The Financial Value of Practice Systems
The Overlooked Power of Systems
We’ve all heard people discuss business systems. For many, the term itself sparks an internal sigh, if not an external eye roll. It often sounds like corporate jargon—overcomplicated and impractical. Many assume they already have systems in place, dismissing the need for intentional development.
But let’s take a fresh approach—one that’s simple, easy to start, and builds on itself. Systems are not just corporate fluff; they are the backbone of successful, sustainable behavioral health organizations. Ignoring them comes at a high cost for not only your practice, but your therapists, admins, and team as a whole.
Why Systems Matter: Lessons from Deming
William Edwards Deming was a leader in quality management. He changed Japan’s economy after the war with ideas that the U.S. had ignored. His insights remain relevant today:
“Eighty-five percent of the reasons for failure are deficiencies in the systems and process rather than the employee. The role of management is to change the process rather than badgering individuals to do better.”
“A bad system will beat a good person every time.”
If, as Deming suggests, the world runs on effectively executed systems, shouldn’t your mental health practice?
My Experience: When Systems Fail
As an accountant, I’ve been called “The Paramedic CPA” because I often step into financial disasters.
I have seen a finance director vanish during lunch. I have witnessed a payroll manager have a brain aneurysm. I have even seen an entire executive team get fired overnight. In every case, vital knowledge vanished, leaving those businesses scrambling and in need of direction.
The issue wasn’t a lack of systems but a lack of documented systems. When businesses rely on “tribal knowledge” rather than structured processes, they become fragile. If key employees leave for a new job, illness, or a long vacation, everything they created goes with them.
The Hidden Financial Cost of Poor Systems
How much do undocumented systems cost? Consider this:
- Admin salaries and taxes in private practice often total 15% of gross revenue.
- For a $500,000 practice, that’s about $70,000 in payroll expenses.
- If an employee in charge of operations leaves without documentation, the company could lose a year’s salary. This loss comes from inefficiency, retraining, and disruptions.
Yet, people often overlook this loss because it gets buried in a web of setbacks—missed deadlines, hiring costs, and lost productivity. When a systems consultant proposes $20,000 for process design, it sounds excessive. But in reality, it’s a fraction of what’s already being lost.
Where to Start: Identifying Bottlenecks
Since hiring a consultant isn’t feasible for many behavioral health practices and organizations, how can you improve systems internally? Here’s a great starting place:
- Find the bottlenecks. Ask both your therapists and administrative staff: “what do you always feel behind on?” And “are you ever held up waiting on something from someone else?”
- Look for hidden systems. When people repeatedly ask the same question instead of looking it up, there is an undocumented system. If you hear, “Let’s ask Matilda” instead of consulting a process guide, it’s time to write it down.
- Start small. Choose one major inefficiency and document the process. Encourage staff to contribute, refine, and communicate changes over time.
- Visualize. As the operating systems team at Scalable puts it, “you can’t optimize what you don’t visualize.” Through the use of simple, visual diagrams, creating workflows that are intuitive to the whole team can help define and uphold the entire system.
The Key to Success: Keep It Simple
The biggest reason system-building fails? Over-complication. Many assume it needs to be a massive, one-time overhaul. Instead, treat it as an ongoing process:
- Identify a bottleneck.
- Start a collaborative document.
- Review and refine it regularly.
- Move on to the next bottleneck.
Especially for behavioral health organizations where therapists have limited marginal time, these processes need to be easily accessible and referenced.
The Added Value: Clearer Accountability
Once you document systems, you gain another advantage—clear expectations and accountability. This allows you to assess all team members (both therapists and operational employees) based on three key factors:
- Do they understand the process?
- Are they capable of executing it?
- Are they willing to follow it?
If a team member does not follow a clear system, this is an indication of a different issue. This problem is not about misunderstanding or lack of ability, but of employee unwillingness. That’s a different kind of problem, and one that’s much easier to address.
Just Get Started
Systems are not a “set it and forget it” task. Just like any daily habit, you have to work at it over and over again. By focusing on steady, ongoing improvements, you and your behavioral health organization will see returns year after year.
So, send the email. Start the document. Make the list.
Seriously, stop reading. Go build systems that add value!
This blog article was written by (and in partnership with) James Childress, CPA of CAC Advisors. Be sure to check out his upcoming webinar on “The Financial Value of Practice Systems” as well as all other guest speakers in CheckpointEHR’s 2025 Webinar Series.