One of the most frequent questions I get from owner doctors relates to whether or not critical information should be shared with staff. The argument usually goes something along the lines of the following: “If I show my income statement to my office manager – who is making $20 per hour—and they see that the net profit in the practice is $250,000, they’ll wonder why I am making $250,000 per year while they are making $40,000. I’ll either get constant requests for a raise or I’ll have to replace my office manager.”
On the other hand, you can’t expect a manager or key person to make important decisions for your practice while flying blind. If you ask a person to handle your purchasing, you cannot reasonably expect a person to buy supplies without knowing the budget, historical spending or important product costs. If you make decisions without information, you’re pretty much asking for bad decisions. Also, if you are too guarded with information, the people in the office may think you are hiding something shady.
Here are some guidelines for information sharing:
Always be open with all information related to new patient activity
Items like new patient appointments made, appointments seen, contracts/production and sources of patients should be openly shared. Not only is this because this information is generally readily available, but also because a large part of the focus of any practice is attracting new patients. If people know where you stand in this area, they are better positioned to help improve results.
Personally, I’m in favor of sharing this information with everyone in the office (you can see that because we specialize in posting these results online), but I do understand that some practices only want to share it with key personnel. That clinician on the job for 7 days probably isn’t in a position to materially affect results anyway.
Yes, someone with access to the new patient data can extrapolate to financial results. For example, if a practice consistently has $100,000 in monthly new contracts or production, someone could compute that if the practice collects 85% of production with a profit margin of 40%, the net profit in the office is roughly $34,000 per month ($100,000 * 85% * 40%). Still, that’s no reason to closely hold this important information.
On the financial side, share only what the staff person can control
If you ask your office manager to handle all hiring and firing decisions and your payroll, they’ll need to know how much everyone makes so that they can keep costs within whatever range you set. Without that knowledge, you’ll have to set up a system whereby they bring you the name of a person, you approve it and set the rates and so forth. That may get a bit convoluted and complicated after a while.
But, if you value the privacy of your financial information, consider that even the most trusted, responsibility-laden office manager will have no control over your pay, debt service, rent, utilities, insurance, outside professionals (lawyers, accountants, consultants, etc.). That information can remain with you. Even if you have a bookkeeper hired to do the cash basis accounting the office, you can still reserve the right to handle entries for compensation and any accrual based entries that may be required from your accountant. In other words, while staff have control over key parts of the practice and need that information, you can also preserve some degree of privacy because only you (and probably your accountant) have the full financial picture.
Communicate on a regular basis
As I mentioned in our last piece, you know a practice is in trouble when results are expressed as individualized anecdotes (“Hey, remember the time we had that patient show up and pay in full? Think it was about 3 years ago”).
If you don’t want to divulge all of the information about your practice to your staff, you can regularly communicate about hot button issues that you want to be the focus of attention. For example, if clinical supplies expense are running high, you can explain to the staff that supplies cost are running high for your taste and that they need to organize supplies better and check for things on the shelves before requesting new ones. That focuses the staff on this issue without having to get into the fact that supplies are 10% of revenue and you’d like them to be at 8%.
For any gray areas, I’m personally in favor of oversharing information. When people know what is going on, you generally get better focus and better decision-making. If someone prefers to post your monthly collections to Twitter, that person isn’t the type you want in the practice. On top of that, you should have those folks sign confidentiality agreements when they start anyway as part of the standard human resources package.
Questions, comments, specific situations? Leave your comments or feel free to contact us.
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