While many behavioral health CEO’s treat cost cutting as a major management function, conversely, there are too few of these same leaders capable of building sustained financial growth.
Much like, “lines in the sand”, leaders tend to build concrete barriers between things they believe can and cannot change. Managers usually place costs into the “easy to change” category, while often leaving financial growth to chance.
Only by fully understanding where future revenues are potentially generated will C.E.O.’s become capable of managing both financial growth and reducing costs. During the past five years, the ACG Group has been involved in building the strategies and management disciplines necessary for financial growth. The normal evaluative process includes interviewing senior managers, analyzing financial, statistical reports and developing initial strategic plans. All proposed financial growth opportunities are then discussed with the senior management team.
Health managers can influence operational performance and financial growth only if they have the the right attitude, and the correct diagnostic information regarding costs and revenue sources. Many times this information is unavailable to management teams, who are hamstrung by the quality of data available to them.
Income statements are problematic because they often omit traditional comparative sources of revenues by geographic area, business units, product-lines and are in a non-business format. Under the present non-profit systems, mid-line managers can be left out of the information loop of knowing whether their departments are meeting financial growth expectations.
There are at least four main sources for a Non-Profit’s financial growth:
1) Patient Base Retention – Continuing services to existing referral sources but at a higher quality,
2) Expanding Market Share – Through newly contracted services with 3rd party insurance companies and others,
3) Medicaid Approval – New revenues can be generated based on approval as a Medicaid provider,
4) Market Positioning – Other opportunities often lie just outside the traditional geographic service area and include partnering with traditional Medical Providers.
Tracking the market growth coming from each product line will help managers start taking control of their revenue streams, diagnose problems earlier and spot opportunities for financial growth.
