Practice Business Manager, The Waterfield Practice, Bracknell
Gary has more than 25 years’ experience as a director and manager of businesses in the primary care, optical and veterinary sectors. As well as being a practice business manager he is also a practice management consultant, providing business and management support to general practices
Do you know what is happening to your business? This is more than “scanning is up to date” or “we are short on appointments” but the bigger issue of where the business is heading. Do you know what trends are being set, good or bad? If you have set targets, are you on course to achieve them?
These are all questions you should know the answers to but almost certainly won’t unless you are measuring and managing the key areas of your practice’s business.
Why measure business activity?
A comprehensive performance-management system is an essential requirement for keeping track of your business’ progress and provides vital information about what is happening, allowing you to manage your business proactively. Without this you are more reliant on instinct, gut feel and anecdotal evidence and less able to make decisions based on objectivity and facts.
If key business areas are unmonitored there is a danger that a slow decline can go unnoticed, allowing complacency to set in, or that successful areas will be less visible so the chance to build on these opportunities may be missed.
The information produced in measuring your business is also a valuable asset in management reporting, adding weight and clarity to your communications and arguments. The quantitative data produced can also be a useful tool in staff appraisal. Used effectively in staff reviews it can contribute to assessing past performance and can form a part of the individual’s future personal objectives.
While performance management of the business is a powerful management tool it should not be kept as exclusive information for partners and management. The successful achievement of the business objectives requires the efforts of the whole team, and the reporting of progress – along with the sharing of successes and failures – is a great way to maintain motivation.
What you should measure?
One of the key challenges with performance management is selecting what to measure. Getting this right involves identifying and focusing on the areas of your business that determine its success; these are known as your key performance indicators (KPIs).
Strong financial performance is crucial for any business, whether general practice or any other sector, and your KPIs should certainly encompass some financial data and monitoring. This can easily be done in-house without the skills of an accountant.
As a simple starting point, produce monthly accounts, which all accounting software should be able to generate. Report and record income, expenditure and profit or loss – or the cash balance if cashbook accounting is used. These can be compared to the previous year, or budget if this is set, to monitor progress and trends.
Most general practices have uncomplicated and regular movements of money in and out of the bank account and it is also sensible to monitor the highs and lows of the account balance, as this can show if the business is building cash reserves or needing more cash.
Along with measuring financial performance, focus on other areas key to success and the strategic, clinical or other goals that the business is aiming to achieve. In general practice the key areas are likely to include list size, Quality and Outcomes Framework (QOF) achievement, demand on appointments or access, and more recently patient referrals and A&E attendances.
The practice may have their unique goals – for example, the introduction of a new service such as online appointment booking and prescription requests. In which case, these should be monitored. The important thing is that the areas measured are the same ones in which goals have been set. Measuring progress towards these goals is an invaluable way of driving improvements in performance.
If you haven’t already decided on your key performance indicators, a good starting point would be the following:
The KPIs specific to your goals are unique to your practice. As an example, if the goal is to increase list size then it is a straightforward case of measuring list size as shown in Figure 1.
If the goal is income growth, this is more complicated and likely to involve several areas. You might, for instance, monitor enhanced services income, prevalence and private income in addition to NHS income, QOF points and list size, as all of these can have a bearing on overall practice income.
Similarly, if the goal is to reduce expenditure you will need to measure this in categorised areas and compare this to the previous year or period you are trying to improve upon. You might also need to measure expenditure categories as a ‘percentage of income’ or ‘cost per patient’, as expenditure can vary in relation to income and list size.
Collecting and recording the data
Once you have decided on the KPIs you need to measure and monitor, start collecting and recording the data. If a set of KPIs like those shown in Figure 1 is used, data will be taken from more than one place – in this instance the accounts software and the clinical system.
When using the data for reference and reporting it makes life easier if it is stored in one central place; Microsoft Excel is ideal for this. It helps if you are familiar with some of the more advanced aspects of Excel, as you can create more sophisticated and powerful performance management tools using the charts and mathematical functions built into the software. Setting up the spreadsheets in a secure folder, which is regularly backed up, and issuing user permissions as appropriate is a perfectly good way of doing this.
In most cases, recording your KPIs monthly is the right timescale. A shorter timescale may not be long enough for any meaningful activity, while a longer timescale may not show enough detail. It is good practice to get in the habit of recording the data monthly and at the same time each month, say the first working day of each month.
The chosen KPIs should be measured and recorded to enable history, progress and trends to be easily seen. Once the data is built up over a period of time it can be used to draw comparisons against previous months and years, and against
targets set; charts are particularly useful for showing these.
Ideally any targets that have been set will be SMART objectives:
If this is the case, the measurement of your KPIs will show if they are being achieved or progressed towards. If, for example, the goal were to increase list size from 10,000 to 12,000 patients over a two-year period, it would be easy to see if that were achieved. The KPIs could also be used to see if progress was being made over the two-year period; after six months had the list size increased by 500, and 1,000 after a year, and so on?
However, in some case it may be that the goal was simply to increase income, in which case comparing to the same period in the previous year will give the answer.
Monitoring trends for problems and opportunities
The longer you collect your data, the more you build a picture over time allowing you to make comparisons and to see trends developing. In this respect, displaying your measurements in a graphical form is invaluable, as it will often make these far clearer to see. If the trends are moving in the wrong direction, you may have problems that require attention. Similarly, if they are positive they could indicate opportunities to maximise or greater potential than originally anticipated.
In the chart example in Figure 2, triage calls to patients (telephone consultations) have been recorded. It shows a clear trend since 2009 of an increase in these calls. This may be due to a reduction in access to ‘face to face’ appointments or it could be demonstrating a growing patient preference for this type of service. Either way, a significant trend like this would warrant investigation and appropriate action being taken.
If performance is below that expected, consider the factors contributing to this. Can changes be made to improve performance? Can additional resources be utilised to gain improvement? Or was the target overly ambitious and should this be adjusted?
If performance is ahead of expectations, why is this? Have too many resources been applied and is another area suffering because of this? Should the target be adjusted upwards to gain extra benefit from the over-performance?
While performance management of your business is an important management activity with real benefits, you can only compare your performance to your own targets, or against previous periods, unless you are able to compare or ‘benchmark’ your performance against other practices.
It may be that you are achieving an increase in list size, improving your income or reducing your expenditure – but are your competitors performing even better? You will most likely only be able to answer this accurately if you are comparing like for like with other practices.
Benchmarking is a valuable way of improving your understanding of your business performance and potential by making comparisons with other businesses. In some cases it can also be achieved by comparison within the practice.
Figure 3 shows the referral numbers of four doctors. Assuming they all work the same number of sessions, the chart offers a simple form of benchmarking to compare referral rates between the different practitioners.
Sharing details of how you perform can be a frightening and sensitive area that many will avoid. But the closer working relationships forming within the new clinical commissioning groups can only encourage this. In most cases, details such as prescribing spend and referral numbers will be shared, and information such as QOF achievement is in the public domain – so why not share other details such as list size, income and expenditure, and areas that drive your practice’s success? Done properly and sensibly there is nothing to lose and much to gain in terms of managing and improving performance.
While this might be a step too far for many practices, information on how you benchmark with other practices nationally and regionally is often available from your accountants. At the year-end, when your accounts are finalised and reports produced, it is worth asking your accountants to provide a benchmarking report. If they are acting for others in general practice they will have this information available and may well be providing this already.