be relevant for general practice KPI’s are:

  • Financial performance = e.g. cash flow, return on investments, expenses, cost of keeping the practice open, percentage of claims denied by Medicare, fees generated per doctor per hour, total expenses per doctor per annum, average cost per hour of opening the practice, revenue generated by each doctor, total patient revenue, average patient revenue.
  • Patients – e.g., patient satisfaction, new patient numbers, total patient numbers, cancellations and appointment no-shows, number of patients that do not attend follow-up appointments, percentage of time spent per patient on consultation.
  • Employees – e.g. employee satisfaction, employee performance, break-even number of patients per day, ratio of private to bulk billing, number of patients seen per period/per doctor.
  • Medical data and patient services – e.g. percentage of diabetes/asthma patients, patient responses to recalls.
  • Expenses – e.g. monitoring individual expenses will give a better understanding of expenses and ways to manage them.


Examples of how to calculate a KPI

The practice wants to know how much each visit on average contributes in financial terms to the practice.

To calculate, take the total revenue for the period you are working on, and divide it by the total visits for the period.
  1. The average visit value will indicate how much revenue is generated by each patient and will aid in determining policies such as discounted consultations.
  2. Compare how many patients each doctor consults and work out the productivity in terms of financial gain. By knowing this information, you can investigate if there are any problems in inefficiency, a mismanaged schedule or if there is a clear decline in appointment requests.
  3. Track missed appointments and cancellations by utilising a simple graph for each doctor. It is wise to track missed appointments, as it can cost the practice a lot of money in missed revenue over time. The remedy may simply be improving schedule patterns or adjusting staff processes.
  4. You may wish to determine if your patients are satisfied with the services, doctors and experience with the practice. A means of gaining this information could be through a patient questionnaire e.g. by asking “would you recommend this practice to others?” Use a scale of 1 as the lowest score to 5 as the highest and calculate the overall score. Also, ask for their reasoning behind their answer.

 

All results should be analysed, and action taken where necessary, or in the case of encouraging feedback, used as positive reinforcement that the practice is meeting their goals.

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business

Over the years we have worked with many medical professionals across many specialisations. This great level of experience means we understand the medical profession.

 

In this medical practice checklist, we discuss key areas you need to consider.

 

BUSINESS STRUCTURE

The structure you choose to operate from can make a massive difference to your wealth and financial security. Each structure has its own benefits and limitations, but it is important to choose a structure that meets your individual circumstances, is in accordance with ATO guidelines, while at the same time yielding any additional tax benefits.

 

  • Is your structure compliant with ATO guidelines?
  • Does your structure ensure you meet payroll tax, superannuation, WorkCover and employee leave entitlement obligations?
  • Does your structure provide opportunities for tax planning?
  • Does your structure provide adequate asset protection?
  • Do you have the appropriate documentation in place for your structure?
  • Do you have agreements in place with your business partners?

 

TAX PLANNING

As a medical professional it is likely you will be in the higher income brackets, and therefore be expected to pay a fair share of what you earn in tax. However, there are certain tax planning strategies that can be implemented to effectively manage tax liabilities, while still ensuring you are compliant with ATO guidelines.

 

  • Are you taking advantage of the unique tax planning opportunities available to medical professionals?
  • Do you meet with your accountant at least once a year to discuss tax planning strategies?
  • Is your debt structured correctly to ensure you maximise the tax deductibility of interest? Do you know the difference between good and bad debt?
  • Do you have a structured plan for your superannuation and contributions?

 

 

TECHNOLOGY & SOFTWARE

With cloud technology and software available for almost every role and purpose, the facilities available to medical professionals to streamline processes and reduce costs are huge. The hardest part is working out what is most suitable for your practice.

 

  • Do you use cloud-based accounting software?
  • Are you aware of the various add-ons available for you accounting software to automate & streamline processes?
  • Are you utilising your software to the fullest and have you been provided with adequate training?
  • Are your automating steps with technology to improve efficiency and reduce costs?
  • Is your accountant familiar with the software available to medical professionals?

 

THE POWER OF COLLABORATION

The life of a medical professional can be a very stressful one with competing demands on you time being at the top of the list. Efficiencies gained from having everything ‘under the one-roof’ should never be overlooked.

 

  • Is your medical practice and associated entities accounting and taxation all done by the one team to streamline the process and reduce costs?
  • Are you able to speak with your Advisor about lending, investments and insurance?
  • How much time do you spend working on your business to understand how to identify efficiencies in operation, implement process improvement ideas and best practice solutions?

 

INDUSTRY EXPERTS

Having solid knowledge of the medical profession ensures an understanding of the professional life-cycle of medical professionals. The medical profession is unique and therefore to get the best advice you need to make sure you have the right people ‘on your team’.  Professional understanding, technical knowledge and proven results are critical attributes you should look when selecting your team.

  • Has your advisor looked after medical professionals before?
  • Does your advisor have a great network of firms around them to support you in the successful operation of your practice and personal wealth growth?
  • Are you fully aware of all the financial opportunities available to you as a medical professional?

 

Want to talk about your Medical Practice to see if you are operating at your full potential, then contact us for a coffee and a chat.

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business

Tax Tips for Medical Practice Owners

Tax time is a headache for many doctors, let alone medical practice owners. Even worse when you are a doctor and a medical practice owner!

Not only are you paying a lot of tax, you need to stay compliant to avoid audits and issues with the ATO while still keeping as much cash flow in your medical practice as possible.

So how do you keep on top of your tax as a medical practice owner?

Get organised

Doing your tax should not just be once a year thing. You should be working and reviewing your tax position throughout the year to stay compliant and be prepared come year end.

You should be working with an accountant that specialises in the medical industry, who will understand your situation and requirements. You should have regular meetings with your accountant through the year to ensure you are on top of everything, including due dates, changes in tax laws and how they impact you and your business

Keep your records safe and easily accessible. Also, you should maintain separate files for personal and business-related documents.

Know your business structure and the rules

Every business structure has different tax responsibilities and requirements that need to be met. Medical professionals in particular have a specific set of rules that need to be followed.

Each structure also has unique features that you need to understand. Having this understanding will help you with your business and your legal requirements.

Know what deductions you are entitled to

The expenses you can claim as a deduction will depend on your practice – how it is structure and how it is run, but some common areas include:

  • Professional dues or membership fees
  • Professional and some personal insurances
  • Medical journal subscriptions
  • Medical and technical equipment
  • Superannuation contributions
  • The cost of managing your accounting

Being familiar with what expenses you can claim will likely see a great uplift in your return.

Keep your books up-to-date

Keeping your financials up-to-date will have multiple benefits to you: you should not be hit with any surprises, such as an unexpected tax bill, you will have current figures if you need finance, it will give your accountant the opportunity to look at your position and make suggestions to help your tax position before the end of the tax year.

 

You can automate things and streamline your business, use accounting software like Xero. You can also explore other practice management software that may integrate bookkeeping as one of their functions.

Get expert advice

The most important tip for a medical practice owner is to work with a medical accountant who understands your needs and your profession. Running a medical practice is unique, and a financial expert who specialises in your profession will help you identify opportunities and reduce risks.

Reach out to us if you wish to discuss your practice and your situation.

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As a dentist, you will face a unique set of financial challenges that not many other medical professionals have to deal with.

You will require an area that has multiple private treatment areas and a wide variety of expensive equipment.

But the question then becomes – how can you build a successful practice, run a business and achieve your financial plan without going into too much debt?

Do your research.

Building your own practice is rewarding and can provide you with a good retirement, if it is done right.

The questions you need to ask yourself are:

  • But should you start your own clinic from scratch?
  • Buy into a practice with other dentists or join a dental group?
  • Purchase an existing practice?

Each presents its own pros and cons. You will need to consider all before making a decision.

Know your market and pick the location accordingly.

The choices you make about who you wish to market your practice to and its location will influence the potential profit you generate.

Do your due diligence to find out what the demand for dental services and the amount of competition in a given location before progressing with your plans.

Don’t go too big, too quick.

You might be thinking to go big at the outset in anticipation of a big inflow of new patients. But you also need to be realistic about your potential growth. Utilise the space you have to its maximum before you make plans for expansion. Start your expansion only when your revenue and client base justifies it.

Purchasing dental equipment – have a plan.

Dentists will generally have to outlay a lot more to fitout their practice than most medical professionals, given the treatment chair and other specific tools you require.

Yes, you can pay cash, but that can impact the cash flow of the practice You can also go second hand or a lower quality product, but would that give the give the right impression for your practice or provide the best experience for you patients.

Financing the equipment may be an alternative. Medical professionals can, if you are able to find the right provider, get access to some great deals for finance. Make sure you get advice from a medical finance expert, who understands your practice, knows what you can afford and can find the best deal that is suitable to you.

If you decide to enter into a loan, you will need to understand and be aware of the cash flow impact on your practice and the legal implications that go along with the finance agreement.

Don’t under insure.

Insurance, for business owners, is quite often something they think about but never end up doing, or they take the cheapest option. Insurance should provide full coverage– protecting your expensive dental equipment, protect your practice, protecting your staff and your family and finances in the event something goes wrong.

Run a lean machine.

You don’t want to go cheap and cut corners, but the secret to saving your practice money lies in reducing your overheads. This may include changing electricity providers or review your supply ordering process (as you may be holing too much stock).

Are you overstaffed? Can new technology or automation streamline processes and same time and money?

This is an ongoing process so always review your costs as small changes all add up.

Be aware of your tax obligations.

Many medical professionals, including dentists, struggle at tax time. As a high-income earner, you will owe a lot in tax so it’s important to be prepared. Talk with your advisor to help you understand your position and if you can be doing things differently to help your tax position out.

Get advice

When it comes to accounting, finance and financial planning, it pays to work with the best people who know the medical profession

Contact us today to discuss how we can help with your practice.
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business

Is your medical practice cash flow not as healthy as it should be? It surprising but this can happen even if you’ve got more clients than ever before.

As the saying goes – cash is king in business.

Take back control of your medical practice cash flow by recognizing and changing these cash flow killers.

Not Using Appropriate Accounting and Practice Management Software.

Not using practice management and accounting software is probably holding your practice back from being as efficient as it could be.

You might be missing subtle areas of your business that are bleeding money, or worse, alarming trends in your practice that have been building over months and years.

You may have been running your own medical practice for many years, so it might be tempting to keep on doing things the way you’ve always done them. However, you could be missing important accounting and financial details that are key to your cashflow improvement.

Tax Issues.

Poor tax strategy and business structure can result in you paying too much tax. This will have a huge impact on your cash flow. But the opposite problem, not paying enough or not understanding your tax obligations could get you in trouble with the ATO and potentially face fines.

As a high-earning medical professional, please remember that the ATO will be expecting to see a return with high income from you. You need to have a plan and ensure you meet your obligations on time. This is where working with a proactive medical accountant is crucial.

 

Debt Management.

Debt is one of those things that hangs over your head. If you don’t start dealing with it now it will spiral out of control.

Your medical practice’s debt can easily blow out when interest and fees are added. Making the minimum monthly payment may not be enough. Small additional payments on your loans can have a huge impact on the time frame of the debt and the total interest paid.

Some medical practice owners also make the mistake of taking on too much debt.

You should also review any loans that you have in place to see if better deals are available. Most medical professionals received concessions from lenders for their loans.

No Risk Management Plan.

Too many medical professionals, and other business owners, say they already know what kind of problems to expect and how to avoid them. Others feel that they won’t be able to do anything should something happen, so why bother. The reality is these are the people who lose the most money when something goes wrong.

Whilst you can’t anticipate and avoid every single bad event that could happen to your medical practice. But having a risk management plan will lower your chances of your business not recovering if something were to go wrong.

Talk with a medical accountant to ensure that you have the right insurance coverage, data security and savings to protect your business in the event of an unexpected problem.

Not Getting Expert Accounting and Financial Advice.

You have sent many, many years studying to excel in your chosen medical profession, but they don’t teach you the fine details about running a business. Being a highly skilled medical professional is awesome, but it won’t guarantee you success maintain a healthy cash flow.

Seek out professional advice to help you structure your finances. You’ll be glad you did!

Get advice today

Great cash flow starts with great advice.

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business

How long can you afford not to work?

People in small business today, especially start-up business owners, often struggle to balance work and family pressures. A typical scenario involves starting work early in the day, finishing late, spending dinner with family or relationship partner and then working late into the night to complete accounts, pay bills, quote on jobs etc.

Is this you?

One of the traps of starting and running a small business is putting off or delaying decisions that are important for you to protect your personal, family and business situations.

A lack of action can have a substantial negative impact on an owner’s personal and family situation when an unexpected “triggering event” occurs in the business.

Case Study
Ian recently started a trade business.

His family was very supportive of his decision but had some concerns initially due to their high mortgage repayments and kids schooling requirements.

Whilst completing a customer’s job, Ian had a major accident that rendered him unable to work for 3 months.

Ian had forgotten to purchase insurance. Ian had to drawdown on the family’s entire savings and the equity in their home until he was able to return to work.

Are you at risk from a triggering event?
A triggering event is one that occurs which significantly impacts on your personal, family and business situation. Small business owners can take preventative action to minimize the impact of a
triggering event. 

The table below lists examples of potential triggering events and suggested preventative actions.

Potential Triggering Event Prevention Action
Business insolvency                               Business plan
Insufficient capital                                 Budget
Loss of major customer                        Customer Relationship Management system
Relationship breakdown                      Family life balance charter
Death of a business partner                 Partnership agreement
Accident, health scare or death           Personal (Medical/ Life) and Business insurance


How much insurance do you need?
Purchasing insurance is one way of minimizing your risk from a triggering event occurring.

Typically small business insurance usually includes:

1. Key Person Insurance – insurance to provide for a lump-sum payment if death occurs.
2. Sickness and Accident Insurance – insurance to replace a loss of income.
3. Trauma and Permanent Disability Insurance – insurance to provide for lump-sum payment if a traumatic health event occurs which causes disability.


What is important when purchasing insurance is to make sure you have sufficient insurance to cover your personal, family and business situations?

Your Financial Adviser is usually in the best position to provide advice on your insurance requirements. When meeting with your Financial Adviser make sure they assess your current and future needs.

If you need assistance assessing your business risks, contact us to discuss
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