A simple framework for practice management and marketing

On my first day at Harvard Business School our class watched a film about business management that summarized the entire MBA program.

The film showed a cartoon of some sort of business, and broke the business into two parts: cash coming into the business, and cash going out of the business.

The goal in any business, including healthcare practices (and our Healthcare Practice Management & Marketing Systems), is to maximize cash coming in and minimize cash going out.

The rest of the MBA program provided 500 case studies focused on exactly how to do that. We kept slicing and dicing the basic premise of maximizing cash in while minimizing cash out into finer and finer elements.

In a healthcare practice, someone should always be asking whether the practice is optimizing cash flow.

For instance, every medical practice should be reviewing its aging of receivables to uncover opportunities to accelerate cash flow, become better at coding, and understand their most profitable services and insurers.

However, in practice optimizing cash flow is not always easy. For instance, the standard way for a medical practice to increase cash coming in is by broadening one’s patient base. However, we work with many medical practices that could increase profits more by DECREASING their patient base and instead focusing on a more profitable patient mix.

Also, it can be challenging to determine the right perspective between short-term cash management and longer term returns. For instance, investment in new equipment can require a substantial cash outlay, with returns to come over time. In this case, it can take a savvy analysis to determine whether a new investment will really increase cash flow over time, above and beyond the cost of the investment and other opportunities.

Many medical professionals resist using a cold, seemingly impersonal business framework because it ignores the human aspect of patient care. But applying this framework actually presents an opportunity to improve care. Practices that provide outstanding quality and an excellent patient experience will generate rave reviews in the community and increase referrals (which ultimately will increase business results). They also tend to optimize both quality and efficiency of care, which makes everyone better off.

Maximize cash in. Minimize cash out. Easy to say, but not always easy to put into practice.


One Response to “A simple framework for practice management and marketing”

  1. Zachary Says:


    ) Some individuals or companies have abused the TrackBack feature to insert spam links on some blogs (see sping). This enables authors…

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