The rigorous training to become a doctor is not easy and requires many hours in and out of the classroom. Depending on your specialty, there are more licenses and education required. Like a doctor, the steps to becoming a CFO include experience in and out of the classroom. Typically they have an accounting degree and a master’s in business or accounting. They may have a CPA or some additional certification and they will have spent many hours creating budgets, forecasts and various analyses for a wide variety of clients and industries. They must have the ability to turn large amounts of data into meaningful and actionable information. And if that were not all, they must have the ability to explain this to the client and motivate them to make changes.
However, like medical professionals CFOs specialize. Though they do have the ability to change to different business skills just like any doctor would, the more they specialize the more valuable they become. I think you know what we are talking about. Patients come to you because of your experience and skill to decipher and suggest the appropriate remedy. The same can be said of a medical or practice CFO, they understand the quirks and important items that differ from manufacturing, service, technology, hotel, and all other industries. It would be important to mention that there are differences between dental and medical. Even in medical, family practice will have different benchmarks than dermatology, podiatry or physical therapy.
So why hire a CFO for your practice? There are many reasons but perhaps the primary one is to add an important advisor to your team. Often medical professionals, try to go it alone, but would you recommend the same to a patient? I don’t think you would because there are inherent dangers in a patient doing self-diagnosis. Perhaps a worse danger is when the patient can’t understand or realize just how dangerous their condition is. This is a rather helpless feeling to the doctor. Another important reason is time. Time to improve your medical training, time to be more billable while getting a better handle on your practice’s finances. Therefore, a Chief Financial Officer gives you the flexibility to focus on your patients while providing your practice with financial security.
Hiring a CFO will ultimately offer your practice a better financial situation by setting the right goals for your practice, comparing to important industry benchmarks, strategically executing a financial plan, and leading monthly meetings with data organized in an easy to understand and meaningful way. The reports from your CFO will provide transparency and identify if your plans and actions are in fact working. A CFO should offer insight on how to run your practice like a profitable business. With a CFO on your team, there will never be surprises when you check your accounts and you will always know your past and present financial situation. Like medical professionals, all CFOS are not of equal skill, so it is important to do your research.
How Will A CFO Help Your Practice?
Planning / Budgeting
- Correct plan setting for daily, monthly and yearly goals.
- Days worked, Encounters and Cost Per Encounter should be above all other goals.
- Other goals may include new patients and collections.
- Ideas on how to reach these goals should be discussed.
- Perhaps even offer a score sheet as Doctors CFO does.
Benchmarks
- Different than goals or budgets, they look at what makes sense for that industry. or a group of industries.
- Realize that benchmarks provide an important framework, but you have to allow for the gray areas.
Forecasting
- Forecast month and annual targets for production, collections, new patients, etc.
- With Forecasting, you can see how well actions are paying off.
- You may need to adjust plans and actions in order to reach set goals.
Mentorship & Training
- By including your practice manager in meetings with your CFO, you can hold them accountable for reaching financial goals.
- If they know the significance of the numbers they are tracking, they are more likely to find value in the process of doing so.
Simulations (Equipment & Staff)
- Not every purchase is a good decision for every practice.
- A CFO will help answer the question of if this investment is a good move for your business.
- Run simulations for staffing and other situations.
Staffing
- Determine if staffing makes sense.
- Make sure you can afford bonuses and employee raises.
- Help determine if various staff members are an asset or a liability.
Ad Hoc Analysis
- Sometime you will need a special analysis and your CFO should be able to do this.
With this information, we can provide you with the answer as to whether or not any purchase is a good decision.
To participate in this week’s poll, please subscribe to our mailing list and follow us on Instagram. ,“Do You Have an External CFO?”
Prior Article Poll Results
Our last blog was about the important of equipment purchase simulation before you invest. Our poll asked “The Last Time You Purchased Equipment, What Level of Analysis Did You Use?” Based on the responses we received, 40% said “none”, 40% said “A Little On Your Own”, and 20% said they “Talked to an Accountant”.
The reason we are publishing these articles is so that your office can increase its success. We appreciate your feedback on how we can help you more and love it when you pass these articles along to other practice owners and office managers.
Developing a management report is not easy and Doctors CFO currently has a robust model for most practice types that is customized for our monthly and bi-monthly clients. If you have questions on how this model applies to your practice or you are interested in applying the Doctors CFO model in your practice, via one of our annual, bi-monthly or monthly assessments, please contact us.
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