ghdLAB toolkit: best practices for small clinics

by admin on February 10, 2011

Operational and strategic assessment for Kampala Family Clinic in Uganda
A capsule case report of analysis for improvement in finance, operations, marketing, and information technology

Kampala Family Clinic (KFC) was founded in 2004 by two Ugandan entrepreneurs to provide quality, affordable healthcare to the growing middle class in the city of Kampala, Uganda.  The clinic grew quickly over five years and now serves over 10,000 patients, offering outpatient care, pharmaceutical, and laboratory services. It has a staff of 18 full and part time employees.

The Global Health Delivery Lab is a graduate-level class at MIT that pairs teams of graduate students with partner enterprises delivering health care in resource-limited settings in Sub-Saharan Africa and elsewhere. Part of MIT Sloan’s flagship Action Learning program, the course puts students to work on practical challenges that limit access of health care, addressing specific business and organizational needs.

In January of 2010, a team of four MIT graduate students spent three weeks living and working in Kampala, partnering with the two entrepreneurs and their staff. In the entrepreneurs’ own words, they had set out to “help understand critical business processes, develop the necessary skills, feel the pulse of the business and prepare for the future [of the business].” With this in mind, the team compiled a set of relevant business practices which they applied to analyzing and improving core clinic functions in finance, operations, marketing and IT capabilities.

We present these business practices here in the hope that this article will serve as a useful high-level guide for understanding and applying these practices to other clinics and similar settings.

1. Tracking Finances

Proper tracking of costs, expenses, resources and cash provides managers with information needed to make decisions about planning for the future. Profit & Loss and Cash Flow are two important financial tools that provide insight on how well a business is doing financially and where it can improve.

Profit & Loss

Profit & loss metrics track where money is being spent (expenses) and where money is coming from (revenue). Expenses are the cost of doing business or outflow of money to pay for items or services. Expenses are ususally categorized as fixed or variable costs. Fixed costs are independent of services produced and tend to be time-related, e.g. employee salaries, rent, monthly utilities, etc. Variable costs change in proportion to the activity of the business, e.g. cost of medical supplies which changes depending on volume of patients served. Revenue is income that is generated by business activities usually from the sale of goods or services. Clinics typically generate revenue from services such as medicines/pharmacy, consultation, or laboratory work. In clinics, revenues can come in the form cash, credit, or future insurance payments.

Tracking profit & loss metrics can be useful for answering managerial questions like these:

  • How is the clinic doing month-to-month, year-to-year?
  • Which clinical services are growing or declining?
  • Are expenses stable? What are my biggest cost buckets? Can we reduce them?

Example: Metrics show KFC’s main cost drivers from 2006-2009.

Tracking profit & loss is also useful for understanding profit margins, forecasting sales growth, understanding how market fluctuations of costs affect the business, among many other strategic questions.

Cash Flow

Cash flow metrics track the movement of funds in and out of the business. Without adequate cash available a clinic may be unable to cover its operating expenses and may suffer growth issues. Expected payments to the business are recorded in Account Receivables, e.g. bills to patients or insurance providers. Money owed to suppliers or other parties is recorded in Accounts Payable, e.g. bills to suppliers of medical equipment. Knowing how much cash is available and when that money will be required by the clinic is important in forecasting cash needs, knowing when you’re running low on reserves and improving collection of payments owed.

Cash flow metrics are useful for answering questions like these:

  • What are the clinic’s cash inflow trends? Are they stable overtime?
  • How long does it take the clinic to receive payments from patients, insurances, or other debtors? How can we shorten this time?

Download the team’s financial analysis of KFC (pdf) and supporting expense data (xls) and revenue data (xls) as an example for learning more about financial metrics.

2. Improving Patient Operations

Improving patient operations focuses on generating more value for the patients (and the clinic) through more efficient uses of the clinic’s physical (rooms, equipment) and human (nurses, doctors, administrator) resources. Knowing the clinic’s resources and capacity to serve patients can help clinic managers make decisions about hiring more staff, buying more equipment, expanding services, taking on more patients, among many others.

Patient metrics help answer these types of questions:

  • How many patients does the clinic currently handle per day, per week? How many can it handle?
  • What are the clinic’s busiest hours? Can ‘rush’ periods be smoothed to reduce load on staff?
  • How can the patient experience at the clinic be improved?

Example: Analysis shows that KFC has sufficient capacity to expand services.

Download the team’s operations analysis of KFC (pdf) and supporting data (xls) as an example for learning more about improving operations.

3. Marketing Clinical Services

The American Marketing Association (AMA) defines marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” Most companies follow a customer-centric approach to marketing, focusing their activities and services on customer needs and demands. This approach is especially relevant in health delivery. Understanding and delivering services that are important to patients not only contributes to providing better patient care but will also set clinics  apart from others offering similar services.

These 6 steps can be applied iteratively in the marketing process to better understand and serve a clinic’s potential customers:

1. Market research – who are your customers?
2. Market segmentation – what are the different types of customers and what is important to each?
3. Targeting – which customer group(s) will the clinic serve?
4. Positioning – what is the best way to get the attention of these target group(s)?
5. “4 Ps” (Product, Price, Promotion, Place) – what are the actionable steps a clinic can take to communicate their message?
6. Branding – What is your core message to patients? How can it be delivered consistently?

Example: Market research of private health care in Uganda

Download the team’s marketing analysis (pdf) for KFC as an example.

4. Utilizing IT tools

Information Technology (IT) tools enable organization to become more efficient and effective at what they do by facilitating recording, sharing and retrieving information. IT tools can be leveraged to simplify processes, reduce costs, scale operations and disseminate information faster and more accurately among staff, patients and stakeholders. We believe the following IT tools, most available for free,  can greatly benefit any type of clinic, in any setting.

1. E-mail accounts – e-mail can be a great tool for facilitating communications internally among staff and externally with patients and stakeholders. E-mail allows for asynchronous communication, allowing both sides to share and receive information at different times from different locations. Google mail is a popular provider of free online e-mail accounts.

2. Clinic website – in an increasingly networked world, websites have become the means through which organizations publish information about themselves. A clinic website needs to communicate who the organization is, what it does, where it is located, operating hours and contact information for the patients. The website can become a channel for reaching out to your patients by sharing news, updates and care information. More advanced features like on-line appointment booking can be added at later points depending on need and cost.  Google sites is another free Google service for creating and managing websites.

3. Business accounting software – as noted above, tracking of finances is an important function for any manager for future planning and decision making. There are many accounting software options in the market, but before choosing one there are number of things to be mindful of. First, someone in the clinic needs to be financially literate and understand the data the clinic needs to keep and the types of reports in needs to generate. An accountant typically fills this role. Next, you need to ensure you have adequate resources (funds, computers) and someone with technical knowledge to maintain and upgrade the software as needed. Additionally, this person needs to be aware of how much storage will be needed for data and data back-up procedures in the event that things go wrong. KFC used QuickBooks as their accounting software.

4. Productivity software (Word, Excel, PowerPoint) – basic productivity software is the best means for capturing and sharing information. As with other software investments, a manager needs to ensure that staff has the appropriate training and knowledge to use the software effectively.

Download the team’s IT recommendations for KFC (pdf) as an example of some IT best practices .

Want to know more? You can download the complete analysis for KFC (pdf).

Was this article useful to you? Please give us feedback on how to improve sharing our work by leaving us a comment or e-mailing us at ghd.projects.lab@mit.edu.

Prevention of medical errors; Reduction in the health care costs; Increase in the administrative efficiencies; Decrease in the amount of paperwork; and Increased access to affordable health care options.

Prepared by Eriola Kruja, drawing on the team’s reports and coursework under the supervision of Anjali Sastry. Thank you to the MIT student team and our partners at Kampala Family Clinic.
Eriola Kruja, MBA, collaborates with Anjali Sastry and MIT Sloan colleagues to develop, manage, and asses academic projects designed to address global health delivery needs.
MIT Senior Lecturer Anjali Sastry, Ph.D., teaches, researches, and writes about global health delivery at the Sloan School of Management.

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