Strategies for Healthy Finances

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Strategies for Healthy Finances

• Don Pursley, Col Ret. USAFA, BSE, MS, DBA

The speaker does not have any relevant financial
relationships with any commercial interests
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Blantyre Adventist Hospital
What Did They Do This ?
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How They Did It

• Right sizing the staff.
• Recognition of where the business comes from.
• Adjusting the tariffs.
• Watch surgeries and occupancies.

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Strategies

• Different Laws.
• Different Cultures.
• Different Situations.
• All have been used in hospitals.

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10 WAYS TOIMPROVE YOUR FINANCES
INCOME

• Contract Compliance
• Special Service Lines
• Lure The Physician
• Donations
• Watch Inflation

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10 WAYS TOIMPROVE YOUR FINANCES

• Right Size The Organization
• Use Flex Staffing
• Control Overtime
• Manage Supplies/Medicines
• Fewer Might Be Better

EXPENSES
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Strategy 1Contract Compliance
Read and Understand
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Contract Compliance

• The provider may bill against this contract for
  the following (See appendix A for rates)
• 1 Physician services
• 2 Hospital bed usage
• 3 Medicines given
• 4 Meals given to the patient
• 5 Supplies used in treatment
• 6 Auxiliary services

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Contract Compliance

• THE BILL
• Physician Services-----------------------500
• Hospital Bed (5 nights)------------------250
• Medicines given to the Patient--------100
• Meals------------------------------------------25
• Laboratory -----------------------------------50
• Total------------------------
  925

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Medical Supplies???
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Contract Compliance

• The provider may bill against this contract for
  the following (See appendix A for rates)
• 1 Physician services
• 2 Hospital bed usage
• 3 Medicines given
• 4 Meals given to the patient
• 5 Supplies used in treatment
• 6 Auxiliary services

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Contract Compliance

• THE BILL
• Physician Services-----------------------500
• Hospital Bed (5 nights)------------------250
• Medicines given to the Patient--------100
• Meals------------------------------------------25
• Laboratory -----------------------------------50
• Total------------------------
  925

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Contract Compliance

• Must list the type and quantity of medicines
  given.
• Must List the specific laboratory test given.
• The physician must submit with the bill the
  medical summaries.
• Bills must be submitted within 90 days of the
  dismissal.
• Readmission for the same medical problem within
  30 days of dismissal is not covered by this
  contract.

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Strategy 2Special Service Lines
Cash Cow
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Special Service Lines
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China

• Manufacturing Assembly Worker
• 11,500
• Architect
• 28,470
• General Manager
• 132,801

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Zambia

• Accountant
• 11,700
• Finance Manager
• 48,000
• Country Manager
• 54,000

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Botswana

• Physician
• 33,600
• Accountant
• 4,372-88,769
• Civil Engineer
• 142,031

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Nigeria

• Accountant
• 16,000
• Mechanical Engineer
• 32,522
• CEO
• 165,000

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Executive Physicals

• Blood Work
• Stress Test
• Colonoscopy
• General Physical
• Life Style Counseling
• Diet Counseling

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Strategy 3Lure The Physician
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• Who decides which hospital a patient will go to
  for a procedure?

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DOCTOR'S
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Strategy 4Donations

• Donations To Nonprofit Organizations
• In 2013
• 335.17 Billion
• 72 Is Given By Individuals

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Donations

• We are a Hospital in need please send money

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Donations

• Information About The Hospital
• A Case Statement
• Thank You
• Constant Communication

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Strategy 5Watch Inflation

• Chad----------------------------------3.7
• Nigeria--------------------------------8.2
• Cameroon----------------------------2.6
• Ghana--------------------------------16.5
• Gabon----------------------------------5.2
• Cote Divore--------------------------1.3

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Strategy 5Watch Inflation

• Angola---------------------------------8.8
• Malawi---------------------------------21.2
• Mozambique-------------------------3.5
• Zambabwe----------------------------5.4
• Madagascar--------------------------6.2
• South Africa--------------------------6.3
• Tanzania------------------------------6.5
• Zambia--------------------------------8.0
• Kenya----------------------------------5.6
• Namibia-------------------------------4.4

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Effects Of Inflation Over Time
2009 2010 2011 2012 2013
Inflation 3 3 3 3
Income 105 105 105 105 105
Expenses 100 103 106.09 109.27 112.55
Profit/(loss) 5 2 -1.09 -4.27 -7.55
Profit Margin 4.76 1.9 -1.04 -4.07 -7.19
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Strategy 6Right Size The Organization

• How many staff do you need in each department?

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WHERE ARE THE EXPENSES?
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WHAT ARE THESE CHARTS TELLING US?
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RIGHT SIZE THE ORGANIZATION

• 1. EXTERNAL BENCHMARKS
• a. COMMERCIAL DATA
• b. STATE GUIDELINES
• c. FEDEREAL GUIDELINES
• 2. INTERNAL BENCHMARKS

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Cost/Saving of Right Sizing

• Hospital is over staffed by 20 employees.
• Average annual salary and benefits of the 20
  employees is 9,000. ( 180,000)
• The cost to terminate by law is 3 months salary
  and benefits. (45,000) Payable upon termination.

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Savings From Right Sizing

• Spend 45,000 save 180,000 per year.
• Where do we get the 45,000?
• Do the math and borrow the money.

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Strategy 7Flex Staffing
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What Nursing Staff Do You Need?
Assume 1 to 5 nurse to patient ratio.
However there will never be less than 2 nurses.
Patients 5 10 15 20 25 30 35 40 45 50 55
Number Of Nurses 2 2 3 4 5 6 7 8 9 10 11
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How Do You Deal With This?
Number of Inpatients
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Use Flex Staffing

• Send employees home.
• Use an on-call system.
• Use an employee contracting agency.
• Have part-time employees who can be called.

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Strategy 8Control Overtime

• About 10 of a providers labor budget
• Labor 63 of your costs
• No overtime would save about 6
• Labor 500,000 per year-save 30,000

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Control Overtime

• Have clear policies and procedures
• Who can approve overtime
• Set goals
• Track overtime and compare with goals

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Strategy 9 Manage Supplies/Medicines

• 22 of expenses
• Who is making the decisions on supply and
  medicine usage?

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Manage Supplies/Medicines

• Inventory control
• Stealing
• Outdated
• Too Much and Too Little
• Gain sharing
• Who is making the decision on usage?
• Give an incentive for efficiencies

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Strategy 10Fewer Might Be Better

• 1. Is your hospitals quality down because of
  unmotivated and unresponsive staff?
• 2. Are the staff in the hospital rude to the
  patients?
• 3. Is the morale in the hospital down because of
  some disgruntled staff?
• 4. Are you losing money because patients and
  doctors do not want to use the hospital because
  of 1, 2, and 3 above?

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Fewer Might Be Better

• It is far easier to allow matters in our
  important institutions to go in a lax, loose way
  than to weed out that which is offensive, which
  will corrupt and destroy confidence and faith.
  But it would be far better to have a smaller
  number of workers, to accomplish less, and as far
  as possible to have these who are engaged in the
  work truehearted, firm as rock in principle,
  loving the whole truth, obedient to all the
  commandments of God
• Counsels On Health Page 264

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10 WAYS TOIMPROVE YOUR FINANCES

• Contract Compliance
• Special Service Lines
• Lure The Physician
• Donations
• Watch Inflation

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10 WAYS TOIMPROVE YOUR FINANCES

• Right Size The Organization
• Use Flex Staffing
• Control Overtime
• Manage Supplies/Medicines
• Fewer Might Be Better

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