In this episode of the MGMA Consultants Corner podcast, host Daniel Williams welcomes Jonathan Tamir, Principal Consultant at Tamir Healthcare Advisors. Bringing a background in both finance and healthcare administration, Tamir offers practical advice for medical practice leaders on improving financial efficiency and preparing for potential investors. He discusses actionable solutions to streamline operations, tighten financial reporting and strengthen a practice’s financial health.
Emphasizing the Importance of Financial Measurement
Stressing the importance of detailed financial reporting, Tamir identifies it as a core principle for managing a healthcare practice’s financial health. “If you can’t measure it, you can’t manage it,” he emphasizes, explaining that many practices are unaware of key metrics driving their financial performance.
Tamir believes practices must go beyond basic tax reports and use data to guide operational and financial decisions. He illustrates this point by sharing how one practice was able to boost revenue by expanding diagnostic testing capacity after analyzing their financial data more closely. “They were doing great work with amazing quality, and yet their finances weren't where they wanted to be,” he says. “I went through the finances and I set up actionable reports, and then did a dive and tried to figure out where their revenue is coming from.”
Identifying and Reducing Operational Inefficiencies
One of the recurring themes in consulting work is the identification of operational inefficiencies. Tamir highlights that many practices can let money slip through the cracks due to outdated processes, unnecessary steps or poor vendor management. “The interesting thing with healthcare is that there are amazing physicians and amazing providers who are doing fabulous patient care, but because operations don't work efficiently, because HR and staffing doesn't work efficiently, and because systems don't work efficiently, there's a lot of waste” Tamir observes, urging practices to review their workflows and contracts. Reducing these inefficiencies, he argues, can lead to measurable savings and improved financial performance. Tamir recommends starting the process by closely analyzing expenses and evaluating whether current vendors provide the best value.
Preparing for Investor Interest
When preparing for investor interest or potential acquisition, Tamir advises practices to focus on their financial health and operational readiness. He explains that investors evaluate two key areas: the practice’s financial metrics and the efficiency of its operations. “If they don't know what the EBITDA number is for them, and they don't know what EBITDA means, that's probably a really good first step,” Tamir notes, referring to Earnings Before Interest, Taxes, Depreciation, and Amortization—a critical figure for investors. He also stresses that practices should begin preparing a year in advance by ensuring their financial records are organized and that key metrics, like EBITDA, show a positive trend.
Operational Efficiency and Investor Confidence
Operational inefficiency can significantly reduce a practice’s value to investors. Tamir emphasizes that investors will scrutinize how well a practice is run, often by asking staff about daily procedures. “They'll probably visit your practice and they want to know how it works,” he explains. “They're going to ask your front desk staff, ‘hey, what do you do in this situation?’ And if they have a manual and they know what they need to do, you're ten steps ahead of most practices.” This readiness can reassure investors that the practice operates smoothly, making it more attractive for acquisition.
Strengthening Financial Reporting for Better Decision-Making
Detailed financial reporting is essential not only for managing a practice’s current financial health but also for positioning it for future growth or sale. He points out that practices often rely solely on annual tax reports, which do not provide enough insight into the profitability of specific service lines or areas for improvement. “That is like ground level,” he says. “I know a lot of practices [where] that's all they do, because that's all they want to pay for. They don't really have a bookkeeper, an accountant or a consultant that's going to help them analyze those numbers on a real-time basis and give them a sense of where their profitable service lines are.”
By implementing more frequent and comprehensive financial reporting, Tamir says practices can make informed decisions that directly impact their bottom line. “I think that the physicians and providers who are looking to do something like this need to understand the financial health of their practice just like they need to understand the financial health of their patients,” he emphasizes.
Helping Small Practices Compete
Small practices often face unique challenges in negotiating with insurance companies or managing complex operations. While highlighting such challenges, Tamir suggests that small practices focus on improving internal efficiencies to maximize their value before seeking outside help. He also discusses the potential for small practices to merge with others to gain bargaining power, though he acknowledges that aligning leadership can be difficult. “When you have small groups, you generally have somebody who's leading it, and getting two people who are leading small groups to see eye to eye is challenging at times,” Tamir notes.
Tamir’s goal is to help small practices thrive by making them more financially and operationally competitive in a challenging healthcare environment. As he puts it, “I see my approach as I'm here to coach the physician leader so that when they're looking at investors, they have the answers and they can reply in a way that the investors understand, so investors will see them as a value add, not as a value detract.”
Resources:
MGMA Resources:
We Want to Hear From You:
Let us know if there's a topic you want us to cover, an expert you would like us to interview, or if you'd like to appear on an MGMA podcast. Email us at:
- Daniel Williams: dwilliams@mgma.com
- Ryan Reaves: rreaves@mgma.com
- Colleen Luckett: cluckett@mgma.com
Thank you for tuning in to the MGMA Podcast Network. Please subscribe and leave us a review. See you next time!
Explore Related Content
Sponsored Solution
eBook: Unlocking the Power of Financial Technology in Healthcare
Online Course
Medical Practice Evaluation Tool
