Evaluating Your Administrator Four areas to measure performance

by Shellie Pruden, DCMS director of medical practice relations

A wealth of information is available about how to evaluate your practice, but little on how to evaluate an administrator. It's important to define the difference between office manager and administrator. Office managers are skilled at daily details of running a practice. They may manage employees but aren't ultimately responsible for strategic planning, policymaking, and financial management. Administrators, to the contrary, are executive-level professionals with decision-making authority. They possess strategic planning skills, assist physicians in setting long-term goals, and can manage complex financial deals, including managed care negotiations. Administrators typically do not handle day-to-day operations.

In evaluating your administrator, review four key areas: financial performance, risk management, administration, and leadership.

Financial Performance
It's difficult to evaluate an administrator without evaluating the practice. A review of a practice's financial success is fodder for many books, articles, and consultants. Although it's not rocket science, it does take financial expertise and experience specific to practice management. "Many people think that a low accounts receivable balance is a global indication of a healthy and successful practice. That's not always true," says Karen Carr, president of Epic Physician Resources, an Arlington-based medical practice consulting firm. "Accounts receivable can be a good thing. Monitoring its age, followup, and origin can tell you a lot about a practice." One benchmark in the industry for collecting data is the Medical Group Management Association's Annual Cost Survey, which compiles data on 28 categories of operating costs by practice size and specialty. You can contact MGMA at www.mgma.com or 888-608-5601. Additional information on assessing practices can be found in the "Medical Practice Management Handbook 1999" by Reed Tinsley. The 2000 version will be available in August.

Risk Management
Risk management is one of the most difficult aspects of practice management. Administrators must have an overall understanding of the complex regulatory environment in medicine, including Medicare compliance, Medicaid, malpractice, HEDIS, CLIA, OSHA, ADA, and employment and contracting law. Beyond understanding and preventive measures, an administrator protects the practice by taking immediate and appropriate corrective action when possible violations of these regulations occur.

Administration
Administration and management of human resources in the practice represents the greatest budget expenditure and the greatest potential liability. "The fire chief doesn't grab for a hose to put out fires. He orchestrates, making sure firefighters are properly trained and have the needed equipment, enhanced skills, confidence, and support to efficiently put out fires," says David Loomis, president of The Health Group, a Dallas-based practice management consulting firm. "An administrator directs employees much the same way."

The definition of human resources has moved beyond the scope of employees; administrators must have skills in managing physician resources, too. With physician compensation contracts, buy-in and buy-out agreements, mergers and acquisitions, and recruitment and terminations, the management and liability of human resource management is greater than ever. Managing the technical and operational aspects of a practice and balancing it with the available resources is more than a full-time job.

Leadership
Leadership skills probably are some of the most difficult to evaluate. Leadership is a combination of professionalism, vision, execution, and results. Meshing various practice styles and cultures into a single, successful business is a complicated task. Without physician respect and support, it becomes impossible. Medical administrators have become high profile in the medical community. They represent your practice as they develop working relationships with insurance carriers, peers, and professionals. They have a commitment to professional development in order to stay on the leading edge of management.

There is no magic formula in evaluating an administrator. The task is virtually impossible without an adequate job description with clear goals and expectations. If you decide to do the evaluations yourself and want help, an objective third party can assist you with the process. Texas Medical Association Physician Services (800-523-8776) and many consultants offer this service.