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Turning Point Financial Newsletter                      January, 2014:  Vol 13
  
Welcome to the Turning Point Financial Newsletter.  We provide a fresh perspective on the state of your finances, business strategy, and operations, so you can point your business where it needs to go.
 
This month I would like to share a synopsis of a project recently completed. I particularly liked this engagement as it required some real detective work.  Enjoy!
 
Client Snapshot: 
Medical Practice:  Cash Flow Forensics 

Situation and Challenge

A health care provider was concerned that cash flow was declining despite the perception that nothing had changed in the operations of the practice. The owner was unexpectedly required to make a capital contribution to the practice to cover the shortfall. We were asked us to perform a thorough analysis to determine the root cause of the declining cash flow.

 

Solution

As with most business, there were many factors which can affect cash flow, including production volume, revenue mix, collections, and expenses.

 

For medical practices there is the added complexities that payment can take up to 12 months to collect and the amount paid for a given procedure can vary significantly depending upon the class of insurance (such as Medicare, Medicaid or private insurance).

 

In the case of this client, several parameters which affect cash flow were in flux, including the amount charged per procedure, production volume, collection rate, adjustment rate and expense levels. It was not readily apparent which of these factors were affecting cash flow.

 

After a thorough analysis, we determined that the underlying cause of the decline in cash flow was a drop in production volume. A recent increase in the amount charged per procedure resulted in a constant level of gross charges and masked a decrease in the number of procedures performed. 

 

We also determined that the net amount realized per procedure was relatively constant despite a change in both the collection and adjustment rates.

 

Results

We determined that a drop in production volume was the root cause of the decline in cash flow. We forecasted a continued deterioration in cash for the next several months unless quick measures were taken to accelerate collections, reduce expenses, or otherwise free up cash. 

 

We suggested several initiatives to increase volume, including cultivation of the referral network as well as additional physician hours.     

 

Just as we helped this client understand their cash flow situation, we can do the same for you. If you would like to learn more, please give me a call. 

 

Until next month, Point Your Business Where it Needs to Go! 

 

Best Wishes,

 

 
Kelly
2013, Turning Point Financial, LLC

Contact Us
Turning Point Financial 
PMB 111 
321 High School Road, Ste D3 
Bainbridge Island, WA 98110 
206.842.4922 
  
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In This Issue
Client Snapshot:  
Medical Practice:  Cash Flow Forensics
Who We Are
 Turning Point Financial
provides finance, strategy, and operations consulting services to businesses in Seattle and the Puget Sound region. 
 

 

Kelly Deis, Turning Point Financial
Kelly Deis, Principal

Kelly Deis is a senior finance, strategy and operations professional with an MBA from The Wharton School, over 20 years of experience (including Deloitte Consulting), and a proven track record of driving business results.
 
Kelly brings depth and breadth of experience in all facets of finance, operations and strategy - from hands on financial management to strategic direction setting and cost reduction. 
 
  
Call Today
 Do you want to grow your business, but are unsure how?

 

Is your organization and processes as efficient and effective as possible?

 

If you need help thinking about these and other financial, strategic and operational questions, call us to schedule an initial consultation.

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