The operations of your rehabilitation business drives your financial results. That’s why we’ve spent so much time in the previous segments talking about how to set and measure your operations budget against your financial results.
Now we are ready to talk about how to marry your operations information with your financial information.
Your operations information drives the topline of your financial report, which is your revenue. Your revenue comes from your results. This is an important concept. We find that in terms of financial statements, there are three critical items that need to occur to drive financial success:
- Establish financial budgets. Just going through the process of setting budgets makes you and your staff more aware of what drives success in a rehabilitation practice and keeps your staff engaged in achieving results. Note that it’s important in muti-clinic practices to allocate to each clinic (or cost center) a portion of corporate overhead. Corporate overhead is services that all clinics use such as marketing and billing and collections. You should allocate those dollars as a percentage of revenue per clinic. For example, if one of your clinics does 20% of your total revenue then 20% of corporate overhead should be budgeted.
- Compare your actual results on a monthly basis. Every month, your actual results should be compared against budget as well as against the previous period and previous year. Looking at your actuals by month tends to give you a clearer picture of your year to date performance.
- A Clinical Director who has been educated on how to use and read financial statements as a tool should be responsible for the results. The key to success, especially in multiple clinic practices is a Clinic Director who is responsible for not only the clinical, but operational and financial results.
Martin Healthcare Advisors has developed a number of tools, reports and systems to assist business owners in developing and measuring these results.