At the 18th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 28, Rajiv Chopra, principal and CFO of the C/N Group, discussed how to improve performance by benchmarking financial metrics.
ASCs can measure their profitability through financial statements and other performance measurements. Types of financial statements include income statements/profit-loss statements and balance sheets, which provide a "snapshot in time," according to Mr. Chopra. He said balance sheets should include assets in inventory; equipment on hand; accounts receivable; statements of cash flows, including capital expenditures; investments; and payments to the bank. Mr. Chopra suggested creating monthly financial statements. "This business can change on a dime. You can have a doctor leave, a physician starting or a different medical supplier. That can change your financial picture in a heartbeat," he said.
ASCs can improve their profitability by tracking performance metrics. Mr. Chopra said the drivers of ASC performance include the following:
• Physician productivity — the number of cases; block time utilization
• Revenues and profitability — EBITDA
• Cash cycle and revenue management — speed in capturing receivables
• Operating efficiency and resource management — labor and medical supplies
• Financial strength and balance sheet
Benchmarking these metrics can provide objectivity through a quantitative approach and create a sense of urgency among physicians and staff, according to Mr. Chopra. Benchmarking is only the first step, however. ASCs then need to develop a strategy, make a budget, form a capital structure and ensure strong governance, he said.
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ASCs can measure their profitability through financial statements and other performance measurements. Types of financial statements include income statements/profit-loss statements and balance sheets, which provide a "snapshot in time," according to Mr. Chopra. He said balance sheets should include assets in inventory; equipment on hand; accounts receivable; statements of cash flows, including capital expenditures; investments; and payments to the bank. Mr. Chopra suggested creating monthly financial statements. "This business can change on a dime. You can have a doctor leave, a physician starting or a different medical supplier. That can change your financial picture in a heartbeat," he said.
ASCs can improve their profitability by tracking performance metrics. Mr. Chopra said the drivers of ASC performance include the following:
• Physician productivity — the number of cases; block time utilization
• Revenues and profitability — EBITDA
• Cash cycle and revenue management — speed in capturing receivables
• Operating efficiency and resource management — labor and medical supplies
• Financial strength and balance sheet
Benchmarking these metrics can provide objectivity through a quantitative approach and create a sense of urgency among physicians and staff, according to Mr. Chopra. Benchmarking is only the first step, however. ASCs then need to develop a strategy, make a budget, form a capital structure and ensure strong governance, he said.
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