How to run your healthcare business better?

It does not matter whether you are a "for profit" organisation, a "not-for-profit organisation", a "charitable institution", or a "welfare organisation", your end goal remains the same. To be an affordable, accountable and efficient service delivery platform

Irrespective of being a small clinic, a laboratory, a diagnostic centre, a hospital or a pharmacy or for that matter anyone who needs to work with patients, your primary aim is to provide a service. The service is to resolve the problem for which your patient came to you. It is equally important that you make profits, not because it happens to be the reason for your existence in business, but because that's the only way your business can run. Address it as a service, a profession, a vocation or by any other name that pleases you. The bottom line is that your role is to provide an efficient service to the patient, at an affordable price that too in a manner, such that it ensures you can continue to provide the service better, as a profitable venture, keeping in mind your employees and associates enjoy what they do.

It does not matter whether you are a "for profit" organisation, a "not-for-profit organisation", a "charitable institution", or a "welfare organisation", your end goal remains the same. To be an affordable, accountable and efficient service delivery platform.

In this and the upcoming features slated to be published in the due course of time, we invite you on a journey towards improving the way your business can run. It is a journey without any ending, for improvement has no limits, except your own thought process.

Anyone who has been running a healthcare facility knows that the money comes in from the surgeries, diagnostics, pharmacy, bed charges and nursing charges. These are the services, for which the patient pays the most. The money comes from patients, insurance, corporate organisations who cover their employees and their dependents, and other financers like private and public trusts, government and good samaritans who donate generously.

Introspecting on your healthcare organisation inwards, you need to provide the services efficiently, maximise delivery at the lowest cost. Looking outwards, you need to be a good public relations organisation managing relationships with insurance, corporate organisations, government, trusts and the members of the society.

The single largest cost of running a healthcare organisation undoubtedly is the cost of manpower. This fact holds largely true for organisations that provide a service. At times, the cost of finance, the cost of materials and the cost of maintenance of the organisation may also compete with cost of manpower, often depending on the nature of the organisation, its age and location, its mode of financing, its policies and its efficiency.

That is where the money is spent though not intended. Where the money goes as ''waste'' may well be unpaid bills, loss of efficiency of the staff, pilferage, breakage and misuse of materials, losses due to delayed payments to vendors and delayed receipts from customers, Concessions and cancellation of wrongly billed services and materials for which the patient was never billed.

If you could quantify the money that you may be losing on account of the aforementioned parameters, it is indeed an indication to take a fresh look at your work style and approach. Here is a small check list of how much money you are losing which is not based on arithmetic calculations, but on the impact it has on your business:
How much money have you lost due to concessions, cancellations and write offs? All amounts to a dead loss.
How much money have you lost on account of delayed payments? For every Rs 1000 delayed by one week you lose Rs 3.50.
How much stock went unaccounted? How much did you lose because the physical stock was lower than the stocks as per your books of account?
Are you overstocked on inventories? Every Rs 100000 of additional inventory costs you Rs 15000 per annum.
Every time you delayed payment to your vendors by one week your effective cost of materials will be more by at least three per cent.
Are you losing money due to misuse of materials? Look at items that should not be consumed in such a high quantity. Often this figure may be of the order of two to 10 per cent depending on how good your systems may be.
How much money are you losing because your costly equipment is lying under-utilised? These figures are anywhere from bet ween five to 25 per cent or more.
Are you conducting diagnostic tests where the reagents are under-utilised? Are you getting only 10 tests done from a kit that can be used for 50 tests? That loss can well be 10 per cent of the total cost of kits or more.
It does not take a qualified college degree in financial management to know that if your total costs are 10 million you may be losing anywhere between three million rupees of the total costs due to such a waste. If you are losing under one million, we would like to learn from you, how you are managing your business.

Can we teach you how to run your business better? Yes, No or Maybe.
Yes, because that's what we are going to talk about in the rest of the series of these articles. We will guide you through these articles to help you run your business better.

No, because you know how to run your business. No one can do it for you.

Maybe because if you would like to run it better, help is always available.

The question is how? The forthcoming features will include articles that will give you an outline on how to set business objectives, understand your current state, and plan for the future. We will also help you to create a business process improvement project plan, select the right tool for change, facilitate you to put that plan into practice and finally prepare a road map to success.


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