P&L: What You Should Be Looking At

The question, “What is a profit and loss statement and why do I need to look at it?” comes up often enough that a brief explanation is in order. One thing that I’m always amazed by is the willingness of hearing healthcare professionals to open a practice with very little formal business training. Your passion for helping others probably got you into this business, but your ability to run your businesses successfully is what keeps you in business.

Many owners may be in business for years before they see a profit-and-loss statement. Even if someone else is taking care of your bookkeeping or accounting, it is vital to understand this tool. It’s your gauge for knowing how successful the business is, and it provides great information for setting goals. It can show trends that warn when the business is failing. It can also give you clues about how your business can grow.

The most basic function of a profit-loss statement is to determine your gross profit and net profit. Gross profit is the difference between cost of goods sold and total sales. Net profit is the difference between your gross profit and total expenses. Net profit is the bottom-line dollar amount that the business earns at the end of the day.

A profit-and-loss statement can usually be generated electronically through accounting systems such as QuickBooks or Peachtree. Your accountant can also generate one based on the information you provide. Usually a profit-and-loss statement begins with your income. Details are helpful here. For example, you can break down each sales category separately to serve your needs. I suggest creating categories for hearing aids, hearing tests (sub categorized if your office provides specialty testing), ALDs, Ancillary Care Products, Repairs.

The next category is the cost of goods sold. This is how much you pay for your products for resale. The breakdown of your cost-of-goods-sold categories should mirror your sales categories. That way you can calculate individual gross margins for each category.

Again, subtracting the cost of goods sold from your total income will leave you with your gross profit. This is how much money you have made before expenses.

It is extremely important to list all of your expenses. Some of your basic fixed expenses will be utilities, rent and insurance. These are expenses that should remain consistent and that you have limited control over.  It is also important to have your variable expenses listed. These are expenses that in many cases you can control. Some of these would be advertising costs, travel and entertainment, and charitable contributions. By tracking your variable expenses, you have the ability to help your company be more profitable. If the practice’s gross margin declines for some reason, these expenses can be reduced.

Some of the other standard expenses that will show up on a profit-and-loss statement are labor costs, professional fees and office supplies. These again are expenses that can be reduced when the practice’s profits are not in line with the owner’s goals.

Last but not least, don’t forget to create categories for any additional expenses that come through the business such as licenses, dues and subscriptions, and postage and shipping. Interest on loans that you pay, or bad debts you can’t collect, should also be added to your profit and loss statement.

Finally, get into the habit of viewing your P&L at the beginning of the month, mid-month and at the end of the month.  Doing so will help you to use your P&L to accomplish three very important things.

  • Plan
  • Problem Solve
  • Analyze

Reading this was probably a painful process.  There’s only so much humor you can inject into any article related to Accounting.  I hope you made it all the way to the end and I hope when you’re done reading the article, the very next thing you do is go look at your P&L.

5 Ways to Handle Problem Employees

Problem employees. Every manager has or will have to deal with them. Managers need to understand that a negative employee is not just a problem between them and that employee. The air of dissent affects everyone who’s around it. Even though dealing with “problem employees” isn’t a favorite task for most managers, it’s part of the job. You will have to deal with the employee, and better sooner than later.

The unfortunate thing is, most managers get held hostage to these folks, spending a disproportionate amount of time, thought and emotional energy on them. Often hovering on the verge of letting them go for years, but never quite being able (for a variety of reasons) to pull the trigger.

Here are five tips that great managers do when confronted with a difficult employee – things that keep them from getting sucked into an endless vortex of ineffectiveness and frustration:

1. Don’t Ignore the Problem

No one enjoys confrontation, but allowing a difficult employee to wreak havoc on your workplace is bad for business. A problem employee can lower morale and productivity in your office. If they’re interacting with your clients they could even lead to loss of business. Don’t ignore the problem and let it get worse.

Are you setting your business apart?: Tips to effectively sell

2. Give Feedback

You may complain about your problem employee all the time, but do they know what they’re doing wrong or what they should do differently? It’s never fun to give critical feedback, but great managers learn how to do it well and actually follow through. Give your problem employees specific information they need to improve and let them know what an improvement would look like.

3. Be Consistent

If you say you’re not OK with a behavior, don’t sometimes be OK with it. Employees look to see what you do more than what you say. If, for instance, you tell employees that it’s critical they submit a certain report by a certain time, and then you’re sometimes upset and sometimes not upset when they don’t do it…the less-good employees generally won’t do it. Pick your shots – only set standards you’re actually willing to hold to – and then hold to them.

4. Set Consequences…And Stick to Them

If you’ve let your employee know what they need to do, but you’re still seeing no improvement, it’s time to get very specific. Lay out your expectations on a timeline and set the consequences for not following through. For example, you could say, “I still believe you can turn this around. Here’s what turning it around would look like. If I don’t see an improvement by this date then here’s what will happen (i.e. you’ll be fired or you’ll be put on probation, etc.).

5. Document Everything

Many managers have a difficult time letting problem employees go because they have no record of his or her bad behavior. Whenever you’re having significant problems with an employee, DOCUMENT EVERYTHING. Write down the key points or put it through the proper channels in your organization. All too often a lack of documentation arises out of misplaced hopefulness; managers don’t want to be ‘too negative’ about the employee, as if it would all magically go away if they didn’t write it down. But good managers know that documentation isn’t negative – it’s prudent. Remember, if you’re able to solve the problem, you can just breathe a sigh of relief and put your documentation in the back of the drawer.

Don’t allow problem employees to disrupt your business. Problem employees don’t just affect their managers, they affect the morale in the office, the productivity of their peers, and ultimately, your business’s bottom line.

Read our blog post of the one factor that will improve your SEO, conversion rate, & your bottom line.

Don’t Post These Signs In Your Waiting Room, Ever!

There are many signs that can be purchased in office supply stores, novelty shops, and even stores like Target that you may think will spice up your waiting room and make your patients laugh or make your office more orderly. But this may not be the case. The following 5 signs are examples of what NOT to buy! Here’s why…

1. “If you are grouchy, irritable or just plain mean, there will be a $10 charge for putting up with you.”

Ha, ha, ha…. The 3 Stooges, Roseanne Bahr, George Carlin…humor is best left to the paid professional.  Your attempt at humor will never amuse everyone so why bother?

2. “Please be aware that this office is under 24-hour surveillance.” 

Why?  If I’m your patient, I believe I may be asking myself if I really want to return to an office that has a need for 24-hour surveillance. 

3. “A No-Show fee of $35 will be billed to you if you do not give at least 24-hour notice prior to cancellation of your appointment.”

What you’re telling me is that time is money.  If I’m kept waiting, can I expect a credit on my account?

4. “The nature of our practice is to give our patients the utmost in care and service.  Please excuse any delays.”

If you have taken the time to turn this into a sign, then I guess I can safely assume that I, as the patient, will be kept waiting…a lot.  And this would be because you haven’t figured out how to provide the utmost in care and service in a timely fashion.

5. “We welcome your comments about our office and or staff.”

Really?  Would you like me to blurt it out right now, right here, in the middle of the waiting room?  If you feel a need to ask for the comments and suggestions, give them options on how.  Give the patient a form to complete and return at their discretion.

And while we’re on the topic of signs in the waiting room, if you must have them, pay attention to how they look.  There is no place in your waiting room for signs that are torn, dirty or mismatched. Signs should not be held up with pushpins, thumbtacks and/or duct tape.  Signs should serve a purpose.

Walk out into your waiting room right now.  What do your signs say about you, your staff and your office?

5 Ways To Make Your Tomorrows More Productive, Today

Do you walk into work feeling swamped before you even sit down at your desk? Do you not know where to start? Work gets busy and it’s easy to get overwhelmed. It’s tempting to just end the day at 6PM and think about everything else tomorrow. But with these five tips, you can increase your productivity and reduce your stress. By taking just a little time out of the end of your work day, you can set yourself up for success.

1. Review Your Calendar

Checking your calendar a few hours before you intend to head out mitigates the possibility of forgetting about a commitment that requires prep work. If your prep is a large commitment (use your judgment on this one), start on it today. Otherwise, make a note to prep for your meetings first thing in the morning.

2. Review Your To-Do List

With a few hours left in the work day, triage your to-dos. What can you realistically finish today? Then prioritize. What NEEDS to be done tomorrow, this week, etc. Are their non-essential items that you can be delegated or removed completely?

3. Update Tomorrow’s To-Do List.

At the end of the day, when you’ve finished everything you need to, take two minutes to review tomorrow’s to-do list. Ask yourself the following questions:

  • Do tasks need to be completed in a certain order?
  • What items do you absolutely need to finish tomorrow? (Rank these high priority.)
  • What items can you tackle later in the week? (Rank these low priority.)
  • Do certain items need to be completed by a certain time of day, and have you made note of this (instead of relying on your memory)?

4. Make as Many Decisions About Tomorrow as Possible

Choose what you’ll wear and eat, along with any anything else you need to decide tomorrow the night before. This will free up your brain and help preserve your willpower for the more consequential decisions tomorrow. With more brain capacity and better decision making, you’ll see your productivity and energy rise.

5. Sleep 8 Hours

You’ve heard it a million times, but it’s true. There’s no better productivity booster than sleep. When you get enough sleep, you can better focus on your plan for the day because you’ll have more self-control. Not only will you get more of the right things done, you’ll also notice your interactions with other people to be easier going. This is hard for those of you who do a lot. My advice is to see adequate sleep as one of your most important tasks to accomplish every day. Make it a priority.

Age 65+ Statistics You Should Know

How much do you really know about the finances of your potential demographic?

Median Income Levels

The median income of older persons (65+) in 2013 was $29,327 for males and $16,301 for females.

 

A Few Sobering Facts About Social Security

 

In 2015, over 59 million Americans will receive almost $870 billion in Social Security benefits.  Social Security is the major source of income for most individuals over the age of 65.

  • Social Security benefits represent about 39% of the income of the elderly.
  • The average monthly benefit for retired workers is $1,335.
  • 53% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security.
  • 22% of married couples and about 47% of unmarried persons rely on Social Security for 90% or more of their income.

Economic Measures Courtesy of the National Council on Aging

Click here for a direct link to the National Council on Aging

Income & Employment

  • Older women typically receive about $4,000 less annually in Social Security than older men due to lower lifetime earnings, time taken off for caregiving, occupational segregation into lower wage work, and other issues. Older women of color fare even worse. (Wider Opportunities for Women)
  • By January 2012, older workers displaced in the years following the recession were half as likely to have regained employment as the nationwide average. (Bureau of Labor Statistics)
  • Older workers of color are most at risk for unemployment, with older African American men twice as likely to be unemployed as older white men. (Bureau of Labor Statistics)

Debt & Savings

  • One-third of senior households has no money left over each month or is in debt after meeting essential expenses. (Institute on Assets and Social Policy)
  • In 2012, the average credit card debt among adults aged 65+ was $9,283. (Demos)
  • 14% of adults aged 65+ face retirement with negative net worth. (Aging and Bankruptcy, U.S. Courts)

Health & Nutrition

  • Over 27% of older adults living in poverty were at risk for hunger in 2011. (National Foundation to End Senior Hunger)
  • Only one-third of eligible older adults (age 60+) are enrolled in the Supplemental Nutrition Assistance Program (formerly Food Stamps).

Housing

  • As of December 2011, 16% of older homeowners owed more on their house than it was worth. (AARP)
  • A majority of older adults have unsustainable housing costs, with 59% of older renters and 33% of homeowners with mortgages spending more than 30% of their income on housing costs. (AARP)

 

If you don’t offer your patients payment options other than cash or credit, now might be a good time to start.

 

 

 

 

 

ICD-10: Good News, Bad News

 Let’s Start With the Good News

CMS Creates a One-Year Grace Period for Transition to ICD-10

From the American Academy of Audiology

The Centers for Medicare and Medicaid Services (CMS), in conjunction with the American Medical Association (AMA), announced on Monday a one-year grace period following the October 1, 2015, transition to ICD-10, where Medicare claims will not be denied based solely on inaccuracy or a lack of specificity in claims reported with ICD-10 codes.

This announcement means that providers will not be denied payment in the first year of the transition to ICD-10 as a result of unintentional coding errors inherent in the process of transitioning to the new system, as long as the wrongly coded claim is in the same general family as the correct ICD-10 code.

Monday’s announcement marks the start of a joint collaboration between CMS and the AMA to provide nationwide support and training for providers before the October 1, 2015, deadline, including a newly published set of guidance questions and answers. Outreach will include webinars, on-site training, educational articles, and provider calls. The Academy will work to share these resources with our members in addition to the many other audiology-specific resources available on our Web site

The announcement also includes measures for authorized advanced payments for Medicare contractors that cannot process claims within established time limits due to administrative challenges of the transition. Additionally, CMS will select an ICD-10 Ombudsman to be located at the ICD-10 Coordination Center to answer questions and provide assistance for claims submissions. Lastly, CMS will not subject providers to the Physician Quality Reporting System (PQRS), Value-Based Modifier (VBM), or meaningful use (MU) penalty during verification or auditing directly related to the greater specificity of ICD-10 codes during the first year grace period.

The Bad News?

In the announcement, CMS restated that as of October 1, 2015, all claims must still be transitioned to ICD-10.

Take a Vacation

It’s that time of year. People are taking a vacation, planning to take a vacation or thinking they should take a vacation. You need a break, everyone does. Time to recharge the batteries.

10 Reasons Why You Should Take A Vacation

And remember, US workers get fewer vacation days than any other developed nation, it’s vital to make every one of them count.

  1. A vacation will help you live up to 20 percent longer
    A study by the State University of New York at Oswego that surveyed 12,000 men between ages 35 and 57, found that men who go on vacation every year reduce their overall risk of death by 20 percent
  2. Some time away will give you more energy on a daily basis
    Experts from the University of Pittsburgh and Radboud University both said that people had more energy and felt more satisfied with life on vacation.
  3. During a break from work is when people come up with their best ideas
    The author of How To Succeed In Business Without Working So Damn Hard, Robert Kriegel says that many workers get their best ideas away from work. Los Angeles psychologist, Robert Butterworth told ABC, “The break will allow you to refresh your brain cells.”
  4. Some time in the sun will make you more productive and happier at work
    34 percent of professionals come back from vacations and are more productive. They also feel better about their jobs.
  5. Calling your travel agent can save your marriage and keep you off the Prozac
    A Wisconsin Medical Journal published findings that women who take two or more vacations a year are less likely to be depressed, tired, or unhappy with their marriage.
  6. You don’t get many other chances to act just like a kid again
    You get the freedom of just having fun again. You don’t have to wake up at a certain time or follow a strict schedule. You can just relax and spend all the time in the world doing what you want.
  7. You don’t even have to go to reap the benefits of getting away
    Research by a group in the Netherlands showed that just planning a vacation boosted happiness for eight weeks. They found that many of the benefits come before you even actually go on vacation.
  8. You will save your company money every day you are away
    Christine Hohlbaum, author of The Power of Slow: 101 Ways to Save Time in Our 24/7 World, says that workers who forego their vacations are hurting both themselves and the company. They are more likely to get sick, and even when they are physically in the office, they may have already mentally checked out.
  9. Even your home life will improve when you take time to get away
    53 percent of people say they came back from a vacation feeling more reconnected with their family.
  10. Showing the confidence to take time off speaks volumes to your boss and to your peers.  Financial advisor, Suze Orman says “Don’t put yourself on sale.

Need a Vacation Destination?

No need to leave the country. Here are 29 unbelievable places to visit in America before you die.

10 Things You Need to Know About HIPAA Compliance in the Cloud

  1. Safe Harbor is a provision to HIPAA’s Final Breach Notification Rule.  It kicks in when a breach occurs, and allows a “covered entity” (pending a breach risk assessment) to determine that Protected Health Information (PHI) was not disclosed. Encryption of PHI data is considered a primary way to achieve Safe Harbor. In case of an information breach and assuming the risk assessment will find that PHI was encrypted, the covered entity will not be exposed to onerous reporting requirements; especially, they will not need to report the breach to every single effected patient, thus saving cost and their reputation. Additionally painful fines are likely to be avoided.
  2. Encryption is only part of the solution. Strong data encryption, like AES-256, is critical to HIPAA compliance in the cloud, but it is not the end of the necessary cloud security. Strong encryption must be coupled with strong encryption key management in order to be effective.
  3. Backups and snapshots must be secured. You need to properly secure any storage medium which contains protected health information about patients. This includes backups and snapshots.
  4. Business Associate Agreements (BAAs) and liability. If a company you do business with (for example, a payment processor) has a data breach and ePHI is compromised, you could be liable too. Companies must sign a BAA, but are still potentially liable.
  5. Monitor data access. According to TechTarget’s SearchHealthIT, you must monitor who has access to your data. “In order to ensure data is protected adequately, cloud providers implement advanced firewalls and intrusion detection systems that can help detect and prevent hackers from accessing their clients’ sensitive data.”
  6. Employee training is a necessity. In addition to formal annual training, make sure you provide a constant stream of information and security awareness to train employees about their HIPAA compliance responsibilities. Use diverse methods to garner staff attention: posters, letters, memos, web based training, meetings, and promotions.
  7. Policies and notices may need to be updated. Whenever the HIPAA rules change and/or your systems change, re-evaluate your policies and privacy notices as they will likely need to be updated and redistributed to patients.
  8. Mobile devices and apps. All mobile devices and apps that are used by healthcare professionals must comply with HIPAA rules and regulations. Conduct a risk analysis to identify potential threats and vulnerabilities to ePHI, and implement a mitigation plan to address the gaps. Encrypt data on mobile devices before sending information to the app and always use strong user authentication to avoid data theft or inappropriate access.
  9. Cloud storage can be made HIPAA compliant. Most cloud storage options are not HIPAA compliant “out of the box.” One of the reasons is because many cloud storage solutions allow encryption, but require that they have access to encryption keys. To maintain compliance and achieve safe harbor, use a solution like split key encryption that ensures that you maintain ownership and control of encryption keys.
  10. HIPAA is not to be feared. Possibly the most important thing to know about HIPAA is that you should not fear it; it exists to protect patients, providers, and business associates and to facilitate appropriate data sharing. None of us want to suffer a breach and by following the provisions set forth in HIPAA, we protect ourselves.

Is There Safety in Numbers?

In this business, the answer is no.

The concept of “safety in numbers” is applied successfully in many situations. For example, starlings gather in the evenings to roost. They will often participate in what is called a murmuration — a huge flock that shape-shifts in the sky as if it were one swirling liquid mass. This behavior is often sparked by the presence of a predator, like a hawk, and the movement is based on evasive maneuvers. There is safety in numbers, so the individual starlings do not scatter, but rather are able to move as a cloud, feinting away from a diving raptor, thousands of birds changing direction almost simultaneously.

The pack mentality.

We would argue that the “pack mentality” is one of the bigger problems with this industry. Groups make people feel safe, letting them take a more dangerous course. The only way that the “safety in numbers” approach works is if the entire group also follows the “head in the sand” approach to problem solving, by allowing the group to identify and to solve the problem.

The problem with herd behavior is that it puts us to sleep, and makes us stop assessing what’s right in front of us.

There are plenty of ways that people take risks, but most of the time it involves knowingly taking the risk. When herd behavior takes over, people don’t realize when they are taking risks. They stop analyzing the situation, and go with the group, with the plan. That makes it easy to drift into disaster without ever being aware that they’re in danger. If other people have done it, or are doing it, it has to be okay. Too many large groups in our industry have led too many business owners down a path they no longer want to be on.

Our competition.

We’re well aware that we have competition for your business. Most of our competition embraces the concept that, “there’s safety in numbers”. We don’t. Franchises use the pack mentality to their advantage. In order to run a successful chain of franchised stores, it’s necessary that each franchise owner be a follower and not a leader.

You don’t own a McDonald’s. There is not an assembly line approach to running a successful Audiology/Hearing Healthcare Practice. And if there isn’t an assembly line approach to running your business then there isn’t an assembly line approach to fixing it either. You want to know why? It’s because you have a unique set of strengths and weaknesses, as does your staff in a marketplace that has unique characteristics that must be accounted for in the overall scheme.

It’s time to stop following the herd mentality.

Call us, we don’t promise to make the process painless but we do promise to make it successful.

Is the Person Answering Your Phone Losing You Business?

You’re hoping that your advertising and marketing efforts will make the phone ring. But what happens when it does? Who answers the phone? Do they know what to say? Do callers feel like someone on the other end cares that they called, is knowledgeable about the business and can solve a problem? How many times a week are calls mishandled by staff members to the point where a potential customer decides to contact another business?

If you aren’t 100% certain of the answers to those questions or the answers aren’t making you too happy, then you have a problem. The person who answers the phone is your businesses first line of defense. Your ability to survive in an increasingly competitive marketplace is dependent on every component of your business firing on all cylinders. And the biggest misfire of all may be the ability of your front desk person to successfully handle incoming calls.

How to Successfully Manage Your Incoming Calls

Hiring the right person

Start the interview process over the phone. They could be the most qualified person on the planet for the remainder of the job description. But if they’re primary role is to answer the phone and they sound awful on the phone, move on to the next candidate.

Consider a bonus-based compensation

Money does motivate job performance. Consider providing staff with a bonus or commission for every appointment booked that turns into a sale. If you find that one in a million person who is absolutely, positively making a difference at the front desk, pay to keep them. One lost sale a month would’ve more than covered their salary and incentives.

Do not “close” during lunch

Businesses that do not take calls during their “lunch” make me nuts. Considering that many people use their lunch times to take care of personal business, you could be losing out on a lot of business. It’s a none too subtle sign to potential customers regarding your company’s stance on “customer service”.

Confirm call back times

Agree on a set time that the “boss” will return the call. By stating clearly that the person who they really want to talk to returns calls between 4:30PM and 5:00PM you’ll cut down on the people who will inevitably call back 3 or 4 times in the hopes of catching the decision maker.

Provide scripts

You can’t script the entire phone experience. But I can’t tell you the number of offices I’ve contacted where the staff answers the phone in ways that make me cringe. “Hi, Hearing Center.” “Hearing Center, please hold.” Hearing Center, Can I have your name please.”  None of these are appropriate. If the person calling has a hearing loss, they might not have heard, please hold and thought they were disconnected.  A script should contain the opening lines and the answers to the most frequently asked questions.

Training

The simplest way to provide training is to record the incoming calls. 90% of all problems can be identified and resolved if you and your employee can just sit and listen to the calls.

Businesses that apply these strategies will notice a difference; it will make your customer’s happier, your staff more efficient and everyone less frustrated.