I’ve been speaking and writing about metrics a lot lately.
The measurement and evaluation of the daily, weekly, monthly, and annual performance of all of the functions within an organization are vital to its ongoing health and well-being, helping executives and managers to solve problems, evaluate individuals and departments, anticipate needs, plan improvements, and so on.
Here’s a thought: If you are a CEO, an owner, operator or share holder in a company, what could be better than an incremental increase at the bottom line?
Given the solid structure, effective accounting and management practices, and overall organization that an effective executive team can create, it follows that, beyond the financial function, policies and procedures must be implemented and monitored which (cliché coming) enhance the bottom line.
Business 101: If you sell more and spend less, you’ll earn more.
I recently saw data on a medical practice that undertook a program to increase earnings for one noble reason – so that the partners could earn more. It’s no secret that the trend has been for insurers and Medicare and Medicaid to pay doctors less, while their insurers expect them to pay more for malpractice and other coverage, to name just one aspect of a complicated problem. This particular group got together, engaged a Consultant CFO, and got to work, determined to hinder the downward pressure on their practice, and their lifestyles.
After installing the proper financial controls, the CFO installed a tool that allowed the practice to improve its effectiveness in every function, cutting costs and improving efficiency. And the physicians agreed among themselves to attempt to see one more patient per day.
The outcome? After just six months, and after a few employee bonuses to reward stellar performance, and the CFO’s fee, the five physicians distributed over $60000.00 among themselves! And the trend continues upward.
Delivered directly from the bottom line to the owners’ pockets. They got to keep money they earned.
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