financial essentials … strategic financial execution and tools · before starting to develop a...

Strategic Financial Execution and Tools Financial Essentials …

Mark Doherty , Executive Director SNS

Danielle Goldsmith , Project Manager SNS

NNOHA : August 2014

Remember……. Knowing who you are and being able to define that with data;

defining who you want to be and what success looks like for you;

creating a simple and clear plan to achieve that success and then

communicating that plan to the team and thus creating a culture of

accountability is the road to accomplishing financial success.

2

Vision

Creation of access in high-quality, affordable, oral health programs that document the improvement of the oral health status of the patients we treat while being financially responsible.

• Access

• Affordability

• Quality Managed

• Documented Health Outcomes

• Financially Responsible

Creating Accountability

• Data • What Does Financial Success look

like ? • Clarity around the Financial Plan • Communicate and Share the

Financial Plan • Evaluate and Measure Execution of

the Financial Plan

Be Prepared!

Data

• Meaningful

• Accurate

• Timely

Key Data to Evaluate Program Performance

• Number of visits • Gross charges • Total expenses (direct and

indirect) • Net revenue (including all

sources of revenue) • Expense/visit • Revenue/visit • Transactions (procedures

by ADA code) • Transactions/visit • Scope of Service

• Payer and patient mix • No-show rate • Emergency rate • Number of unduplicated

patients • Number of new patients • Percentage of completed

treatments • Percentage of children

needing sealants who received sealants

• Number of FTE providers (dentists and dental hygienists)

• ACR >90 days

8

Key Data to Determine Financial Performance

Profit and Loss Statement

What Does Success Look Like?

Before starting to develop a financial strategy for a program, determine the goals. Ask, “What will success look like?” and then “back map” to a financial plan utilizing financial tools to achieve that success.

Understand that the only way to evaluate success is by measuring and that is exactly what financial reports and data accomplishes.

10

The Business Plan

What the dental practice needs to accomplish to be financially sustainable, maximize patient access and provide

meaningful quality outcomes

• Numbers and types of patients to be seen

• Numbers, types and lengths of appointments

• Scope of service for the practice

• Staffing model

11

The Business Plan (cont.)

• Service delivery model

• Hours of operation

• Financial, productivity and quality goals

• Optimal payer mix

• Evaluation plan

12

The Approach

• Keeping it simple

• Standardized tools and planning

• Standardization leads to predictability

• Recognize and eliminate variables

• Make it a shared journey

• Communicate with clarity and regularity

• Accurate, meaningful and timely data

13

Danielle's Business Planning Tool

• Interactive

Can be used as:

• a Dental Program business Pro Forma

• a Profit and Loss Format Template

• a Budget Planning tool

Danielle`s Slides ……

Financial Projections Projected Visits

Actual Visits

Difference 0

Patient/Insurance mix: Yearly visits

Percent Medicaid -

Percent Self Pay -

Percent Commercial Insurance -

Percent Other -

Total 0% -

Reimbursement Rate (per visit):

Yearly

Revenue

Medicaid $ -

Self Pay $ -

Commercial Insurance $ -

Other $ -

Total revenue $ -

Interactive Pro Forma Tool

Slide 1 of 3 16

FTE Clinic Days Per Year Clinic Hours Per Day Total Provider Hours Visits Per Hour* Total Visits

Dental Visits 0 0

Hygiene Visits 0 0

TOTAL VISITS 0

Calculating Projected Visits • Begin with utilizing National Benchmarks

– Dentists: 1.5-1.7 visits per clinical hour

– Hygienists: 1-1.2 visits per clinical hour

• Number of clinical days per year

(5 days x 46 weeks = 230)

• Number of clinical hours per day

• Example 2.0 FTE Dentists and clinic is open 230 days per year 8 clinical hours per day (not including lunch) = 1,840 dental provider hours per year. 1,840 x 1.5 = 2,760 projected dental visits

Year One

Projections Actual Variance

Gross Charges

Section 330 Revenue/Grants $ -

Commercial $ -

Self Pay $ -

Medicaid - - $ -

Other - $ -

Total Gross Charges $ - $ - $ -

Contractual Allowances

Commercial $ -

Self Pay $ -

Medicaid $ -

Other $ -

Total Contractual Adjustments $ -

Total Net Revenue $ -

Slide 2 of 3 18

Projecting Gross Charges

Projecting Gross Charges Utilizing Last Fiscal Year Profit and Loss Statement

Step 1:

Most Recent FY Gross Charges

Most Recent FY Net Revenue

Collection Rate #DIV/0!

Step 2:

Projected Net Revenue

Collection Rate

Projected Gross Charges #DIV/0!

EXPENSES

Direct Expenses:

Salaries $ - $ -

Fringe Benefits $ - $ -

Total Salaries $ - $ - $ -

Support Costs:

Rent/Building Lease $ -

Dental Supples $ -

Malpractice Insurance $ -

Lab Fees $ - $ -

Education, Training, Conferences $ -

Maintenance and repair $ - $ -

Dues $ - $ -

Bad Debt $ - $ -

Office Supplies $ -

Depreciation $ -

Printing, Postage $ -

Software License and Fees $ -

Utililities $ -

Telephone $ -

Laundry $ -

Total Support Costs - $ - $ -

Total Direct Expenses - $ - $ -

Indirect Expenses:

Administrative Allocation $ -

Total Direct and Indirect Expenses: $ - $ - $ -

Total Expenses Year Two $ -

Net Income (Loss) $ - $ - $ -

Slide 3 of 3 20

Interactive Performance Evaluation Tool

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Gross Charges

Net Revenue

Expenses

Visits

Revenue per Visit

Cost per Visit

# of Procedures

Procedures per Visit

New Patients

Unduplicated Patients

Completed Treatments

Emergencies

No Shows/Cancellations

# of Sealants

Provider Performance Monthly Provider Performance

Dr. X

Visits # of Days Worked

Avg. # of Visits per Day # Procedures

Procedures per Visit Gross Charges Net Revenue Revenue Per Visit

Month 1 #DIV/0! #DIV/0! #DIV/0!












Payer Mix and Collections


Quarter 1

# of Visits % Gross Charges Revenue Collected Collection Rate

Medicaid #DIV/0! #DIV/0!

Self Pay #DIV/0! #DIV/0!

Sliding Fee #DIV/0! #DIV/0!

Commercial Ins. #DIV/0! #DIV/0!

Managed Care #DIV/0! #DIV/0!

Totals 0 $ - $ - #DIV/0!

Scope of Service

Scope of Service

Quarter 1 Quarter 2

# of Procedures % # of Procedures %

Diagnostic #DIV/0! Diagnostic #DIV/0!

Preventive #DIV/0! Preventive #DIV/0!

Restorative #DIV/0! Restorative #DIV/0!

Endodontics #DIV/0! Endodontics #DIV/0!

Periodontics #DIV/0! Periodontics #DIV/0!

Prosthodontics #DIV/0! Prosthodontics #DIV/0!

Emergency #DIV/0! Emergency #DIV/0!

Oral Surgery #DIV/0! Oral Surgery #DIV/0!

Totals 0 #DIV/0! Totals 0

No Shows/Cancellations

No-Shows and Cancellations

Actual Visits No-Shows Cancellations Walk-Ins

Scheduled Appointments

No Show Rate

Month 1 0 #DIV/0!

Month 2 0 #DIV/0!

Month 3 0 #DIV/0!

Month 4 0 #DIV/0!

Month 5 0 #DIV/0!

Month 6 0 #DIV/0!

Month 7 0 #DIV/0!

Month 8 0 #DIV/0!

Month 9 0 #DIV/0!

Month 10 0 #DIV/0!

Month 11 0 #DIV/0!

Month 12 0 #DIV/0!

Establish Clarity • Our Program Financial Goals are_________

• My $$ Goals are________

• My Role is_________

• My Responsibilities are ________

• Your Goals, Roles, and Responsibilities are __________

• We need to get this done by_________

• AND……This is how I am evaluated!

Top Priorities for Dental Success 1. Data: Accurate, Meaningful, Timely

2. Understanding your Capacity

3. Use the Dental Schedule Strategically

4. Have a policy for everything

5. Actively Manage No-Shows/Last Minute Cancellations

6. Manage Emergencies Effectively

7. Define Clinical Scope of Service and Protocols

Top Priorities for Dental Success 8. Document Patient Eligibility

9. Develop Billing Excellence

10. Manage Self-Pay Patients Effectively

11. Maximize Productivity through productivity Goals

12. Manage Payer Mix through focus on priority populations

13. Set Goals; Financial, Productivity, Access,Quality and Outcomes

14. Create a culture of Accountability

15. Execute a Continuous Quality Improvement System

Understanding Capacity

• Understand the concept of capacity

• Learn how to use an understanding of capacity to establish clarity and strategy around productivity guidelines

Health Center dental programs cannot be everything for every patient.

29

Tools for Evaluating Dental Program Financial Performance

Tools that provide you with the meaningful, accurate and timely data with which to evaluate your success.

•Budget- an estimate or prediction

•Profit and Loss Statement- an actual report of finances as they are today

•Variance Report- the difference between budget and actual

•Reforecast- a new budget prediction based

upon evaluation of the variance report

30

Also have and use:

• Business plan pro forma

• Capacity report

• Aging report

• Program productivity report

• Individual provider productivity reports

31

FQHCs Require :

An Understanding of:

• The 330 grant and the dental allocation

• Nominal fees- What are they?

• Sliding fees as an art and science

• Setting our HC fee schedule

• Fees for patients above 200% FPL

• Income verification

• HRSA expects us to collect fees

• Understand your PPS

32

Financial Projections Projected Visits

Actual Visits

Difference 0

Patient/Insurance mix: Yearly visits

Percent Medicaid -

Percent Self Pay -

Percent Commercial Insurance -

Percent Other -

Total 0% -

Reimbursement Rate (per visit):

Yearly

Revenue

Medicaid $ -

Self Pay $ -

Commercial Insurance $ -

Other $ -

Total revenue $ -

A three page dental business plan pro forma

Slide 1 of 3 33

Year One

Projections Actual Variance

Gross Charges

Section 330 Revenue/Grants $ -

Commercial $ -

Self Pay $ -

Medicaid - - $ -

Other - $ -

Total Gross Charges $ - $ - $ -

Contractual Allowances

Commercial $ -

Self Pay $ -

Medicaid $ -

Other $ -

Total Contractual Adjustments $ -

Total Net Revenue $ -

Slide 2 of 3 34

EXPENSES

Direct Expenses:

Salaries $ - $ -

Fringe Benefits $ - $ -

Total Salaries $ - $ - $ -

Support Costs:

Rent/Building Lease $ -

Dental Supples $ -

Malpractice Insurance $ -

Lab Fees $ - $ -

Education, Training, Conferences $ -

Maintenance and repair $ - $ -

Dues $ - $ -

Bad Debt $ - $ -

Office Supplies $ -

Depreciation $ -

Printing, Postage $ -

Software License and Fees $ -

Utililities $ -

Telephone $ -

Laundry $ -

Total Support Costs - $ - $ -

Total Direct Expenses - $ - $ -

Indirect Expenses:

Administrative Allocation $ -

Total Direct and Indirect Expenses: $ - $ - $ -

Total Expenses Year Two $ -

Net Income (Loss) $ - $ - $ -

Slide 3 of 3 35

Jan-12 Feb-12 Mar-12

REVENUE: ACTUAL ACTUAL ACTUAL

GROSS CHARGES 496,121 455,188 481,936

INSURANCE ADJUSTMENTS (159,450) (191,456) (173,739)

GRANT REVENUE 22,917 22,917 22,916

CAPITATION PAYMENTS 4,330 4,524 4,783

INTEREST/OTHER REVENUE - - -

TOTAL REVENUE 363,918 291,173 335,896

EXPENSES:

SALARIES & BENEFITS 254,205 249,129 256,607

COMMISSIONS - - -

RENT, BUILDING EXPENSE, OFFICE EQUIPMENT13,593 14,025 15,989

PRINTING & ADVERTISING - 1,548 -

POSTAGE & SUPPLIES 43,958 26,000 27,871

TELEPHONE 1,111 533 29

OPERATIONAL EXPENSE (389) (150) 3,184

PROFESSIONAL SERVICES & CONSULTING17,566 23,301 16,203

INITIATIVES - - -

COMPANY INSURANCE 397 508 -

TRAVEL 10 - 131

MISCELLANEOUS 919 4,098 -

DEPRECIATION 30,507 32,890 30,722

Total Expenses 361,875 351,882 350,736

NET INCOME 2,043 (60,709) (14,840)

Actual P&L Statement

36

JUNE

Actual Budget Variance Actual Budget Variance

Revenues:

Gross Charges 410,093 487,190 (77,097) 2,767,732 2,965,725 (197,993)

Insurance adjustments (145,552) (183,671) 38,119 (1,001,406) (1,118,078) 116,672

Grant Revenue 22,917 22,917 - 137,500 137,500 -

Capitation payments 4,446 5,198 (752) 27,113 32,034 (4,921)

Interest/Other Income - - - -

Total Revenues 291,904 331,634 (39,730) - 1,930,939 2,017,181 (86,242)

Expenses:

SALARIES & BENEFITS 232,954 238,549 5,595 1,464,196 1,413,315 (50,881)

COMMISSIONS - - - - - -

RENT, BUILDING EXPENSE, OFFICE EQUIPMENT 15,636 13,542 (2,094) 88,037 81,250 (6,787)

PRINTING & ADVERTISING - 250 250 1,548 1,500 (48)

POSTAGE & SUPPLIES 14,378 35,808 21,431 191,953 214,850 22,897

TELEPHONE 2,574 1,708 (865) 6,620 10,257 3,637

OPERATIONAL EXPENSE 2,855 1,542 (1,313) 19,907 9,250 (10,657)

PROFESSIONAL SERVICES & CONSULTING 17,224 18,417 1,193 114,384 110,500 (3,884)

INITIATIVES - - - - - -

COMPANY INSURANCE - 2,900 2,900 7,776 5,800 (1,976)

TRAVEL - 67 67 262 400 138

MISCELLANEOUS 2,721 3,193 471 10,561 10,357 (205)

DEPRECIATION 30,722 32,223 1,500 186,287 193,336 7,049

Total Expenses 319,064 348,198 29,134 2,091,533 2,050,815 (40,718)

Change in Net Assets (27,160) (16,563) (10,597) (160,594) (33,634) (126,960)

Month - To - Date Year - To - Date

JUNE

Variance Report

37

Dr. X

Visits

# of Days

Worked

Avg. # of Visits

per Day # Procedures

Procedures

per Visit Gross Charges Net Revenue Revenue Per Visit

Month 1 200 20 10 350 1.75 60,000.00$ 25,000.00$ 125.00$












Monthly Provider Performance


Quarter 1

# of Visits % Gross Charges Revenue Collected Collection Rate

Medicaid 600 24.2424 $ 250,000.00 $ 180,000.00 72

Self Pay 400 16.1616 $ 95,000.00 $ 20,000.00 21.05263158

Sliding Fee 550 22.2222 $ 300,000.00 $ 100,000.00 33.33333333

Commercial Ins. 125 5.05051 $ 25,000.00 $ 20,000.00 80

Managed Care 800 32.3232 $ 200,000.00 $ 130,000.00 65

Totals 2475 $ 620,000.00 $ 270,000.00 43.5483871

Scope of Service

Quarter 1 Quarter 2

# of Procedures % # of Procedures %

Diagnostic 250 41.5973 Diagnostic #DIV/0!

Preventive 100 16.6389 Preventive #DIV/0!

Restorative 175 29.1181 Restorative #DIV/0!

Endodontics 4 0.66556 Endodontics #DIV/0!

Periodontics 5 0.83195 Periodontics #DIV/0!

Prosthodontics 7 1.16473 Prosthodontics #DIV/0!

Emergency 35 5.82363 Emergency #DIV/0!

Oral Surgery 25 4.15973 Oral Surgery #DIV/0!

Totals 601 Totals 0

No-Shows and Cancellations

Actual Visits No-Shows Cancellations Walk-Ins

Scheduled Appointments

No Show Rate

Month 1 1100 200 50 80 1270 20%

Month 2 0 #DIV/0!

Month 3 0 #DIV/0!

Month 4 0 #DIV/0!

Month 5 0 #DIV/0!

Month 6 0 #DIV/0!

Month 7 0 #DIV/0!

Month 8 0 #DIV/0!

Month 9 0 #DIV/0!

Month 10 0 #DIV/0!

Month 11 0 #DIV/0!

Month 12 0 #DIV/0!

Potential vs. Actual Capacity based on

FTE Dentists Sample Week Month day-day, 2013

# of FTE

Providers

X 1.7

Visits/FTE/

Clinical

Hour

X # of

Clinical

Hours

Potential

Visit

Capacity

Actual

Visits

% of

Capacity

Achieved

Mon. %

Tues. %

Wed. %

Thurs %

Fri %

Fundamentals Review

• Define Success

• Create The Business Plan

• Understand your Capacity then Define Productivity

• Get Meaningful Data and reports- (P and L) • Share with Clarity to Create Accountability

• Be part of your Budget Process

• Measure-Measure-Measure

• Share your results-Dashboards

• Reward Success

Partnering to Strengthen and Preserve

the Oral Health Safety Net

2400 Computer Drive, Westborough, MA 01581 Tel: 508-329-2280 Fax: 508-329-2285 www.dentaquestinstitute.org

A PROGRAM OF THE

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