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Continuing my series offering best practices and tips to address the many challenges executives at health centers face, this month I am addressing the topic of the chart of accounts and accounting for grants.
This topic seems basic and a bit granular, but when you understand the premise, “What gets measured, gets managed”, these are important topics. I set out to do a series of topics on themes that I routinely see. I continually encounter scenarios where analysis is limited due to poor use of data often due to poorly designed chart of accounts structure. If data isn’t accumulated in a way to help measure your organization’s finances, then it will be challenging to use the data to make good decisions. I think many executives try to understand their organization’s financial reporting and conclude it’s all gibberish simply due to a poorly designed chart of accounts. I summarize the chart of accounts data shortfalls as follows:
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 Continuing my series offering best practices and tips to address the many challenges executives at health centers face, this month I am addressing the topic of revenue cycle, particularly evaluating the accounting for your revenues.
In my travels and discussions with health care executives throughout the years, some of the top questions I am asked include: Are we billing for everything? Are we accurately completing claims? Are we collecting what we bill? Are we collecting what we are supposed to collect? Are our rates appropriate? Why does cash collections seem to be lower than our revenues? Are our revenues as posted in our financial statements accurate? Health care executives struggle to understand the correlation between their financial reporting, cash flow, and their general sense of the business. Does this sound familiar? If you are reading this, my guess is that you have had similar questions. You probably need to assess your revenue cycle if you are uncertain about the answers to these questions. There are of course many factors. In order to answer the questions above, you need to address: Last month I started a series offering various best practices and tips to address the many challenges
executives at health centers face. This month, I’m going to write about a topic that is a major challenge to many executives: how to improve the accuracy of monthly financial statements, and do it in a timely basis. Numerous clients over the years have told me they either never receive monthly financial statements, relying on year end audits, or they take two to three months to receive them and even then, the accuracy is questionable or the usefulness is limited per the executives I’m speaking to. Executives need information to run their health care organization. I talk to CEO’s all the time about their challenges, and I have put the broad challenges into the following categories simply to apply some framework:
I consistently get the following feedback: I don’t have the financial leadership support I need; I need information; the board needs to be educated about the complexities of our organization; I am not even comfortable that the monthly information is accurate; cash flow seems to be low; we frankly have no idea if the billing department is doing a good job; any financial surprises in the near future may cause some pretty big problems for us, but we don’t really know; the results from the annual audit don’t correlate with monthly data I receive and I have no idea why; we think we’re fine, and then the audit comes along and the results are remarkably worse; we receive offers to sign capitation contracts, and yet we don’t know how to evaluate them; and many, many more comments like that. |