Steps To Keeping Your Business Lucrative
August 2003 Issue
Tom DiBello, CO, FAAOP, president/CEO, Dynamic Orthotics & Prosthetics, Houston, Texas, notes, "The cost of absolutely every aspect of business have risen, while our reimbursement has gone down. This has been a consistent trend for the past five to ten years."
What is the beleaguered O&P business owner to do? Here are some steps to sunnier days:
Cost Accounting Is a Must
Cost accounting is a continual process. At regular intervals, say every six months or at least yearly, take time to review salaries, insurance (health, liability, workmen's comp, etc.), administrative costs, and discounting, to name a few of the larger expenses you incur. Don't forget to check the minor expenses as well: Do you own or lease your office equipment and what are the pros and cons of either option? How about telephone costs, including monthly base rates, long-distance charges, and Internet access? Can you negotiate a better deal with your current carrier? Don't be afraid to make a change once you've thoroughly researched the options.
If such a review of expenses is delegated to someone on your administrative staff, be sure you take the time to review their findings so you have a complete understanding of where your company's money is going. Ignorance is not bliss in this instance-stay in the know. By brainstorming once or twice a year, you can often change things that aren't working or reassure yourself that the choices you've made have proved successful. (Some suggested reading: Principles of Cost Accounting, Edward J. Vanderbeck, July 2001; Cost Accounting: A Managerial Emphasis, Horngren, Foster, Datar, Datar, March 2002.
Surround Yourself with Great People
Let your staff know how much their efforts contribute to the overall success and longevity of the company. Efficiency and hard work will grow your business.
From day one, be very clear about what is expected regarding responsibilities and workload. An increase in salary or a bonus plan is a great reward for exceptional performance, helpful ideas, and showing initiative. Other perks could include gift certificates to the local mall or a great restaurant. Regular displays of appreciation can yield much in relation to employee performance.
Be sure your staff size is appropriate for the amount of business you have. You neither want employees sitting around with nothing to do (overstaffed), nor do you want employees so stressed that they can't keep up (understaffed). Find the balance.
Education and Association Involvement
Association involvement is a great way to hear what others are going through in their businesses. It also affords the opportunity to work as a team to educate insurance companies, Congress, and others in related fields as to the unique value of O&P. Have high standards, give attention to detail, and be tough (in a nice way, of course). Don't assume insurance companies or lawmakers understand O&P and all it encompasses. Educate and explain until you are understood.
Says DiBello, "We must all do a better job of educating the insurance companies to the cost-effectiveness of the work we do, its custom nature, and its significant complexity. Even in orthotics, we are now beginning to work with some complex knee components." He continues, "We have not done a good job in the past of demonstrating that we put people back to work. We help to rebuild lives, and we need to effectively demonstrate that to insurance companies."
Technology Is Your Friend
This can be a difficult area to keep up with, given the rapid changes that seemingly appear daily at times. However, assigning someone on staff to investigate the latest in technological developments specific to O&P can be of great benefit. Does the equipment you utilize pay for itself? Technology is supposed to make our lives easier, not add ten extra steps. This would also apply to office equipment and bookkeeping software-anything that will make your business flow and grow.
Keep a Close Eye on A/R and A/P
Don't think it'll take care of itself. Familiarize yourself with your inventory. Don't overstock items. Regularly call your accounts receivables. "Regularly" means that, at least once a month, you call any that are overdue by 30 days or more. If payment in full cannot be made at that time, negotiate for partial payment as kindly and firmly as possible.
Marketing-Another Part of the Formula
A marketing program is also a key to improving the future of your business. Patty Johnson, executive vice president, Ron Sonntag Public Relations, comments that the firm's clients have incorporated a marketing program into their overall business and presence in the medical community. By doing this, these companies have accomplished much. "The companies have a positive outlook on business and marketing," says Johnson. She continues, "They educate and inform other members of the medical community about O&P through newsletters, in-services, and facility tours; they educate patients through literature and through supporting local community events such as golf clinics and senior events. Many participate on a national level in meetings and symposiums, growing their knowledge, not just for their own good but for others."
Her good advice is an important part of the formula for success in the current O&P business climate. "Share any strategies you may have in place currently or are thinking of implementing in the near future," says Johnson. "Having some type of a marketing program in place, no matter the budget size, is much easier than trying to play catch up in a competitive marketplace."
Meticulous cost accounting, a forward-looking marketing program, and a super staff both clinical and administrative are elements of success. Be sure to include them in your business strategy!