Do you speak the language of numbers?

The future of healthcare and your practice’s financial management demands that you speak the language of numbers. If you don’t, now is the time to learn – your future in healthcare will be greatly enhanced if you have this skill.

Financial management continues to become more complex. In the past, we addressed areas such as budgets, days in accounts receivable and aging. Today, value-based reimbursements, increasing expenses, Merit-Based Incentive Payment System (MIPS), the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and a host of other rules and regulations have increased the skills required for financial management.

Financial management is more complex than it ever was, and it will likely continue to increase in complexity.

As a medical practice administrator, your ability to provide leadership and management in this area will be a critical factor in your organization’s success and future viability. Learning the language of numbers requires four main skills: analysis, mathematics, technology and communication.

Analysis

If you can’t speak the language of numbers, you can’t analyze the numbers. And if you can’t analyze the numbers and understand what they are trying to tell you, what purpose do they serve? Management requires that you can interpret the meaning of the numbers. What do they mean for the practice? What changes should we make? Learn to analyze numbers so you can interpret them and what they are trying to say.

Mathematics

Seriously, can you do math? Can you add, subtract or create a formula? Sure, Microsoft Excel does much of the work for you and, in most cases, correctly. What happens, though, if you input the numbers incorrectly, use the wrong symbol for a formula or use the wrong cell reference? Don’t say that it never happens, because it does. Your basic skills in mathematics and formulas will enable you to discern an error before you present a spreadsheet, table or graph for review. 

Technology

In the language of numbers, you need technical skills as well — skills that enable you to navigate software for the aggregation, computation, analysis and presentation of numbers. Support staff in a larger organization can do this work, but administrators in smaller practices often are required to have these skills. If you don’t, now would be a good time to learn them. They are necessary skills for your current practice, as well as for enabling you to explore other opportunities in the future. Analysis at all levels, particularly in the value-based era we are entering, will require technical skills and tools.

Communication

Since we are talking about the language of numbers, we’re of course talking about communication, as well. You must communicate tasks and accountabilities for financial performance; ask questions about analysis and evaluations; and review budget assumptions and variance reports. Communication skills regarding numbers, and in your everyday written messaging and verbal conversations, are critical. If you can’t effectively communicate what is expected, what is happening, what it means or how to remedy the situation, all the analytical skills in the world won’t improve a situation or enable you to provide quality financial management.

The importance of speaking the language of numbers

The financial management section of the Body of Knowledge for Medical Practice Management (BOK) provides additional insight into the importance of speaking the language of numbers. This section addresses coding and billing, payer reimbursement and revenue cycle, cash flow, accounts payable, payroll systems, budgets and the audit process.

Here’s how the four skill areas identified earlier (analysis, mathematics, technology, communication) apply to each category:

1. Coding and billing, payer reimbursement and revenue cycle. Data is generated through the programs and software in use in your practice. The data is aggregated employing mathematical calculations and then analyzed. Once each of those processes has been completed, it’s up to the administrator to communicate what the numbers are saying — to tell a story that describes the current situation, how the practice arrived here and what can be done in the future to remedy the situation.
2. Cash flow. The administrator identifies sources and uses of funds and projects expenses and revenue. To do so, the administrator uses mathematical calculations, analysis and technical skills — including forecasting tools — to communicate the practice’s cash flow needs.
3. Accounts payable. Communication enables administrators to understand vendor terms and contracts. Technical and analytical skills allow leaders to effectively track accounts payable, make cash flow projections and ensure a well-controlled and managed process. Don’t be the practice that funds its operations by delaying accounts payable payments. Learn the language of numbers and hear what your accounts payable management is telling you.
4. Payroll systems. Technical skills are required for time clock management. Communication skills are needed to develop fair and comprehensive policies and procedures. Analytical skills will ferret out overtime issues, identify workforce allocation opportunities and understand employee personnel costs trends.
5. Budgets. Communications skills are necessary to develop the budget and assumptions, assign oversight and responsibility, and discuss budget variances. Analytical skills are needed to identify the actual-to-budget variances and understand the cause and remedy. Technical skills are necessary to aggregate and display the data. Mathematics skills are necessary to calculate what’s going on. And back to communications, this is how we tell the story to our staff and other key stakeholders.
6. Audit. Defining the audit needs and outcome expectations are important aspects for establishing an audit process. Communications skills are necessary to communicate the results and to interpret and implement recommendations.

Financial management is likely to become increasingly more complex. To ensure the future financial viability of your practice through this complex process, you must learn the language of numbers and master the four skills outlined in this column, as well as the six areas identified in the BOK section on Financial Management.