EXAMINING the current state of your healthcare practice or organization!

Vital Signs…and Measures!

            I said that “strategic thinking and leadership” is the same as the approach you were taught in medical or other healthcare professional schools. In your healthcare training you started with examining the patient and recording their vital signs. Tests were conducted to determine the patient’s blood pressure and other vital signs. The results were then compared to the “normal scores” and deviations noted. The patient’s scores were recorded and then used in subsequent visits to determine changes.

            Business organizations must do the same. The key vital signs for any for-profit or non-profit organizations include:

• Cash Flow Analyses
• Market Position
• Revenues and Earnings Growth.

Cash Flow Analyses

In business there is one measure that needs to tracked and monitored. It is called CASH FLOW.

Cash is the life-blood of any organization.

In simple terms it measures your ability to pay your bills. In begins with what you take in, your revenues, subtracts expenses and looks at the difference. If the difference is positive your business is in good health. The larger the positive difference the better and indicates strong health.

If it is negative your business is in poor health. If you are continually unable to pay your bills you are on the verge of bankruptcy.

The key is monitor the “cash flows” quarterly and look for deviations, that is changes and determine what is causing these changes. The total net cash flow is the sum of cash flows that are classified in three areas:

• Operational cash flow: Cash received or expended as a result of the company’s internal business activities. It includes cash earnings plus changes to working capital. Over the medium term this must be net positive if the company is to remain solvent.
• Investment cash flow: Cash received from the sale of long-life assets, or spent on capital expenditures   (investments, acquisitions and long-life assets).
• Financing cash flow: Cash received from the issue of debt and equity, or paid out as dividends, share repurchases or debt repayments.

Market Position

            Whether we like it or not, healthcare is becoming increasingly competitive and so it is important to understand how your revenues compare to others. The key is define what you believe is your served market. Competitors may be other specialists or general practitioners or it may be other forms of providers, like the new emerging “urgent care centers” or it can be my other forms of healthcare, such as chiropractic providers, oriental medicine.

            The key is to determine if you are gaining, holding or losing share and why.

Revenue changes.

            Another measure is your revenues. This involves knowing the source of revenues. Segment the revenues into those generated by services, procedures, fees from other sources and funds generated by the sale of products or equipment.

            Examining and Tracking “Vital Signs and Measures”

          Knowing the trend of these “vital signs” and how they compare to other providers will enable you to assess the current and changing condition of your practice and help to determine the type and depth of further analyses required.