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How to find common financial problems

Allied Health businesses, like many other service-based businesses, have a few key metrics when measuring business performance at the CFO / CEO / Board / Owner level of the business including:

  • Revenue
  • Clients
  • Billable Hours
  • Hours per Client
  • Utilisation

These metrics give insight into business performance and health and are often measured and compared based on intervals such as Monthly or Weekly. Measuring performance against the previous period or the same period last year is a well established method to determine if the business is growing (good numbers going up!) or not. 

Financial Metrics in The BOS

Each of these metrics appears on the Mega Report which is the main report used to determine financial reporting. 

Common usages of the Mega Report include:

  • 'End of Month' meetings with business owners / CFO / board, reviewing the just-completed month to the forecast, previous month, and same month last year. 
  • 'Start of Week' meetings between practice managers and supervisors to set targets/goals for the week with an 'End of Week' review. 
  • Random 'check ins' during the week/month to see if the business is performing as forecasted or if targets are being hit. 

How to 'break down' metrics

The base metrics are very 'high level', covering the business as a whole. Consequently if you are trying to find the 'why' of the numbers you will usually need to 'drill down' to find the cause. This can take a long time with other reporting systems but the Mega Report is built for exactly this purpose. 

'Revenue is down' example

Situation: Revenue is down 10% for the just-completed month vs. the previous month. 

How to find the cause:

  1. Compare other top-level metrics between the months to see if there are other significant differences:
    1. Perhaps this is a shorter month (EG: February) with a lot less 'working days' than the previous month, allowing you to see less clients.
    2. Perhaps there are 'notable dates' for the just completed month identifying unique circumstances in that time period (EG: a government mandated lockdown, extended period of extreme weather, new competitor opening nearly offering promotions)
    3. Perhaps your FTE (full time equivalent) staff load was lower due to holidays or a staff departure or your Utilisation Rate was incredibly high so staff are 'maxxed out' and unable to see additional clients
  2. Break down the primary metric (Revenue) to determine where the change occured
    1. Breakdown Revenue by Funding Source, is there a dramatic shift in where the funds are coming from?
      EG: perhaps all departments are performing similarly but there were reduced Private Health visits due to a change in policy. 
    2. Breakdown Revenue by Service Category: Perhaps a higher percentage of services this month were cheaper services or there is an obvious drop in one particular category
    3. Breakdown by Location: Is one location responsible for the change or is this an across-the-board dip.
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