Every behavioral health company wants to increase their business, or at the least stabilize what they have. Grants, RFPs, and possible contracts become available to an agency and seem enticing. These opportunities for new business offer an agency more services, high rates of reimbursement, or expanded capacity to reach more clients. Yet the most important question each executive should ask is: will it be profitable? If the program can’t pay the bills, it’s not worth approaching. In the non-profit world, agencies still need to know they can cover their costs and use the proceeds towards other services.
A pro forma is one of the best tools an agency can have. Most financial information, such as a balance sheet, cash flow, or profit and loss, are backward-looking statements. They reveal information about what already occurred, not what could occur in the future. The pro forma is designed to give an idea of what could be in the future. These financial instruments predict (as well as possible) how the program will perform.
But if a pro forma doesn’t show you the 1 most crucial factor, it is not doing its job.
A good pro forma starts with assumptions, based on the potential service or program, or historical information. Then it will develop the revenue and expenses associated with the potential program, plus other costs. For revenue, it will explain how it is generated through billing, services, the rates to be used, and other factors. For expenses, it will contain salaries (the highest cost of any venture), the overhead or administrative costs, leasing, purchase of any items such as computers, and other items. After all of this is calculated, the final bottom line of profit, contribution margin, or whatever figure shows a loss or gain after the program.
The one factor a pro forma should concerns the ramp-up to achieve full profitability. Many pro formas show a program starting at full capacity as if the program begins with all the clients coming in right away. In the real world, this does not happen. There are always glitches, problems, and pitfalls that occur at the beginning of any program. Call it Murphy’s Law or any other rule, but things happen. A good pro forma starts slow, knowing these hiccups occur and accounts for them. If your accountant or financial guru doesn’t allow for a slow start in the pro forma, it’s not realistic. Ask them to have lower expectations in the beginning and it will be more fruitful for your business.
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PRAXES is a nationwide behavioral health software, consulting, and training company. No one in the behavioral health industry has a better reputation, and if you give us the chance, we’ll show you why! At PRAXES, our services improve the efficiency and structure of behavioral health agencies serving children and families nationwide. PRAXES brings over 45 years of administrative and clinical expertise. With more than 100 client companies nationwide, we offer the expertise to advance the quality of behavioral health services. We accomplish these goals through our new clinical decision software, our training of best practices, and helping companies meet regulatory standards. At PRAXES, we believe in being creative and fostering new ways to serve children and their families. Our vision is to empower the families our agencies serve with skills that not only improve their functioning, but help them to thrive in their everyday lives. When you give us the chance, you’ll be connected directly to our friendly staff, so you can expect immediate attention to your inquiry. So, don’t wait, call now!
Dan Thorne has unique perspectives on the field of mental health. As a clinician, he has had over 40 years of experience working with clients in the Southern California area. After obtaining his Bachelor’s degree from the University of California at Irvine, he worked with children in the Orange County Juvenile Hall. Here he honed his earliest techniques on at-risk children. After that, he obtained his Master’s degree in Counseling from California State University, Fullerton.
In the 1990’s, Dan turned his attention to the clinical and administrative side of behavioral health organizations. For three years, he was the Assistant Administrator of Starting Point, a chemical dependency facility in Costa Mesa, CA. In 2001, he took an opportunity to be the Director of Harbor View Community Services Center in Long Beach. When he arrived, the Center had only 80 clients and 13 staff. When he left, there were over 400 clients and 75 staff. Dan created several programs through their contract with the Los Angeles County Departments of Mental Health and Child and Family Services. Under his guidance, Harbor View became one of the leading providers of children’s services in Los Angeles County.
While improving the results of the client’s parents at the Center, Dan reflected on his experiences as a parent. His children themselves had special needs such as mental and intellectual challenges, and Dan knew the toll it takes on the parent. In order to help the child, the parent has to be healthy. From this concept, he created his parenting program. After years of refining it, teaching it to his staff at the Center, and then taking the results and comments from these efforts, he became the developer of the current PRAXES program. It is a culmination of Dan’s personal trials and tribulations as a parent along with empirical results and research of over 40 parenting programs.
Our vision at PRAXES is to advance the strength of parents and caregivers of children with special needs (mental health, intellectual, or physical) through education, support, and empowerment. Thus, they can live healthy and functional lives while caring for the child.
Apogee is a clinical decision software designed to help behavioral health practitioners with their treatment and patient engagement. It provides evidence-based and research-based components. Not only do they consist of elements from such practices as Cognitive Behavior Therapy, Seeking Safety, Dialectical Behavior Therapy, Motivational Interviewing, Functional Behavior Analysis, but also the Intensive Models for Parents, Youth, and Children.
PRAXES has over 30 years of accreditation experience. We know what it takes to get your organization accredited. Whether it’s Joint Commission, CARF, or COA, our team can provide an evaluation of your current status and review the standards which need improvements. We will assist you with the policies, documentation, and training required to be accredited.
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