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Preparing for Growth: Improvements You Can Make Today

In developing a long-term facility expansion plan, it is important to for health centers to first engage in a self-assessment. This essential step will help identify immediate action steps to improve operational and financial efficiency, establishing a strong foundation for growth. Below are some suggestions to help health centers pinpoint areas for improvement.

Analyze Your Current Operations

A thorough analysis of current operations before planning a new or expanded facility will help in two ways:

1. To ensure that your new facility has the most efficient layout for effective program delivery;
2. To confirm your facility expansion needs.

Operating effectively and efficiently will result in a strong financial condition, which allows you to weather the impact of a constantly changing political, economic, and funding environment over time.

Areas to focus on:

  • Facility Utilization: What facility characteristics assist or impede service delivery at each of your existing sites? What are the current program, staffing, and operational models for each site and to what extent are they defined by the physical space rather than in response to defined community needs and cultural preferences?

  • Programs and Services:

    • Organization-Wide: Consider how the scope and volume of your services integrates with grant or cooperative agreement opportunities, market/needs assessment findings, and referral barriers. What changes can be made to better serve patients?

    • Site Specific: Does the program of services offered at your sites reflect the needs of their distinct patient populations? Look at the unique characteristics of the immediate community, established re-sources, and facility strengths and see if each site is making the best use of what is available.

  • Staffing: For each site, what type and number of staff will be required to support the de¬sired program utilizing the chosen model in the available facility? Develop a list of current staff by site, department, and service and see if it matches your operating model. If not, what training is required for current staff to work more effectively? What recruitment strategies would better support your operating model?

  • Operational Metrics: As you look to evaluate your health center operations, it is helpful to track various metrics over time so that positive trends as well as warning signs are recognized in a timely manner. Of course, each health center will have its own approach to measuring progress along chosen indicators, but whichever metrics are used, it is important that the data is tracked consistently and comprehensively. Examples of operational tracking measures may include the following:

    • Growth: Total Visits; Total Patients, Total FTEs, Providers/FTEs

    • Productivity: Visits per Provider, Patients per Provider, Patients per Provider Panel (or Providers + Clinical Support Staff), Visits per Provider FTE

    • Utilization & Revenues/Costs: Visits per Payer; Patients per Payer, Net Revenue per Visit, Net Revenue per Visit per Payer; Cost per Visit; Cost per Patient, Visits per Exam Room (per day and year)

The benefit of trending operational metrics over time is that it provides a health center with its own baseline from which to measure progress. For certain measures, there may also be standardized benchmarks to compare against, especially if provided by HRSA. Although data results on their own may not tell the whole story, they do point to operational areas that may need further attention or at least point to alternative metrics that may better represent the model of care for a specific health center.

Analyze Your Financial Strength

Strong financial measures are the result of strong operations. A fiscally sound health center has strong operating margins and a solid balance sheet, achieved through good provider productivity, properly coding patient visits, and a strong outreach and enrollment program to match patients with the best programs for which they are eligible. Tracking these measures is vital to informed decision-making and planning, both for short-term success and future growth.

Areas to focus on:

  • Profitability: The Operating Margin and Bottom Line Margin are key indicators of health centers’ ability to generate income needed to sustain current operations and to support both short-term and long-term growth.

  • Growth: Year-to-year growth rates for Operating Revenue, Net Patient Service Revenue and Grant and Contract Revenue, as well as for Operating Expense.

  • Solvency: Current Ratio, Days Unrestricted Cash on Hand, Days in All Accounts Receivable, Days in Patient Accounts Receivable, Days in Accounts Payable reflect the health centers’ ability to maintain a positive cash flow and to meet immediate obligations.

  • Debt Capacity: The Leverage Ratio and the Debt Service Coverage Ratio examine the ability to meet long-term obligations to creditors and other third parties.

Capital Link has several resources to assist you in assessing your operational and financial condition in preparation for growth: