Practice Management. Karl Salzsieder, DVM, JD
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1 Practice Management with Karl Salzsieder, DVM, JD April 15, 2009 Lunch Meeting Sponsored by: 0
2 VETERINARY PRACTICE LIABILITY AUDIT Policies and Procedures Karl Salzsieder, DVM, JD. Salzsieder Consulting and Legal Service Chicago VMA, April 2009 The practice liability audit is a very broad topic intended to cover the liability risks of veterinary practices, including issues about business entity, landlord liability risks and many of the business and practice operation liability exposures that go on every day when a practice is open for business. Ownership risks can be decreased by the proper entity, whether proprietorship, partnership, corporation or limited liability company. Other business risks should be reduced by insurance coverage, proper DEA procedures and the procedure requirement for proper client authorization and/or waiver forms. From the business operations point of view, there is liability exposure for personal injury for slip and fall and for malpractice. With client injuries, there are defenses regarding whether or not the client assumed any of the risk. The client needs to give written authorization to do veterinary work. Informed consent requires that the client receive information before consenting. Hospitalization and/or boarding are related to bailment legal issues. A decision must be made by the veterinarian and whether or not he or she should file a mechanic or agister lien. Veterinary malpractice requires a duty on the part of the veterinarian, a breach of that duty, followed by the breach being the proximate cause of injury, resulting in damages. Issues of liability occur with each step of a client/patient as they process through the hospital from check-in to discharge. This process requires authorization forms, pet identification procedures, pet exams, doctor/patient relationships and hospitalization forms. When the hospital receives authorization and checks in the patient, there is a bailment relationship in addition to the contract relationship for medical treatment that must be complied with. Once the client authorization for treatment has been granted, there are risks associated with changes in authorization based on changes in the medical or surgery findings, laboratory findings, and/or the treatment or progress of care. When performing surgery, there are medical risks that must be planned for, to prevent liability. Those of course include not only the proper identity of the pet, but also the gender and the body part to be worked on and the possibility of unexpected findings in surgery. Upon discharge, there are issues of risk associated with confidentiality of instructions to the owner and information about prognosis, home care and payment. There are other risk issues associated with follow-up phone calls and the total resolve of the case, whether having to do with zoonosis or with other follow-up care needed for a proper outcome, including whether or not the case should be referred to an all night emergency clinic. You should take home several ideas to limit or decrease your liability exposure from being in the veterinary practice business. 1
3 WORKSHEET VETERINARY PRACTICE LIABILITY Audit What ownership/asset protection choices can a practice owner make? What are the most common veterinary business organizations now being recommended? What major issues should be covered in every buy-sell agreement whenever there is more than one owner in a veterinary practice? Death Disability Retirement Bankruptcy of any party or business Marriage Divorce Want out/get out/buy out Require agreed valuation method 2
4 Why should every veterinarian in the practice, including associates, have their own DEA license? What are the main systems of bookkeeping needed for DEA records? Invoices and receipts must balance with usage of Legend drugs inventory Separate records for unopened inventory and opened inventory What are the main issues in an associate DVM contract? What are some malpractice liability insurance issues? What are some insurance-business and operations liability, fire and casualty insurance issues? Building and content value Insurance company may require 80% coverage or you are co-insurer in the loss; Example: If you only cover for 60% of value, you pay 40% in loss Example: If you cover 80% value, company pays all loss What are some other liability insurable coverages? 3
5 Bailment Liability What is it? What are the malpractice legal elements that must be proven by a plaintiff? What are some practice issues that must be documented in the medical records? What can the practice do to limit liability with clients? How can a practice limit liability from patients? What procedures can the practice do with client disputes? What are the two parts of adequate informed consent or informed authorization? What must be included in the information part of informed authorization or informed consent? 1) Necessary and potential tests 4
6 2) Diagnosis (differential and tentative) 3) Proposed (recommended) treatments 4) Any reasonable alternative treatments 5) The probability of success/failure with each treatment 6) The cost of proposed and alternative treatments 7) Possible consequences of refusing the treatments 8) Possible consequences of not using conventional medicine therapy. What should be included in patient discharge and follow up care for adequate liability prevention? 1) Discuss the methods that were used 2) Discuss the instructions 3) Whom and what handouts? 4) Rechecks 5) Suture removal, diet, water, housing, exercise 6) Emergency care availability during and after hours 5
7 STAFF PAY HIGH ENOUGH? DO PRACTICE PROFITS EXIST? How to Achieve Both Karl Salzsieder, DVM, JD. Salzsieder Consulting and Legal Service Chicago VMA, April 2009 In order for a practice to pay staff adequately, the practice must have an adequate number of clients and charge the clients a fee that results in a profit to owners. Veterinary practice success today is about relationships between the client and the veterinary practice team. As practice size continues to grow and fewer practices are solo doctor, the clients do not continue to see the same veterinarian on every subsequent visit. Yet the clients want the close relationship, with the veterinary practice and want to have the confidence that someone at the practice is caring for their pet. These are the reasons veterinary practices need long term, well trained and well paid staff. Practice high touch and high caring must come from our team members along with empathetic doctor-client relationships. In order to continue to raise the standards of the hospital with high tech, the costs go up while time pressure gets added to the doctors. Staff must be able to comfort and build the client relationship, while at the same time delivering high quality care and the perception of the same by the client. Staff pay must adequately compensate them for their pre-job training or to give them an incentive to take more training when on the job. Increasing practice profit is very easy in most practices, once the practitioner understands how a practice profit is determined and what changes in management will affect the bottom line. When the bottom line (also known as the cash basis earnings) is increased, the practice profit rises markedly. It is reasonable to set a goal to increase the practice profit at least 5% per year if it is not currently at least 15%. The plan is to manage the practice, so in a year s time there will be an additional 5% cash available at the end of the year after cash expenses. The discussion will to look at pricing of individual items to affect the bottom line. Of course, veterinary practice management in every practice is unique in its pricing needs, dependent on the style of medicine that is practiced, the volume of practice and the overhead costs and the current fee schedule. As the costs for facility, equipment and overhead increase, the costs of services will generally have to go up. So every practice that is represented in the session will have different pricing needs, to reach a desired goal to increase the practice profit. Some sample cash flow profit and loss statements will be discussed, to show the variation of pricing needs from different practices. Once the participants understand the variability of individual practices, it becomes easier to understand how each practice must set their fees according to their costs (including the needed staff compensation) to get a preset desired bottom line or cash profit. Once participants understand the need to have fees and/or itemized pricing set to adequately cover the practice s costs which will result in cash profit each and every month, it becomes easier to realize fees must be set and raised as any costs rise, to maintain the bottom line. The goal of this session is to illustrate and teach the management actions that must be used to raise and maintain practice profits, to allow for an owner to adequately pay staff and to realize a profit. The principles of this session are paramount to practitioners to understand how to prevent professional burnout or exit. 6
8 WORKSHEET STAFF PAY HIGH ENOUGH? DO PRACTICE PROFITS EXIST? How to Achieve Both Are your practice staff members paid enough? Should the staff pay be affected by the number of clients and the average transaction charge the clients have to pay? Can the practice leverage the doctors by having staff members spend more time with clients? Can staff members build the client relationship while assisting the doctor to take case histories and educate the client? How should it be easy to raise practice profit, if there are adequate client flows? How often should practices look at their profit and loss statements to understand the cost of operations? What individual priced items should be changed when more profits are needed? How often should practice fees be raised? 7
9 Should several practices have about the same fees or should they be different? Are the pricing needs similar or different from other small animal practices in the same geographic area? Should fees and profit and staff pay be related? Should practice owners receive a reasonable rate of return on investment on their real estate as an individual investment in addition to practice profits? Even though staff should be paid an adequate wage (to maintain good staff), should the total labor cost be relative to the revenue on a weekly basis? How can a practice pay adequate staff wages and still make a profit? What are adequate staff wages? 8
10 VETERINARY TECHNICAL STAFF NEED PAY BONUSES BASED ON MEDICAL CARE AND/OR BENCHMARKS Karl Salzsieder, DVM, JD. Salzsieder Consulting and Legal Service Chicago VMA, April 2009 Non veterinary staff members deserve more than a fixed compensation plan. If the veterinary profession is to adequately recruit and retain technical staff there must be some incentive compensation to keep them enthusiastic and supportive of practice growth whether the growth comes in those chaotic spurts or by gradual year to year growth. They must be able to be appreciated when they work harder or stay later due to the diversity of our case load and the variability of our work schedules. It is expected most readers would agree, paraprofessional staff members are not overpaid in any demographic or geographical setting in our profession. Therefore any measurement of change in a practice would certainly be a wonderful excuse to add compensation to our staff members for being part of the solutions for the occasional stressful situations. Staff members should be given incentive compensation based on the practice reaching or maintaining benchmarks preset by owners or whenever an increase in gross is realized as compared to the same period last year. Some staff may also be able to earn some incentives based on their production data, or leadership job positions. Some incentive compensation areas include the following choices: Production results for increased medical care given: a) a set amount for each blood draw by the technical staff b) a set amount for a preset percentage of fully booked days by receptionists c) a set amount for meeting or exceeding a specified number of dentals per day Management benchmarks reached to control costs a) 5 percent (or some other preset amount) of the savings in labor costs below a preset benchmark (i.e. 20% of gross revenue before taxes and benefits) b) 5 percent of the savings on COGS purchases below a preset amount (i.e. 20 % of gross revenue) c) 5 or 10 percent of the increase in the hospital gross over the same period one year ago Staffs are very appreciative of any or all of the above incentives when paid monthly. In the author s experience, it is common for the staff to request that these extra checks (even though given at pay time) be written separately. It is assumed they spend them differently from the pay check, possibly as fun money. It is recommended that all staff should share in the success of a practice, whether by individual efforts or by the general success of the practices gross increasing. Your staff will really appreciate your offering these above ideas as part of their compensation. 9
11 WORKSHEET VETERINARY TECHNICAL STAFF NEED PAY BONUSES BASED ON MEDICAL CARE AND/OR BENCHMARKS Why do technical staff members need pay bonuses based on medical care and/or benchmarks? Do staff members need more compensation? If staff bonuses are paid bonuses, should they be continued in months where the practice does not profit? Should there be a limit per month in a team member s possible bonus? How might staff bonuses act as incentive compensation? Should there be group incentives or individual incentives or both? Should team leaders get more incentive compensation than non team leaders? Should some of the bonus compensation be directly correlated to the number of hours worked? 10
12 Should the staff share in practice gross revenue as practice growth increases over the prior year, same month? Should there be practice bonuses for blood draws or fecal collections? Should there be bonuses for wellness plans subscribed to (or other campaign successes)? Should there be bonuses for fully booked days or percentages thereof? Should there be bonuses for dental techs that do more than a given number of dental scalings per day? Should there be bonuses for labor leaders that schedule staff and/or send them home when the number of clients per day changes, to keep labor levels at a prescribed percentage of gross revenue? Should there be staff bonuses for savings on cost of goods (COGS) ordered, when the COGS costs stay below a given percentage of gross? Would it be reasonable for a hospital to pay out one to two or more percent of gross revenue for incentives? 11
13 MOST COMMON PRACTICE ACT VIOLATIONS FROM MEDICAL RECORDS Including Medical Records Violations Karl Salzsieder, DVM, JD. Salzsieder Consulting and Legal Service Chicago VMA, April 2009 When a veterinary licensing board receives a complaint, they must investigate that complaint, which will include requesting copies of all records pertinent to the case. If the board sees no written documentation, incomplete or illegible records, it will be difficult for them to discern the veterinarian s intent or treatment. The Illinois Practice Act includes proper record keeping as part of the required administrative rules (Title 68, Ch VII, Sub Ch (b) Parts , Section ). So when the records are deficient and/or illegible, there will be a practice act violation, even if the original complaint was without merit. Practice Act violations primarily originate from miscommunications with clients. These issues include bad outcomes, but more commonly, are from less serious causes. Complaints may be from lack of progress reports, lack of receiving clear authorization or improper informed consent or even for not clarifying and/or updating the estimates. The overall picture of what legally is part of a patient s record includes the appointment schedule, the examination, the laboratory and x-ray room reports and all that s been performed in the treatment and surgery areas, plus information about the time in the hospital covering food, lodging and body discharges, actions and reactions. Practitioners must have a copy of the practice act from their state to confirm the required detail of records. Good records also require documentation of client consent for service, including the offering of pre-anesthetics, pain medications and diagnostics before surgery. Any needed referral to specialists or emergency clinics and whether or not the client accepted or denied should be part of the medical record. The record should include copies of what has been given as follow up care instructions and any attempts to contact a client for further needed care and/or treatment changes. There are some especially important areas where clients consent, (preferred in writing) is required. Those would be for the use of any alternative, unorthodox or nonstandard methods of diagnosis and/or treatment which are provided or even recommended. There should be a near absolute requirement, that any euthanasia require a written authorization. Records should be contemporaneous, and never erased, but amended and/or added by addenda if needed. The records belong to the clinic and copies should be sent or given to clients as requested, even if there is a charge for them. There may be an emergency case where originals are transferred to another veterinarian, if that s the only process that will cover the best care of the patient. Do not include in patients records any derogatory statements about any clients, patients and/or other doctors. This means the practice should not include negative notes about owner s personality, credit rating, chemical addictions or other personal data. License board complaints are likely to occur during the practice life of a veterinarian. Quality and complete records are a primary defense for those stressful times. 12
14 WORKSHEET MOST COMMON PRACTICE ACT VIOLATIONS FROM MEDICAL RECORDS Including Medical Records Violations Why is there an increase in cases to the veterinary license board? How are license board cases different than malpractice cases? Why are medical record violations an easy catch all for Board examiners? What are examples of percentages of license board complaints that end in medical records violations? What are some of the most common problems in board records issues? What are some main items needed to be documented in medical records? What are some good policies that should be part of record keeping systems? What are some requirements for informed consent or informed authorization? 13
15 What items need to be included in the record regarding a pet examination? What parts of the veterinary practice operation are really parts of the medical record? What special procedures need to be enacted for complementary and alternative veterinary medicine referrals? What is the major difference between a professional negligence or malpractice case and an unprofessional conduct license board violation? What should be the significance of hold harmless agreements (or at a minimum client declined ) for clients in the medical record? Why should any client denials of recommended testing be included in the record? Who should be documenting the record for continued care and progress notes of the patient? Does the medical record need details about the patient discharge? Does the medical record need to include follow up care recommendations? 14
16 Does the record need to include emergency care follow up alternatives? Why are examination checklists and/or report cards a good way to educate the client and complete a medical record? Why should a tentative diagnosis be listed in the record? Are there other ways to show doctor intent? 15
17 LEGAL CODE OR EMPLOYEE CODE OF HONOR (How to Build a Team) Karl Salzsieder, DVM, JD. Salzsieder Consulting and Legal Service Chicago VMA, April 2009 Staff management can be a fun cooperative project or it can be a daily drudgery depending on the cooperation and staff participation in discussions and agreements on the staff culture or some would say corporate culture. Staff culture can be affected by the organization chart, strong leaders and staff participation in drafting and using a hospital honor code for acceptable behavior. Without a staff developed honor code and strong team leaders, the interactions and lack of respect will continue to deteriorate the morale or staff culture over time, as the staff grows and is required to live and work through stressful times in the work place. If there is not an honor code, all any practice has for behavior guidelines or minimum standards is the inherent abilities and backgrounds of the team members and the other minimum standards as spelled out in the law. The Illinois state labor laws do not specify team behavior. This is not to say, there are not some super staff teams that may do well without the time and effort spent to develop the honor code. But usually those naturally positive teams would be mostly small staff teams, where there may be some natural leaders that uphold a given standard while others follow the tones set by the strong leaders. Staff respect and behavior ideas should be part of helping the veterinary practice develop team organization and an employee code of honor. The honor code establishes minimum standards of behavior for team members and doctors to use daily, in respecting and interacting with each other. The team members should strive to include at least 10 minimum behavior traits they can agree on, that they would like to maintain as characteristics of their team. Usually the traits would center on respect, honesty, timeliness, accountability and the golden rule of treating others as they would want to be treated. The honor code should be printed and posted in staff areas, so all can see and review daily as they pass by the posting. With this standard and posting they can help to hold each other accountable to uphold those characteristics in each other, while enjoying mutual respect and the feeling of team support. If staff members are left to only live by the state labor and criminal laws, but there is no team building, nor cooperation standards, they usually will not maintain a consistently high standard of work. To keep your team happy, productive and long term employed, is recommended that you develop and use an organization chart, develop strong leaders and have an honor code. This will aid in developing team culture and raising the morale and work ethic in your hospital. 16
18 WORKSHEET LEGAL CODE OR EMPLOYEE CODE OF HONOR (How to Build a Team) How do you make staff management fun? Why have a code of honor? Reference Material The ABC s of Building a Business Team That Wins by Blair Singer, Warner Business Books, This book explains business is easy, managing people is hard. Team Management is Important for the following reasons: What is an Honor Code? Sample honor code rules: Why have an honor code that is more than rules? 17
19 The honor code is a statement of? The honor code is: What does an honor code create? What are the priorities of a great team? What are some of the characteristics of great team players? How do you create a code of honor? How do you enforce the code of honor? 18
20 What are the requirements for the creating meetings and participation? What are the requirements of the rule writing? How do you activate the code? How do you call a breach? What can you expect after the development of a code? What happens if team members fail to call it? What are the 9 steps to calling it? 1. Pick the appropriate time 2. Acknowledge uncomfortable feelings 3. Ask permission 4. Correct the behavior, not the person 5. State specific breach without whole story and offer support 6. Discuss benefits of correction 7. Remind of previous agreement to code 19
21 8. Allow response 9. Acknowledge behavior you want How do you take a correction? Take a deep breath Acknowledge truth for that person Listen actively If you made a mistake, admit it Ask person how you can make it right If call not accurate, see code Become truly interested and inquisitive Summary Strong Corporate Culture or Honor Code Develop a strong team Helps team members deselect selves Helps interviewees deselect selves Helps team members hold each other to a high standard 20
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