First Care is a privately owned urgent care center and general
practice with one location in Columbia, South Carolina. General
bookkeeping and patient visit information was handled with software
specifically designed for the needs of the small to medium-sized
medical practice. Budgeting and planning was done by manual methods
as the need arose. In November of 1989, IMS Quantum (then Integrated
Management Systems, Inc.) was engaged to implement a number of
improvements to the information system as well as to develop an
Integrated Planning Model for the practice as a whole.
The model consisted of a description of the major drivers of
activity: patients, average visits per patient per year, and average
charges per visit. Separate modules determined much of the input data
necessary. Variable costs were tied to appropriate activity levels so
different scenarios could be evaluated by changing a few critical
variables. A set of measures of performance was developed so that
a change in a critical variable would immediately show a consequent
change in related measures.
A base case was developed based on the data from the prior
planning period. Any calculated ratios or efficiencies from the
past period could then be changed for the budget and the resulting
effect computed. In this way the budget was based on factors that
could be influenced and improved. The managing doctor could go
through the model systematically and change any inputs in accord with
his or her perceptions of what was desired during the budget period.
The model thus was a blue print of the business. Because the model
was easily changed, any changes in patient mix, costs or charges could
easily be reflected in the model.
One important benefit of model development was the clarification
of how to evaluate the degree to which the practice was based on
emergency care. The perception was that the percent of total visits
that were return visits (RVs) was the correct measure to use.
Because the model was based on patient activity and not visits,
there arose the need for a distribution of patients by number of
visits per year. This distribution indicated that the percent of
patients who came more than once was a better measure. It was quickly
realized that the RV percent was skewed, since some individual patients
generated as many as fifty-two RVs a year (e.g. allergy shots).
The percent of patients who came only once reflected the degree to
which the practice was vulnerable to new competition.
Integrated Planning Models have a unique ability to clarify
the meaning of numbers and show which numbers are necessary to
understand the level of an organizations success. IMS Quantum
specializes in providing management with planning and budgeting
tools that show where vulnerabilities and opportunities lie.