1. Running your practice like a business
Running your business
Deon Bührs

2. How to run a practice Billing for my treatments
Getting paid for my treatments
Your practice and the medical aid
Financial management
Human Resource management

3. Billing for my treatments
Decide on a billing policy / approach
Ensure your policy is in line with HPCSA and CPA
Get informed consent from your patient
Be disciplined in its application
Be prepared to review it
Treat the patient and then bill (NOT visa versa!)
Be aware that your practice is being profiled
Request peer review for piece of mind

4. Getting paid for my treatments
Cash is king!
Send out your accounts quickly and accurately
Have a credit control policy in place, and follow this strictly
Who is ultimately responsible for the account
Payment terms – e.g. 30 days (Medical Schemes Act)
When does the patient become liable for the account?
Debt collection
Agent
Lawyer
Black listing?

5. Your practice and the medical aid
Friend or Foe?
Let’s consider what the other side of the table looks like

6. Physio Healthcare Patient Funder
Interactions
Physio
Healthcare
Patient
Funder

7. HPCSA Managed care: Most medical schemes offer managed care options
Restrict the choice of patients and providers to an extent
Less expensive than traditional fee-for-service
Make healthcare more affordable
Capitation systems may become a reality

8. HPCSA Considerations: Professional independence should remain intact
No single party should allow for ethical rule violation
The HPCSA does not condone the intervention from advisors and clinical management of patient – if this happens, they share the responsibility for the wellbeing of the patient
Scheme protocols should be harmonised with the ethical rules of the HPCSA

9. HPCSA
Contracts:
Providers must ensure that legal, ethical and clinical norms are adhered to in managed healthcare contracts
Should aim towards evidence based medicine and ethical behaviour
To the benefit of the patient
Not permissible to enter into a contract which affects the clinical independence and judgement of practitioners

10. Medical Schemes Act & HPCSA
Funders must:
Ensure payment is made within 30 days of receiving the account
Pre-authorisation must be conducted according to scientifically developed protocols / clinical guidelines
Peer-to-peer communication prior to any denial of benefits
An appeals process should be in place, should you disagree with the Medical Scheme or MCO

11. Medical Schemes Act & HPCSA
Profiling of providers is acceptable
Profiling must be transparent and scientific
Providers should be allowed to query their personal profiles
Should be allowed to understand the criteria used
All providers should have the opportunity to participate in preferred provider networks
HPCSA encourages GP’s as gatekeepers

12. Medical Schemes Act & HPCSA
What if the medical schemes does not cover what I envisage as best treatment for the patient?
If your recommendations regarding the patients treatment differs from that of the medical scheme or MCO, then your recommendations must be submitted to the patient in writing
Let the patient decide as to the treatment path that they will follow
If the patient suffers harm, the fund or MCO will accrue liability

13. Medical Schemes Act & HPCSA
What if the medical schemes does not cover what I envisage as best treatment for the patient?
Providers must inform patients of medically appropriate treatment options, regardless of the cost of the treatment, or extent of their scheme coverage
Be sure to advise the patient according to your clinical judgement, and not according to their medical plan

14. Scenarios
Let’s look at some scenario’s regarding payment of your accounts:
Patient needs equipment, but it is reportedly not covered by the medical scheme
Patient needs to stay in hospital, but the medical aid insists on discharging the patient
Medical aid insists on paying your fees to the patient
Your patient says “if the medical does not pay for it, I am not going to pay”

15. Financial management The business approach Basic accounting principles
Budgeting

16. Financial management Understand accounting terms and principles
Bench mark to determine acceptable levels
Set targets and standards, and manage these
Ensure economic viability of the practice
Tune in to early warning signs
Establish sound financial policies and principles
Control = the process of comparing results with set standards

17. TAX – How does this work? Death and Taxes – you can be sure of them!
Personal tax 18% - 40%
Company tax is at 28%
Turnover tax for smaller businesses – first R per annum is not taxed
Turnover more than R = VAT at 14%
“Give to Caesar what belongs to Caesar…”
Tax avoidance, not tax evasion!

18. VAT – How does this work? Threshold of R1 million per year turnover
Can voluntarily register for VAT
Output VAT – Input VAT = VAT Liability
Paid on a 2 monthly cycle
How can we reduce our VAT liability legally?

19. Basic accounting principles
People exchange goods & services
Bartering has been replaced with money
We need to be able to record this exchange of money
Therefore, we ACCOUNT for this exchange

20. Definition
Accounting is the systematic recording of ALL financial transactions in a generally acceptable way
A financial transaction is simply the exchange of goods / services for money
Can be cash or on credit
Practice : Client relationship

21. Practical 1 You open your own practice:
What salary would you want to pay yourself?
Your overheads are as follows
Rent R / month
Admin R / month (incl. salary)
Other R5 000
Your average patient session is R350
How many patients do you need to see before you start making a profit?

22. Practical 1 What do we call this calculation? Break even point
Point where no profit / loss is made

23. Practical 2
How do we determine the amount of money required to start up a practice?
Business set-up costs
Cash flow forecast / projection

24. How do we measure the financial health of our business?

25. T-accounts
What is a T-account? Dt Ct

26. T-accounts DEAD Increase on Debit side: Expenses ; Assets ; Debtors
CLIC
Increase on Credit:
Liabilities ; Income ; Creditors
End of the month, these are totalled and posted for closing off

27. Financial statements Income statement What you GET and what you GIVE
Summarises the income, gross profit, expenditure and net profit (or loss!)

28. Financial statements Balance sheet What you OWN and what you OWE
Summarises the assets, liabilities and owners equity

29. Financial statements Cash flow
Shows the true cash situation of the business
We all use this measure 

30. Interpretation of financial statements
To evaluate the performance of the business, these statements are not sufficient
These need to be analysed and interpreted
This then empowers the business owner to make decisions regarding the practice

31. Interpretation of financial statements
Income statement
Sales / turnover / services rendered
Cost of sales  Gross profit
Other income: Interest earned, investments etc.
Admin costs, overheads, salaries etc.
Profit before tax ; tax ; net profit

32. Interpretation of financial statements
Balance sheet
Universal accounting equation:
Assets = Liabilities + Equity
Assets
Current assets: Cash, debtors, inventory
Fixed assets: Computers, furniture, land etc
Liabilities
Who you owe money to (creditors)
Owners contributions, Capital

33. Interpretation of financial statements
Ratio’s
Actual vs budget
Net profit ratio
= profit before tax / turnover x 100

34. Interpretation of financial statements
Management reports
Debt collection period (Debtors days)
= debtors / sales x 365
Salary ratio
Admin ratio
Performance indicators
Profit or loss per project / department / practice

35. What are the predominant causes of business failure?
Lack of managerial experience
Poor Business Planning
Poor Financial Planning 

36. Where businesses fail…
"If you fail to plan, you plan to fail." Leadership is about planning for success before it happens
78% of businesses fail due to lack of a well-developed business plan
82% of businesses fail due to poor cash flow management skills followed closely by starting out with too little money

37. Where businesses fail…
Many small businesses fail because managers do not integrate accounting and accounting practices to a reasonable level in their business

38. Budgeting This is the financial “road-map” of your business
Needs to be strictly adhered to
Gets more accurate over time
Need historical or industry data
PLAN FOR PROFIT

39. A budget is a short term financial plan, and should incorporate:
Budget continue…
A budget is a short term financial plan, and should incorporate:
expectations of market and product changes
loss or gain of key personnel
mayor alterations to the structure of the business
capital investment decisions affecting the period
a forecast of inflation

40. Overheads and Expense Management
IDEAL RATIO for a solus practice:
Staff Salaries (including your own) 50%
Expenses %
Principals’ Return on Equity (minimum) 20%

41. The big question Is your practice a business / charity?
Will you be working for yourself, or be a business owner?
Do you work for your practice, or does it work for you?
Is your practice a true asset?
How do you prepare for the long-term?

42. Human resource management
Payroll
Staffing levels
Leave management
Disciplinary policies and procedures
UIF, PAYE, SDL returns and payments
IRP5’s for staff
COIDA contributions
Team building

43. What does the Labour law say?
Labour Act
Basic Conditions of Employment Act (BCEA)
Thresholds
Below 65 years and under R p.a. – no PAYE
Over R ,30 p.a. – Exempt from sections of BCEA
More than 24 hours in a month – BCEA chapters
More than 40 hours in a month – Employment relationship
5 or more employees – sections of the BCEA
More than R per annum in salaries – SDL

44. What does the Labour law say?
Employment contract – if absent, BCEA applies
Policies and procedures
Disciplinary
Disciplinary code
Grievance
Leave
Patient confidentiality
To dismiss an employee
Poor performance
Misconduct

45. Contact us Deon Buhrs Brooklyn, Pretoria Tel: 012 751 2867
Cell:
Fax:
web:
Skype: deon.buhrs