Thursday, May 15, 2008

The Value of an Administrative Manager

Two years ago our clinic made the leap of faith to hire an administrative manager. We are a group with 10 doctors, 50 staff and 4 sites. We have a General Manager but were finding that the duties of the GM were too large to keep tight control of the schedule. We decided to hire an administrative coordinator whose job it was to enforce the booking policies of the office (among other duties) by coordinating all administrative personnel and reporting to the GM.

What difference did it make? Take a look at the graph below:

In our case, the coordinator started in 2006. There is an immediate increase in the number of appointments. When we compare 2004/2005 to 2006/2007 the normal variation (controlling for season, surgeon and office) is about 3%. In the later two years (2006/2007) there is a 5% jump in the number of appointments, or 2% above the natural variation.

The value of the administrative coordinator is dependant on the size of the clinic. Assuming that more appointments will equate to greater revenue (and improved patient satisfaction by lowering health care & office wait times) a value can be assigned to the administrative coordinator. Divide the gross revenue by the number of appointments in a year. This will give an average value per appointment. Multiple the total appointments by the expected increase (2% if you're running lean already, 5% if not). Finally multiple the average revenue per appointment by the expected increase in appointments.

For instance, a clinic with 5,000,000 in gross revenue had 26,000 appointments in a given year. This equates to $192 average per appointment and an expected gain (at 2%) of 520 appointments. The increase in revenue is $100,000 which will not only pay for the position but lower office wait times and increase patient satisfaction.

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