Building a successful healthcare business
Most healthcare professionals starting a business will be focused on the challenge at hand, namely getting their practice up-and-running. Strange as it may sound, however, some of the world’s leading business minds are of the view that when you start a business you should structure it as though you were building the business to sell it.
When starting a business it is important to consider what you as a prospective investor will be looking for when investing in a new practice. So let’s explore the tangible elements that are taken into consideration when presenting a practice or business for sale.
In the future you may wish to either sell the practice in its entirety, or get a partner or shareholder to invest in the practice. In both instances you would surely expect to be compensated for the time and effort you have invested in developing and growing your practice.
What can I do to add value to my business?
Let’s start with some of the processes and documents that you need to have in place when you one day prepare to sell your practice. You will see that many of these documents are in fact required by law and therefore need to be in place when starting out, while others will assist greatly in the smooth running of your practice over the longer term.
It is important to put in place the necessary contractual agreements with employees and third parties.
Employment contracts: The Basic Conditions of Employment Act (BCEA) stipulates that every staff member should have a contract of employment. Given that a transaction is taking place in which a salary is paid in exchange for specific services provided to the business, it is imperative that employment conditions are clearly established by means of a written agreement.
Keep in mind that in the event that there is no formal contract in place, the employee will then be contracted by the terms of the BCEA. These terms may be less favourable to the employer than if the employer developed their own contractual agreement.
The employment contract should cover basic conditions of employment including leave entitlements, salary, working hours including breaks, dress code, place of work, policies and procedures as well as restraint of trade. The employment contract must be signed by both the employer and the employee.
Job descriptions: It is important that staff members fully understand their responsibilities and the exact expectations of the employer. For this reason job descriptions must be specific but flexible enough to allow opportunity for growth and further development of the position. It is furthermore important that the job description is annually reviewed by means of performance appraisals which can be linked to annual salary increases and possibly also to bonuses.
Lease or rental agreements: It is important to ensure that you have a valid lease agreement in place should you opt to rent the premises from which you practice. This will allow you the opportunity to negotiate the terms of the agreement, including the renewal of the lease, time frames and the possible extension thereof, as well as ample notice for non-renewal.
This will offer protection for you and your business in the event that the landlord does not renew your lease agreement. You will also want to negotiate a fair, market related annual escalation in rental as part of the agreement to safeguard yourself and your business against unexpected, high rental increases.
Policies and procedures
These are the documents within your practice which guide both the conduct and processes of your business. They provide employees with a clear understanding of your expectations, give direction and provide greater certainty and act as a guide should any labour issues crop up. The following are some of the critical policies that should be made part of your practice:
- Disciplinary procedure and disciplinary code.
- Grievance policy and procedure.
- Patient confidentiality policy.
Consider having employees sign an agreement around patient confidentiality and the protection of patient information.
You may then also include procedure documents to assist staff to approach a task systematically. An example would be a data capturing procedure, explaining how the treatments are recorded; codes are defined, submitted for capturing, and added to the billing system.
The following policies and procedures will also benefit your practice:
- Leave policy
- Petty cash policy and procedure
- Performance appraisal procedure
- Staff savings policy
- Staff loan policy
- Internet and telephone policy
- Dress code
A special procedure is also needed for submitting these claims to the funders. In addition, a credit control procedure which is followed for accounts that are not paid, is needed. This also helps should one staff member need to cover for another, or new staff need to be inducted into the practice processes.
Explore possible accreditation programmes that may be beneficial to your practice. You could also consider setting up a peer review process where other practitioners review your practice, and you review theirs, in order to support and strengthen the standard of care delivered to your patients by you and your staff members.
A solid set of financial results
Be sure to keep your practice finances separate from your personal spending.
A dedicated practice account goes a long way to introducing financial discipline. In addition, a formal petty cash system, as well as a system for cash payments made to the practice, is imperative along with a formal bookkeeping system. Be sure to review the financial status of your practice monthly, rather than wait for the year-end audit or tax submission.
Regular valuation of the business It can be of considerable value to track the growth of your business through simple practice valuation methods. These can become complicated, especially in the situation where a shareholder or partner wishes to buy in or sell out of the practice. For regular financial management of your business, it is necessary to choose a simple method of valuing your business, which will assist in tracking business performance.
Simply looking at your bank balance is not sufficient in identifying areas where the business can be improved, or where there are possible risks.
While there are no doubt other important areas that can assist you with the development and growth of your business, those mentioned above offer a sound basis from which to start.
If EZMed doesn’t improve your healthcare practice in 30 days or less you can cancel, risk free. That’s right, no risk. All the features and services, yours to use at no cost for 30 days while you evaluate our product.