SOME UNSOUND ECONOMICS

As a consultant at Silkin Management Group, I’m always looking through various articles in a variety of publications to stay on top of important matters that could effect Silkin Management Group clients. In doing so, I recently read that a well known international economist, Joseph Stiglitz, speaking at the London School of Economics, said that the United States and England should not ever have their bond ratings be anything other than AAA because “all we do is print money to pay it back.” “The notion of a default is so absurd”.

I was a bit amazed at this statement by such an expert, but it also made me realize that this type of thought, promoted by an international expert is part of why the national and international financial scene is in such a mess. Last I heard there were two major countries in Europe that were on the verge of defaulting on loans.

Here’s one way to look at this: if you have to print money to pay your debts, isn’t that a form of defaulting on a loan? I sure wish I could just print some money to pay my house off but, last I heard, I’d get thrown in jail for counterfeiting if I did that.

At Silkin Management Group, we try to teach our clients sound, rational fiscal policies like, “don’t spend more than you make”, “follow a budget”, “pay off debt”, etc. We teach all the obvious, fiscally sound and conservative measures that anyone with any sense agrees with. Why these sound economic principals wouldn’t apply to a government is beyond me. I guess, if I follow the brilliance of the economic policies of most governments in the world, as well as “world renown economists” like Mr. Stiglitz, I should add “print any money you need to pay your bills” to the list too. Hey, great idea Mr. Stilglitz! I’ll do it as long as you cover my jail time.


Gary Crawshaw
Silkin Management Group Consultant

For more information about what we do at Silkin Management Group, how we help clients with financial basics and other practice management issues, visit our website at: silkinmanagementgroup.com. You can also contact us at: info@silkinmanagementgroup.com or call 800-695-0257.

Benchmarks Part II

In our Silkin Management Group blog posted February 5th on our blogsite www.silkinmanagementgrp.com we discussed the idea of having and knowing benchmarks for various areas of a health care practice. This is important information for any practice owner to know so that he/she can compare how they are presently doing against basic productivity benchmarks that should be able to be easily achieved. We work with our clients on all of these areas and, where they are falling short of these benchmarks, we help them figure out why and implement the proper actions to achieve them.

In Part 1 we went over benchmarks for Production in a health care office, specifically for dentists, veterinarians and optometrists. In today’s blog we will go over benchmarks for Net and Collections percentages.

Net

Obviously, you don’t want to get your gross production into a higher range and then find out that you aren’t taking home a commensurate amount of money. Producing more without netting more is not the way to go! So, here are the minimal net benchmarks for you to know and what we work with Silkin Management Group clients to minimally achieve.

1. Dentists should be netting 40%


2. Veterinarians’ net should be at least 30-35%


3. Optometrists should be taking home 30-35%

Collections

Collections follow production and result in actual income to your practice. But if you aren’t collecting a very high percentage of your production, you are throwing money away. The basic benchmark for collections percentage is 98% of your production. That can and should be achieved. It is not hard to do.

Many of our new clients aren’t aware of how much money can slip between the cracks. A change of just 2% in your collection rate can equal thousands and thousands of dollars in your pocket (or out of your pocket if the collection rate goes down).
To give you a dollars and cents reality on what this can mean, let’s take a typical example. Say your practice is producing at a $50,000 a month level. Every 1% change in your collection percentage equates to $500. So if your collection percent goes down 1%, you lose $500 and if it goes up 1% you make an extra $500. Simple, right? If you are collecting at a 95% rate, 3% below the benchmark mentioned above, you are losing $1,500 per month. Most doctors feel that 95% is good. But the reality is you are losing $1500 a month which is $18,000 a year, straight out of your pocket. That is net income money as it doesn’t cost you any more to collect that extra 3% as long as you have the proper systems in place and trained staff. What if your collection rate was 93% (which many of our new clients are very happy with when they walk in our door). They are losing $2500 a month or $30,000 a year in net income at a $50,000 a month production level. We all can easily imagine what to do with $30,000. A new car? Pay off some bills? School tuition? Retirement funding?
You can do the math using your collection percentage with your level of production compared to the 98% benchmark. Try it and you might find it eye opening.

Silkin Management Group can provide you with all the tools to increase your gross, net and collections to the benchmarks presented. If you are interested in finding out how, call us at 800-695-0257 or email us at: info@silkinmanagementgroup.com. If you’d like to visit our website, check here: www.silkinmanagementgroup.com

Lyn Ribisi
Appointment Coordinator
Silkin Management Group

A BIGGER PICTURE LOOK AT HEALTH CARE REFORM

If you’ve been reading through some or any of Silkin Management Group’s various blog sites, you’ve seen a variety of articles concerning the health care reform bills being debated and voted upon in the House and Senate. Most of those articles have also referenced writings on the subject by a variety of authors.

Since we at Silkin are attempting to stay on top of this vital issue for our clients, we are continually reading different publications that have information about this legislation. Today I read a very interesting article in the New York Times written by David Brooks. I thought his viewpoint was worth passing on as it gave a bigger picture look at the whole health care reform activity.

As Mr. Brooks says: “But the general view among independent health care economists is that these changes will not fundamentally bend the cost curve. The system after reform will look as it does today, only bigger and more expensive.

As Jeffrey S. Flier, dean of the Harvard Medical School, wrote in The Wall Street Journal last week, “In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it.”

I suggest you read the whole article as it might give you a different perspective on what is going on. I believe we need fundamental health care reform in this nation. What I don’t believe is that the legislation that seems inevitable to be passed will truly accomplish that. Rather it seems that it will add more government costs and regulations rather than fundamentally change our system for the better. Our government is already fiscally insolvent. It seems to me that this legislation won’t help the matter and only add to the problem for our children and grandchildren.

I invite your comments on any of Silkin Management Group’s blog or social media sites:

Silkin Facebook Page
Silkin Twitter Page
Silkin Squidoo Lens

You can also visit Silkin Management Group’s website at:
silkinmanagementgroup.com

or contact us at:
info@silkinmanagementgroup.com


Gary Crawshaw
Consultant
Silkin Management Group

HELP FOR SMALL BUSINESSES OR JUST MORE HOT AIR?

From my job as a consultant at Silkin Management Group, I continue to monitor and read about what is happening with small businesses as part of the economic recession we are experiencing. On November 4th my colleague Bill wrote an article on one of Silkin’s blog sites about how, despite the governments statements to the contrary, small business lending is still not happening.

Here it is, two weeks later and, with even more government pronouncements about how the bailed out banks are suppose to now be helping small businesses, per this article from CNN, very little is still happening. Small Business Loans Evaporate

My clients at Silkin and I discuss this not infrequently. How come, we ask, do these huge banking conglomerates that have made bad business decision after bad business decision and get bailed out by our tax dollars, do nothing to help the small businesses that employ the great majority of people in this country. How come the government who give them all this money does nothing effective to help, despite whatever they may be saying.

I’m not making this up. Per the author of this article, “Eight months after President Obama began prodding the nation's banks to increase their small business lending, the loan numbers continue to move in the opposite direction. The 22 banks that got the most help from the Treasury's bailout programs cut their small business loan balances by a collective $10.5 billion over the past six months, according to a government report released Monday.”

It must be nice to get a lot of money to save your business and do nothing to help other businesses, even though lending money to help businesses is the essence of what you do. I guess I’m just jaded.

If anyone reading this blog has any ideas or comments about this, I’d love to hear it. In the meantime, if you need any help with the management of your business or practice, contact us at Silkin Management Group.

We can be reached by:
Email:info@silkinmanagmentgroup.com
Website:silkinmanagementgroup.com
Blog: silkinmanagementgroup.blogspot.com

Jack Hennessy
Consultant
Silkin Management Group

HELP FOR SMALL BUSINESSES IS GREAT, BUT WHERE DOES THE MONEY COME FROM?

In today’s New York Times, I read the following editorial about needed help for small businesses.Help Small Businesses Hire again.

As a management consultant at Silkin Management Group, I consult our clients with the workable management technology that helps their business grow, even during these tough economic times. Silkin clients are all primarily single doctor owned health care practices such as dentists, veterinarians and optometrists. As such they are all small businesses in the truest sense of the word and anything that affects small businesses affects them. That’s why I found this article interesting.

The author points out those businesses with fewer than 20 employees account for 25 percent of all jobs, and that these same small businesses created 40 percent of the job growth during the 2003 to 2007 economic expansion. I know that our Silkin clients had something to do with that because, as they learned to become effective managers, their productivity grew and the need for more staff increased in order to keep up with the increased productivity. Expansion for our clients is the primary goal of Silkin Management Group and, as consultants, that’s what we are expected to produce. With that viewpoint, I fully back any ideas and methods to help small businesses and that’s why this article caught my attention.

But reading further through the article I found some seriously strange concepts. I thought it was a positive note to promote the concept of making it easier for small business to obtain needed credit, and the author discusses why this is still very difficult, despite the President’s recent statements otherwise. But then the author puts out some concepts that frankly seemed strange including refunds for taxes paid in the past in exchange for higher taxes in the future and work share programs paid for by the government. Interesting ideas, but where does the money come from to pay for all this? He doesn’t say anything about this.

At Silkin Management Group we try to teach our clients fiscal responsibility. This would include the very basic idea of not spending more than you make and running very tight budgetary controls. These are not esoteric management concepts. The Silkin clients who apply these basic principals do well financially. The government, and many economists who write columns such as this one, don’t seem to think that such a basic concept has anything to do with government.

You know as well as I do that if you keep spending more than you make, and you keep borrowing and borrowing money, it will catch up with you and take you out. Why would this be any different for the government, other than the fact that they can print as much money as they want in order to have the money needed? But that activity just leads to inflation. All you have to do is look at the price of any commodity 50 years ago compared to today to see the truth of that.

So, as a management consultant for small business at Silkin Management Group, I appreciate the author’s concern for small business. But I also must express that any help must follow basic and workable management technology and not include more and more borrowing, more and more inflationary activities and less and less fiscal responsibility.

I’d love to hear your opinion about this article and my point of view on it.

For more information about Silkin Management Group, visit our website at: silkinmanagementgroup.com or email us at info@silkinmanagementgroup.com

Bill Hickey
Silkin Management Group Consultant

Visit our other blog at: SilkinManagementGroup.Blogspot.com