Take control of your business performance 16 October 2017 Presented by: Johan Nel Group Financial Manager Cure Day Clinics
Knowledge Doubling Curve Introduction Buckminster Fuller created the Knowledge Doubling Curve ; he noticed that until 1900 human knowledge doubled approximately every century. By the end of World War II knowledge was doubling every 25 years. According to IBM, the build out of the internet of things will lead to the doubling of knowledge every 12 hours Knowledge is knowing that tomato is a fruit, wisdom is knowing to not put a tomato in a fruit
MANAGING YOUR PERFORMANCE Know your hospital and its drivers Analyse your reports (debtors system reports, stock system reports, management accounts, statistical reports) Ask questions and challenge the status quo Ensure best operating practices in place Set targets Ensure you get the right information at the right time START WITH REVENUE DRIVER OF THE BUSINESS!
MANAGING YOUR PERFORMANCE - REVENUE Daily Info 1. Number of cases 2. Theatre minutes clocked 3. Revenue per category (Accommodation, theatre time, stock and fixed fee/per diem variances) 4. Accounts not finalised report 5. Theatre utilisation Target Weekly Info 1. Prior month revenue vs cash received in bank 2. Revenue Actual vs Budget 3. Revenue Projected for the month (based on actual) vs budget
MANAGING YOUR PERFORMANCE - REVENUE Monthly Info (including YTD Info as well) 1. Average Income per case Actual vs budget 2. Income per discipline Actual vs budget 3. Gross Profit per discipline Actual vs budget 4. Gross Profit per doctor Actual vs budget 5. Total Revenue for the month Actual vs budget vs prior year 6. Turnover per medical aid 28% 3% 4% 4% 5% 16% 40% DISCOVERY HEALTH MEDICAL SCHEME PRIVATE PATIENTS BESTMED MEDICAL SCHEME MEDIHELP MEDICAL SCHEME DENIS DENTAL PROFMED OTHER 9% 10% 6% 3% 16% 20% 29% MAXILLO FACIAL DENTAL ENT COSMETIC SURGERY OPHTHALMOLOGY GENERAL SURGERY GASTRO GYNAECOLOGICAL ORTHOPAEDIC PAIN MANAGEMENT DERMATOLOGY
MANAGING YOUR PERFORMANCE - PROJECTIONS Revenue must be finalised 48 hrs after discharge Employee Cost, Cost of Sales, Rent Paid and management fees represent the majority of all expenses paid. Salaries Cost of sales Management fees Rent paid All other expenses can be estimated to report on results by the 15 th of the following month or even earlier. Compare to actual at month end and learn from your mistakes!
MANAGING YOUR BUSINESS PERFORMANCE This is what you should get on a monthly basis from your accountant / financial manager For every debit there must be an equal and opposite credit! Day Hospital Business Review for the month of Feb 2017 INDEX TAB 1. Management Accounts - Income Statement - Summary 1 - Income Statement - Trended FY 2017 2 - Balance Sheet 3 - Cash Flow 4 2. Statistical Data - Debtors day calculation 5 - Stock Holding 6 - Income per patient 7 - Income per doctor 8 - Income per discipline 9 - Income per medical aid 10 - Income per procedure 11 3. Templates - Debtors template (sales) 12 - Stock template (cost of sales) 13 - Creditors template (purchases) 14 - Salary template - VAT template - Fixed Assets template 4. Audit Working Papers - All Balance Sheet Items 15-20 5. Detail Budget - Current Year 21
MANAGING YOUR PERFORMANCE INCOME STATEMENT DAY HOSPITAL THIS MONTH YEAR TO DATE DATE: ACTUAL BUDGET VAR LAST YR VAR ACTUAL BUDGET VAR LAST YR VAR Beds In the Unit 0 0 0% 0 0% 0 0 0% 0 0% Theatre Cases 0 0 0% 0 0% 0 0 0% 0 0% TURNOVER TOTAL 0 0 0% 0 0% 0 0 0% 0 0% - Ethicals & Surgicals 0 0 0% 0 0% 0 0 0% 0 0% - Fees and other 0 0 0% 0 0% 0 0 0% 0 0% COST OF SALES 0 0 0% 0 0% 0 0 0% 0 0% GROSS MARGIN ON STOCK 0 0 0% 0 0% 0 0 0% 0 0% CONTRIBUTION MARGIN 0 0 0% 0 0% 0 0 0% 0 0% Direct Overheads 0 0 0% 0 0% 0 0 0% 0 0% Indirect overheads 0 0 0% 0 0% 0 0 0% 0 0% OPERATING PROFIT (R) 0 0 0% 0 0% 0 0 0% 0 0% Summary format Comparison with last year & budget Gross Margin on Stock Surgicals & ethicals as & of turnover. Direct & Indirect costs as % of turnover Bad Debts Recovered 0 0 0% 0 0% 0 0 0% 0 0% Net Rental Paid & Levies 0 0 0% 0 0% 0 0 0% 0 0% Management Fees 0 0 0% 0 0% 0 0 0% 0 0% EBITDA (R) 0 0 0% 0 0% 0 0 0% 0 0% Interest Paid 0 0 0% 0 0% 0 0 0% 0 0% Interest Received 0 0 0% 0 0% 0 0 0% 0 0% Depreciation 0 0 0% 0 0% 0 0 0% 0 0% NET PROFIT / (LOSS) BEFORE TAX 0 0 0% 0 0% 0 0 0% 0 0% Taxation 0 0 0% 0 0% 0 0 0% 0 0%
INCOME STATEMENT DAY HOSPITAL MANAGING YOUR PERFORMANCE Mar-16 Apr-16 May-16 Jun-16 TOTAL Beds In the Unit 0 0 0 0 0 Theatre Cases 0 0 0 0 0 TURNOVER TOTAL 0 0 0 0 0 - Ethicals & Surgicals 0 0 0 0 0 - Fees and other 0 0 0 0 0 COST OF SALES 0 0 0 0 0 GROSS MARGIN ON STOCK 0 0 0 0 0 CONTRIBUTION MARGIN 0 0 0 0 0 DIRECT OVERHEADS 0 0 0 0 0 Catering 0 0 0 0 0 Cleaning 0 0 0 0 0 Discount granted 0 0 0 0 0 Electricity & Municipal Charges 0 0 0 0 0 Gases/Fuel/Oil 0 0 0 0 0 Laundry 0 0 0 0 0 Maintenance ME & Other 0 0 0 0 0 Medical Waste 0 0 0 0 0 Stock write/off & non-chargeables 0 0 0 0 0 Salaries 0 0 0 0 0 CONTRIBUTION 0 0 0 0 0
MANAGING YOUR PERFORMANCE INCOME STATEMENT THIS MONTH DAY HOSPITAL YEAR TO DATE DATE: ACTUAL BUDGET VAR LAST YR VAR ACTUAL BUDGET VAR LAST YR VAR RATIO'S ETC. Income per case 0 0 0% 0 0% 0 0 0% 0 0% Income per ppd 0 0 0% 0 0% 0 0 0% 0 0% Gross profit on Stock % 0 0 0% 0 0% 0 0 0% 0 0% Contribution marging % 0 0 0% 0 0% 0 0 0% 0 0% Direct costs % of turnover 0 0 0% 0 0% 0 0 0% 0 0% In-Direct costs % of turnover 0 0 0% 0 0% 0 0 0% 0 0% EBITDA % 0 0 0% 0 0% 0 0 0% 0 0% Net profit % 0 0 0% 0 0% 0 0 0% 0 0% COST PER CASE Catering 0 0 0% 0 0% 0 0 0% 0 0% Cleaning 0 0 0% 0 0% 0 0 0% 0 0% Discount granted 0 0 0% 0 0% 0 0 0% 0 0% Electricity & Municipal Charges 0 0 0% 0 0% 0 0 0% 0 0% Gases/Fuel/Oil 0 0 0% 0 0% 0 0 0% 0 0% Laundry 0 0 0% 0 0% 0 0 0% 0 0% Maintenance ME & Other 0 0 0% 0 0% 0 0 0% 0 0% Medical Waste 0 0 0% 0 0% 0 0 0% 0 0% Stock write/off & non-chargeables 0 0 0% 0 0% 0 0 0% 0 0% Salaries 0 0 0% 0 0% 0 0 0% 0 0% Summary format Comparison with last year & budget Income per case Cost per case EBITDA & Net Profit measure
MANAGING YOUR PERFORMANCE 2. Statistical Data Debtors days (Target 27 days) Stock Holding (Target 2 X monthly purchases) Income per patient Income per doctor Income per discipline Income per medical aid Income per procedure Creditors 30 days from statement date Negotiate different payment terms Avoid COD and create preferred suppliers with accounts.
MANAGING YOUR PERFORMANCE Ward Fees Theatre Fees Stock DAY HOSPITAL INCOME PER PATIENT Cost of sales Equip & Other Fixed Fee Variance Total Theatre Cases Theatre Minutes Income per case Turnover Turnover Turnover Cost Turnover Turnover Turnover Patient 1 0 0 0 0 0 0 0 0 0 0 Patient 2 0 0 0 0 0 0 0 0 0 0 Patient 3 0 0 0 0 0 0 0 0 0 0 Patient 4 0 0 0 0 0 0 0 0 0 0 Patient 5 0 0 0 0 0 0 0 0 0 0 Patient 6 0 0 0 0 0 0 0 0 0 0 Total 0 0 0 0 0 0 0 0 0 0 Ward fees, theatre fees, stock, etc. percentage of turnover Equipment has it been charged Fixed fee variances are we losing? Theatre minutes, are we in line with the average
MANAGING YOUR PERFORMANCE CAPE TOWN DAY HOSPITAL INCOME PER MEDICAL PRACTITIONER Mar Turnover Cost of Sales Cases Inc/case Turnover Cost of Sales Cases Inc/case Doctor 1 0 0 0 0 0 0 0 0 Doctor 2 0 0 0 0 0 0 0 0 Doctor 3 0 0 0 0 0 0 0 0 Doctor 4 0 0 0 0 0 0 0 0 Doctor 5 0 0 0 0 0 0 0 0 Doctor 6 0 0 0 0 0 0 0 0 Doctor 7 0 0 0 0 0 0 0 0 Doctor 8 0 0 0 0 0 0 0 0 Doctor 9 0 0 0 0 0 0 0 0 Total 0 0 0 0 0 0 0 0 Apr Revenue generated from medical practitioners Cost of sales associated with revenue generation Average income per case and variances with previous periods, can be an indication of billing errors Marketing opportunities
MANAGING YOUR PERFORMANCE CAPE TOWN DAY HOSPITAL INCOME PER DISCIPLINE Mar Apr Turnover Cost of Sales Cases Inc/case Turnover Cost of Sales Cases Inc/case ENT 0 0 0 0 0 0 0 0 Gynaecology 0 0 0 0 0 0 0 0 Orthopaedic 0 0 0 0 0 0 0 0 General Surgery 0 0 0 0 0 0 0 0 Ophthalmology 0 0 0 0 0 0 0 0 Cosmetic 0 0 0 0 0 0 0 0 Total 0 0 0 0 0 0 0 0 Cost of sales associated with revenue generation Average income per discipline and variances with previous periods, can be an indication of billing errors 6% 3% 9% 29% MAXILLO FACIAL DENTAL ENT COSMETIC SURGERY OPHTHALMOLOGY GENERAL SURGERY 10% GASTRO 16% 20% GYNAECOLOGICAL ORTHOPAEDIC PAIN MANAGEMENT DERMATOLOGY
MANAGING YOUR PERFORMANCE DAY HOSPITAL INCOME PER MEDICAL SCHEME Mar Apr May Jun Jul Aug Sep Oct Turnover Turnover Turnover Turnover Turnover Turnover Turnover Turnover Discovery 0 0 0 0 0 0 0 0 Medihelp 0 0 0 0 0 0 0 0 Bonitas 0 0 0 0 0 0 0 0 Bestmed 0 0 0 0 0 0 0 0 Keyhealth 0 0 0 0 0 0 0 0 Momentum 0 0 0 0 0 0 0 0 Total 0 0 0 0 0 0 0 0 Revenue generated per medical aid Indication of where your cash flow might be tied up Some medical aids pay quicker/more regular than others Yearly increases average increase calculation based on medical aid turnover percentage of total sales.
MANAGING YOUR PERFORMANCE Mar DAY HOSPITAL INCOME PER PROCEDURE Turnover Cost of Sales Cases Inc/case Turnover Cost of Sales Cases Inc/case Procedure 1 0 0 0 0 0 0 0 0 Procedure 2 0 0 0 0 0 0 0 0 Procedure 3 0 0 0 0 0 0 0 0 Procedure 4 0 0 0 0 0 0 0 0 Procedure 5 0 0 0 0 0 0 0 0 Procedure 6 0 0 0 0 0 0 0 0 Total 0 0 0 0 0 0 0 0 Apr Revenue generated per procedure Income per procedure Cost per procedure
Cash Flow Statement MANAGING YOUR PERFORMANCE Cash as at 1 March 2017 312 431 Profit/(loss) before tax as per management accounts Add back non cash items: Depreciation Finance Costs 124 518 546 761 245 652 Movements in working capital (275 666) (Inventory, Creditors and debtors) If asset increases = cash outflow CAPEX Additions (234 124) Loans from shareholders 1 256 517 Repayments to banks (1 116 282) Cash at end of the month/period 764 472
Budgeting MANAGING YOUR PERFORMANCE Revenue projection Based on discipline mix Timing of school holidays Surgical & Ethical, Equipment as a % of turnover or per case Fixed fee variances Average income per case per discipline Growth in volume projection Annual increases from medical aids and private patients
Budgeting MANAGING YOUR PERFORMANCE Cost projection Cost of sales (surgicals & ethicals) o Discipline mix o Gross profit per discipline o Annual inflation o Equipment Employment cost / model (admin vs nursing staff) Contractual increases Direct cost per case Indirect cost
QUESTIONS?