Maximizing Return on Investment Q&A

Q: Physician compensation kills our bottom line. What can we do?

A: “Every situation is different. Pull out indirects such as benefits and overhead, as they can really skew things. Set incentives: a portion of physician compensation should be based on productivity, patient satisfaction scores, and outcomes.” 

A: “We have adjusted our care provision team to include a greater emphasis on mid-levels. We find that employers are increasingly comfortable with this. Your care team should be less physician-heavy.

Q: So much of our contribution to our organization cannot be quantified in dollars. How can we incorporate soft contributions into an ROI? 

A: “Account for internal care. For example, we do wellness programs for internal staff and routinely report the pass-through fee of doing this.” 

A: “ROI is often in the eye of the beholder. You need to discuss what ROI means to the person ultimately evaluating it.” 

A: “Keep an eye on inpatient referrals. They may be small in absolute terms but usually provide excellent margins.” 

A: “We identify how we are driving additional business. Our program provides our system with enormous visibility to the community. This is hard to quantify but needs to be cited.” 

Q: What kinds of opportunities are there to cut expenses that may not be obvious? 

A: “Ask all staff members to contribute their thoughts. Better to have a collective rather than a unilateral approach to expense reduction. Often the best ideas come from staff members you least expect to hear from. But they are on the front line and have unique insight.” 

A: “Watch high inventory levels. What do we really need? Try to get down to minimums.” 

A: “Look at your state practice act. Can certain people (MA’s etc.) do various procedures in your state? Look at staff roles within your clinics.” 

A: “We learned a lot by looking at supply costs for medication and lab costs. Now we use our internal lab.”

Q: We have seen a decrease in volumes, causing the administration to question our ROI. What can we do? 

A: “Get a handle on why. Is it poor marketing? Is it just a decrease in demand?” 

A: “Central theme: we need a new definition of who we are. If volumes are going down you probably are using a 1990s model; pull together other services and offer a 21st century integrated package.” 

A: “Optimize on-site services, wellness, and upselling new service lines to existing clients.

Q: What reports do programs use to identify ROI? 

A: “Do not look for a canned program as circumstances vary. We use a basic Excel sheet system.” 

A: “We measure productivity, compare performance to budget, and look at client numbers such as new clients. We need to give the administration a picture of the total program.” 

Q: What is a realistic profit margin for ROI? 

A: “Much depends on who is defining the ROI. People usually want numbers. A 5-10% margin makes sense but there are invariably apples and oranges.” 

A: “NAOHP surveys show at least 85% of programs cite small profits or report they are breaking even.”

A: “Different services provide vastly different profit margins.”