Turn Around
Organizations that are losing significant funds and have difficulties in generating cash flow, may have no future plans to resolve their issues, and may need a turn around plan that can be executed immediately.
The turn around is an extreme process of reducing expenses, revenue enhancements, deleting services and adding new services.
The development of a financial model that accurately reflects results of actions taken is the first step in this process. The use of benchmarks and competitive data help identify opportunities to improve profitability. Extensive re-engineering may be necessary to enable cuts that do not reduce patient care.
The success of the plan is measured in cash flow and profitability. If the plan is well designed the institution will be financially sound for years to come.
Analyze Profit or Loss from Operations
Determining the cause and quantifying the degree of the problem are steps one and two in eliminating operational losses. Are the losses due to operational issues, a non-recurring item, inadequate reserves in prior years, third party settlements, etc? With answers to these questions, McBee Associates can identify the operational areas which require immediate attention.
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Establish Financial Goals
A turn around plan needs measurable goals. McBee Associates helps clients establish immediate per month profit goals and long-term profit goals. We normally recommend a client generate a four to six percent profit on net patient revenues. Other measurable goals are days in accounts receivable, days of cash on hand, and days in accounts payable.
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Assess the Institution's Financial and Operational Effectiveness
McBee Associates assists with assessing a client's financial and operational effectiveness. Using info gathered during the evaluation, McBee Associates and our clients develop a list of action items for consideration. Examples are:
- Implement or acquire new services
- Renegotiate managed care contracts
- Improve third party reimbursement
- Align patient rates to maximize bottom line
- Improve medical records coding
- Refinance debt
- Renegotiate vendor contracts
- Reduce staffing levels
- Reduce supply cost
- Improve collections
- Transform unused space into revenue producing areas
- Improve case management
- Reduce days in accounts receivable
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Analyze the Institution's Demographics
Analysis of demographics and patient volumes provides answers to critical questions. . Is the service area population growing or constant? Is the organization gaining or losing market share? Are patients receiving services outside the service area?
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Analyze the Competition
Competitive analysis provides additional information. Is competition taking market share? Are your prices competitive? Is the competition developing new services? How efficient is the competition?
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Develop Short Term Plan
With data gathering and analysis complete, McBee Associates assists with developing a short-term action plan to generate a financial turn around. The short-term plan specifies immediate actions, details the steps involved, and sets implementation time frames. Financial urgency dictates time frames.
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Develop Long Term Plan
Once the short-term turn around plan is in place, McBee Associates supports development of a long-term plan. The long-term financial plan considers the area's demographics, current health care environment, new services, physician recruitment, affiliations, network development and community needs. Action items developed in this phase of a turn around support the client's long-term financial success.
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Input from External Sources
The development of short and long-term turn around plans requires use of external and internal resources. Even when clients believe they have accomplished all they can, with McBee Associates providing an external viewpoint, questioning current assumptions, bringing turn around experience, and stimulating innovative thinking, clients discover new approaches to their problems.
There are no "magical solutions" in a turn around. They combine multiple viewpoints, experience, extensive analysis, and agreed upon action items. The first step in a financial turn around is to engage an outsourcing firm to assess and question all aspects of the operation. McBee Associates helps clients initiate the process, determine operational areas for short-term improvement, and define short and long-term goals.
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