CURRENT CIRCULATION: 7997 DATE: 15 Mar 2013

ISSUE NO: 193

Welcome to Health & Life’s free email newsletter service. This service is to provide Health & Life’s clients, contacts and those who attended our presentations with up to date information on key financial and practice management issues that may affect your practice. Tell a friend that we would be happy to add their email address to the distribution list. Please do not use this as a substitute to seeking professional advice.

Writer in charge: Mr David Dahm BA.Acc, CTA, FCPA, FTIA, Ffin, CPM, FAAPM, FGLF.

How to Cope With the Tsunami of Change – Part 2 of 2

How to run a practice!

Welcome back everybody!

This is our first News Alert for 2013, sorry its a bit late, we have been flat out representing pro-bono practices and the industry in relation to the low-paid Australian Nurses Federation pay claim and General Practice Registrar employment contracts. We have also launched a national patient awareness campaign that the Government may be accessing your private electronic medical records for Medicare Audit purposes without your knowledge. Practices and Doctors can now be prosecuted without evidence.

In Part 1 of this edition, we revealed the biggest challenges that your practice will face in the next 12 months. If you missed this edition, please click the button below. Part 1 covered the following:

What? What are the significant external and internal challenges and opportunities affecting our practice?

• The ePIP are you about to lose a lot of money? • E-health the new norm? • Taxation Audits on Doctors reveal big errors in providers’ pay • Take Out Personal Tax Audit Insurance • Doctors and healthcare workers are being prosecuted without evidence • The Australian Nursing Federation low pay claim - do you have a signed contract? • Succession Planning – what really works!

In Part 2 we will cover the best way to organise and run your practice to tackle these challenges and opportunities head on.

The full article can be found on our website please click here

Table of Contents – Part 2 of 2

2. How & When? How & when are we going to turn these ideas into action?

• Governance – business ethics is just important as patient ethics • Systems – if it can’t be measured it can’t be managed – no more surprises • Training – you don’t know what you don’t know – be open and transparent

3. Who? Who do we delegate to and why? Trust but verify! People – Firstly get the right people on the bus • Owners & Management • Staff • Patients or Clients • External Advisers • Time Management – I am too busy for this!

4. Seminars and No Obligation Meetings

5. Where to from here?

How to Cope With the Tsunami of Change

2 How & When? How & when are we going to turn these ideas into action?

Efficiency is doing things right; effectiveness is doing the right things. ~ Peter Drucker Leaders do the right thing, managers do the thing right!

Highly successful practice owner leaders know how to capture information and leverage from it fast. This includes setting priorities and managing key tasks without the need to micro-manage the outcomes. How do they do it?

Governance – business ethics is just important as patient ethics

Governance means ‘to do no harm’. It is now part of the new accreditation standards. It is a thinking process that involves a structure as described below. It is there to promote openness and transparency as well as sound and efficient decision making. The ability to delegate the day-to-day issues without micro-management is a key benefit.

For example if you have 5 owner doctors charging $300 per hour, each meeting costs $1500 an hour. So you don’t want the practice manager to carry on about getting a $200 discount on a photocopier machine. Good governance prevents this poor use of everyone’s time.

Where there is more than one owner, they have a Board and should elect a Chair. The role of the Board is to hire and fire the CEO/Practice Manager and ensure policies and protocols and the strategic direction of the practice is being complied with. We have a delegations policy for a CEO/Manager that stops unnecessary meetings on the small stuff. An example would be authorised spending limits and a limit when to get Board and/or Chair approval.

The Chair, on behalf of the Board, deals directly with the CEO/Practice Manager. No Board Member or the Chair can publicly undermine the CEO/Practice Manager. The CEO/Practice Manager is directly accountable to the Chair and Board to implement any Board decisions.

All parties must abstain from conflicts of interest. This means walking out of the room and abstaining from voting on a decision where there is a perceived conflict e.g. whether to employ a family member or friend.

Governance training should be for all owners and the CEO/Practice Manager. It should be mandatory from the practice perspective and not just learnt in the classroom. This helps solve and contextualise real time issues.

We offer a governance training service to our clients to help resolve those elephants in the room in a humane way.

Systems – if it can’t be measured it can’t be managed – no more surprises

Great systems help you to delegate, so you can work on more complex issues that others cannot. They protect you from making mistakes or when key staff leave or go on holidays. They help you from having to repeat yourself and free you up for more profitable activities. This is the most efficient, effective and profitable area to work on. You can do it because the thought process is easy to understand and inexpensive to implement.

There is no point in making the same mistake unless you have learnt from it. Well documented systems are proof of this point.

This leads to greater job satisfaction and less job distraction. People know where they stand on how and when to do a task consistently and competently.

A key annual question the Board should ask if a key owner or CEO/Practice Manager was hit by a bus what would happen? Is there a backup so we can continue to operate?

Systems are the key to delegating high level and complex work to staff less experienced or trained. It enhances and up-skills your good staff which is great for recruitment and retention. There are companies that do offer cost effective templated and customised healthcare practice manuals. This saves you reinventing the wheel. Contact us for further information. Monitoring tasks and regular reporting is the key. There is no point in receiving reports 12 months old. It leaves no opportunity for corrective action (see our example of a regular reporting cycle our established clients use).

The key is to enforce any governance systems that have been implemented. Correct errors and deviations immediately. Modify systems when necessary. They should be signed off by the Chair.

Training – you don’t know what you don’t know – be open and transparent

You can’t have successful training without effective and well documented systems and procedures. It is as simple as that. There is no magic. 100% of your operational issues are resolved in a depersonalised way by establishing and training your staff on clear procedures.

3 Who? Who do we delegate to and why?

People – Firstly get the right people on the bus.

The wrong people can be a dangerous distraction when you need to keep your eyes on the road. Always attract like minded people (including the type of patients you want to see) if you want to remain focussed on what you need to do.

About Owners & Management “Trust but verify”! ~ George Bush Snr

My advice is to sack the owners! Why? A great practice is one where the owners don’t have the responsibility to meet the overheads and micromanage the environment. Eat well and sleep well. Earn while you sleep. It should be a choice not a responsibility to come to work.

They should have at least one day a week off to think. Use this as a key measure.

Owners and managers need to lead, coach, enable and inspire. They must clearly state what they want. What is the end point? Are we getting there? To maintain trust they must be open and transparent and use a governance framework. This will allow them to empower and delegate responsibilities efficiently and effectively. Owners should delegate one of their own (the “Chair”) to monitor their strategic plans, budgets, systems and training are actually working. They in turn delegate this role to the CEO/Practice Manager who implements and reports back weekly. This is called working on the practice and not in it. The Chair and CEO/Practice Managers do this by walking the floor. Observe if all their staff have a smile on their face. Try test checking employment agreements to see if they are really being prepared and signed off. Make sure it is done, don’t actually do the task. Another example is receiving timely monthly financial reports. The Chair needs to feed back to management if there is a problem.

Owners need to be the navigator in the taxi cab and not the driver. The CEO/Practice Manager is the driver. It is about giving the right directions and making sure you are not about to go over a cliff. Advisers should act like a Global Positioning Satellite (GPS). Most importantly owners need to know when it is time to retire. Passing the baton by selling out or down to the next generation at a fair price is critical. Mentoring the next generation of owners will ensure their is a smooth and dignified transition. A fair price will be paid for your practice.

About Staff Your staff can be the best or the worst risk management tool outside the consulting room. A great practice culture is critical for success. Is it time to kill Bambi and start celebrating your success?

A good CEO/practice manager plays a crucial role. They are in charge of money and morale. They are the hub in the wheel. I also call them the air traffic controller. Make sure they get the support they need.

The CEO/Practice Manager is probably the most isolated person in a practice. If they are not keeping the owners happy, then it is the staff. It is a real juggling act. It does not have to be.

Ideally always have more than two staff backing up roles. Remember to annually ask the question “if that person gets hit by a bus what are we going to do”?

Staff may have good technical know-how and an ability to apply this theory to the task at hand, however they must want to. This is the most critical quality you need to find in your staff. It only takes one staff member to pull down the rest.

I know patients who say they will not go back because of the defensive or grumpy receptionist at the front desk. I do understand the reluctance to kill Bambi, the person who is not open to change.

You know Bambi; the loyal staff member who is loved and respected by everyone at work. At the end of the day, from patients to staff they are just are hungry for a result. We live in an impatient, instant gratification society. I don’t agree with it, but it is what it is.

Bambi could be damaging your brand which makes recruitment and retention of staff and patients more difficult than it needs to be. This can be a huge medico legal risk. Doing nothing is the worst thing you can do. Nobody is bigger than the practice. Six monthly staff reviews are critical. The most effective thing to do is to correct people on the spot when it happens. Any later and it is too late. People don’t respond well to a six monthly shopping list of complaints about themselves.

Key staff members and owners must inspire, coach and enable people. Morale is the key to ensuring you have a successful and efficient outcome on any task delegated. Try using staff surveys to monitor morale and workloads weekly.

Are your poor performing staff not working out? First blame the system, then the training before the person. Only then give them 3 opportunities to improve their performance. If there is no improvement, ask them if they are unhappy working with the practice. People should not work in jobs they are not happy in. Don’t allow them to lose face and encourage alternate employment. Please seek specific external advice from us if you are not sure.

Get the right people on the bus. Remember to hire slowly and fire quickly. Everybody loses if the person is the wrong fit - especially the patient.

Recruiting the right people from the beginning is the key. We have an unorthodox way we recruit our staff see our job ad flexibility and culture statement. It takes a little longer to recruit but it actually works and saves a lot of time. It attracts people with attention to detail and persistence; they want a career not a job. Google does something similar but in a different way. The message is make it hard to get in.

Reward and Recognise

Most importantly don’t forget reward and recognise. It does not always take money. We have an annual practice trophy for the team player of the year based on a peer reviewed team player of the month to be announced at our Christmas lunch.

About Patients or Clients You don’t go to Starbucks to buy a great hamburger. Why? They are designed specifically to sell fine coffee, this is their reputation and this is what their customers expect.

Similarly, medico-legally, Practices should only attract the type of patients that they are designed to see. Recently, a GP was successfully sued $350,000 for negligence. He failed to refer an obese patient to a weight loss clinic.

Getting the right fit extends to attracting the right type of patients you want to help. For example, at Health & Life we are only after aspirational and ethical clients who sincerely want our help. People have to meet you half way for anything to work. Work to the contrary and you open yourself to criticism and a possible law suit. This significantly effects staff morale and your bottom line.

So make your intentions clear. It is unethical to see patients you really do not want to help (unless it is an emergency) because at all times the practitioner must act in the patient’s best interest. Doing otherwise will only put more stress on your workforce and make your staff burn out. It is better to have a happy doctor than none at all. It is important that they enjoy their work; indifference can lead to serious medico-legal issues down the path.

Look at innovative ways of developing your workforce to meet this need by sub-specialising. For example, train nurses to do more women’s health screening. Alternatively, while patients are waiting to see their doctor, nurses can be trained to record BMI readings on the computer. This can be used as an opportunity for them to discuss this result with their doctor. There are many practices that are charging a fair gap for this service.

For one-off projects, establish a task force with set terms of reference and a time frame handed down from the Board. Potential owners and or future management team members could chair these meetings. This provides an excellent training ground for key role players looking to step up.

About External Advisers The buck stops with owners! You can’t delegate this. You can delegate tasks but not responsibility. The buck always stops with the owner. So delegate well.

Owners don’t have the luxury of blaming advisers, staff or anyone else but themselves when things go wrong. Ignorance of the law is no excuse and being an ‘honest fool’ is not a legal defence. If you don’t sight written and signed documents e.g. Fair-Work Compliant employment contracts that are material to your practice, assume it never happened. Ask yourself what are the real consequences (e.g. a $33,000 fine from Fair Work Australia and the staff finding out there is a problem in the lunch room). Not all advisers are the same and they have limitations. Remember all advisers have limitations in experience, skills and overall capability. Often a problem not addressed may be answered as “you never asked me” or “I assumed you would have told us”. There is a lot of “free BBQ advice” out there you can get burnt by. It is important you compare apples with apples when it comes to advisers. All important advice should be confirmed in writing. Phone advice fades with memory and removes accountability and any legal defence. Wherever possible, seek the advice of specialists. With a specialist there is a greater likelihood that all issues are covered, not just the tax issue by your Accountant, the legal issue by your Lawyer and the commercial issue by your Business Advisor. Real value comes from the comprehensiveness of a service that can holistically embrace all your specific needs. Use industry specialists – it is expensive acting on incomplete advice. Common sense should always prevail. There are many Accountants who are a Jack-of-All-Trades. For 21 years we have been mastering the healthcare industry because it is so complex and heavily regulated that it needs to operate with an integrated thought process. If your adviser is not aware of all the specific Health Care Regulations, their advice is incomplete. Yes, we are registered tax agents and have benchmarked practices. We also deal with national nursing union disputes, tailored Practice Agreements, practice valuations, and national Pathology and Allied Health Leases (see what we do). You can spend a lot of time receiving untimely disjointed and one-dimensional opinions. It is important to tread with caution if this is the case. Make sure your advisers can back up their advice with research and proof, not just hearsay. Good advisers are independent, dispassionate, open, transparent and ethical. They avoid conflicts of interest. They declare when they have one that may affect a material decision (for example; the practice Accountant should not also do personal work of any owners where there is more than one owner). It sets a discordant tone and is actually a conflict of interest. It is the breeding ground for discontentment and expensive disputes amongst owners down the track. Good advisers will make you money and reduce your risks from day one. This why we can afford to offer a no obligation review of your practice affairs. Please email us at pa@healthandife.com.au for more information. If we can’t help we will tell you straight away, at no cost to you. At least you will receive some thought provoking feedback. There is no point in paying for advice if you are not going to follow it. This can only end in disappointment. A good adviser will tell you this.

Time management – I am too busy for this! This is the number one excuse we all make. The reality is, if I had a million dollars in my office to give away next Monday, people would make it a priority. Reality Shot - your practice is worth more than a million dollars. It is your single most important asset. It puts food on the table for your staff, plus a few extra luxuries for the owners family, but most importantly it provides for your greatest debt in life: retirement.

Don’t gamble with the most important thing that can give you a lifetime of financial security. Unfortunately the stock market, real estate and the fixed term investments can never give a greater tax effective return, control, independence, self determination and kudos than owning your own practice can.

4. 2013 Seminars and No Obligation Meetings

If you would like your Medical Local to host a seminar, forward them this email with our seminar details and copy us at pa@healthandlife.com.au. We will contact them directly about presenting in your local area.

We thank you in advance for your interest and support. You would be surprised how it only takes one person to make things happen!

Catching up with David Dahm and the Team We can talk about succession planning, business structures, effective tax planning, employee vs contractor agreements, benchmarking and many more topics.

We are using this time to catch up with existing clients. If you are not an existing client, this may be a good opportunity to tell us what is on your mind.

Ask yourself the following questions:

• What new challenges am I facing? • What new opportunities do I anticipate? • What kind of support or expertise would be most helpful to me now? • What changes do I anticipate over the next year or so? • What more can Health & Life do for you, if anything?

We are now planning trips and one to one to meetings for next year. Please let us know if you are interested and we will be happy to schedule you in! Please note that this is on a first come first serve basis.

In the meantime, please feel free to contact us to arrange a no obligation teleconference to get you started on any significant issues. Email us at pa@healthandlife.com.au.

5. Where to from here?

1. Consult your professional adviser in relation to any advice suggested;

2. If you require any previous issues of our News Alerts please email us; and

3. If you are not sure about any issues raised in this broadcast, contact David Dahm on 1800 077 222 for an initial no obligation consult or email us at pa@healthandlife.com.au. Health & Life provides comprehensive Practice consulting, accounting, taxation and financial planning advice for group Practices and individuals. Email us for information about our Employment Template kits for providers and support staff and our Doctors Pay Calculator.

Which topics would you like to hear about?

If there is a particular topic that you would like covered in one of our future News Alerts, please email pa@healthandlife.com.au and let us know what it is. We will then endeavour to cover your requested topic. Do we have your email address?

It is apparent in feedback we are receiving that there are persons receiving this regular email who are not on our email list. If you are receiving this email ‘second-hand’ from another source, we would be delighted to receive your email address and we will add you to our database so that you can receive it first-hand on the day it is sent. This invitation is open to all Medical Practices. Please send your email address to pa@healthandlife.com.au.

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David Dahm BA (Acc.), FCPA,FITA, CTA, FFin, FAAPM, FGLF,Registered Tax Agent, Former AGPAL Surveyor - 10 years of service

CEO & Founder

Health and Life Pty Ltd National Tax Accountants and Practice Management Consultants

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