Data, facts and instruments on the German health system

What it’s all about

Physicians in private practice have a distant or even negative attitude towards the term „business administration“. Above all, ignorance and prejudices are responsible for this. But this attitude means that important tools that can improve patient care, ensure the flexibility needed for transformation in the medium term, and secure practice success in the long term are not being used. But this situation is about to change.

Most of the work done in medical practices is business management related

„Business management, that’s what the accountant does!“
„The care I give my patients can’t be put into ratios!“
„Economization is damaging medicine!“
„I am a physician and not an entrepreneur!“

Most practice owners do not realize that the quality of patient care is determined not only by their medical skills, but above all by the quality of practice management, i.e., the way diagnostic and therapeutic services are transferred to patients.

Furthermore, the importance of business management knowledge is evident today when it comes to countering the negative effects of inflation and cost increases. Most practice owners think of countermeasures primarily in terms of cost reductions, but the appropriate strategy is to increase efficiency, effectiveness and productivity. The size of the reserves is shown by a figure determined with the help of the IFABS Business Comparison Tracker© for GP, specialist and dental practice management:

On average, family physicians and specialists do not implement about 47% of the best practice standard of practice management in their operations. It describes the regulations, instruments and behaviors that are necessary for a smoothly functioning work even under changing requirements.

The work of a medical practice is business based

Two thirds of the work in the „service enterprise medical practice“ is of a business management nature and can be designed by associated methods and instruments in such a way that a largely smooth functionality is created (best practice standard). This includes not only areas of action such as planning, including the development of a practice strategy, but also market and patient research, personnel management, marketing, organization and communication through to accounting and controlling.

The physician determines the direction

However, the goals pursued here are not of a general nature, e.g. in the form of striving for profit maximization, as physicians mistakenly assume, but are defined individually by each practice owner. For example, it may be a matter of completing the current volume of services at a lower cost. In essence, business management is designed to help physicians achieve their goals. It is free of demands and specifications and provides tools for the activities of the individual company, e.g. for a medical practice, to fulfill the goals of the practice owner as optimally as possible, both qualitatively and quantitatively. This also includes aspects such as work-life balance.

Key figures – the MRI scan of practice management

One such tool is key figures. They solve the problem that „the“ practice management is a conglomerate of many different action areas, which are closely interlinked and to a large extent condition and influence each other. Only when all areas mesh like finely tuned cogs does a smooth practice operation emerge. Key figures such as the Key Performance Indicators (KPI) make it possible to

make the complexity of practice management manageable and comprehensible by condensing it to key orientation variables,
to determine the actual state of practice management without great effort, and
at the same time identify strengths, but also deficits and risk factors as well as unused opportunities and possibilities for improvement.

With their help, concrete target parameters for practice work can be defined and monitored and controlled in a simple but comprehensive way. One such parameter is the Best Practice Score (BPS) of practice management mentioned at the beginning of this article.

Further examples of practical business management aids

Walkway analysis

Another very pragmatic tool for organizational optimization is the walkway analysis, because the spatial arrangement of contact points and the coordination of work or the walkways resulting from it have a significant influence on the time available for patient care. For example, in an internal medicine practice, the distance between the materials room and the treatment room was 36 meters. Based on the number of aisles / MFA and the time required for this, the practice team spent almost two hours per day with running time between the two practice points. Relocating the materials room directly next to the treatment area – a corresponding option existed – freed up this time daily for other work.

Utility analysis

Situations in which various alternatives are available for selection and several criteria are relevant to the decision at the same time are the field of application of utility value analysis, which is also known under the names „scoring model,“ „utility analysis,“ or point evaluation methods.It makes it possible to evaluate even more complex alternative courses of action and to systematically make the optimal selection decision by means of the personally relevant criteria and priorities. Both quantitative and qualitative selection variables can be used here, which can be individually adapted to one’s own environment and decision-making situation.

Break-even analysis (break-even analysis)

This simple analysis can be used to determine the point – the so-called break-even point – that separates the loss zone from the profit zone for a service or offer, e.g., IGeL. The break-even analysis therefore examines when costs are covered by revenues. At the break-even point itself, there is consequently neither a profit nor a loss; it is a neutral point. Only when it is exceeded is there a profit, but when it is not reached there is a loss.

The benchmarking practice analysis

This is a system that has been tried and tested for many years for simple, fast and cost-effective benchmarking-based assessment of the status of practical business management work.

All regulations and instruments of practice management are analyzed in a 360-degree view in the form of a physician survey: From planning to organization, leadership, marketing and IGeL work, self-management to financial management, complements the determination of teamwork quality and patient satisfaction.

The unique feature of the system is a double comparison of the practice results:

On the one hand, the practice analysis results are compared with the results achieved on average by practices in the same specialist group (specialist group benchmarking),
on the other hand, a comparison is made with the results that characterize above-average successful practice companies of all specialist groups (best practice benchmarking).

The implementation offers the user fourfold benefits:

he recognizes where his own practice „stands“ (business position determination, qualitative business comparison)
he learns to what extent the practice’s work is suitable for implementing the practice’s strategy in a targeted manner, and
an „optimeter“ identifies previously unused optimization approaches.

Conclusion

Digitization, changing patient demands and the general change in the framework for action mean that the work for physicians in private practice will become more multi-layered and complex in the coming years. Business administration can help practice owners successfully navigate this change with their businesses, both in terms of caring for their patients and meeting their personal goals.