Are we measuring practice success correctly?

John B. Pinto

“You can’t always get what you want. You can’t always get what you want. But if you try some time, you might find, you get what you need.”

— The Rolling Stones

Most economists gauge a country’s overall forward progress and the welfare of its people by measuring gains in the gross domestic product, or GDP: the total market value of goods and services produced within a given period.

GDP growth is generally viewed as good, and the more the better. In the U.S. we are on track to squeeze out an anemic 1.5% this year. Canada is expected to be a little better at 2.4%, while China is roaring along at more than 9%.

A recession, formally defined as two or more consecutive quarters in which GDP falls, is bad. Officially, the Great Recession started in late 2007 and ended mid-2009, although the average man in the street would argue that the current extremely slow growth of the economy — much slower than is needed to provide jobs to an expanding base of workers — still feels mighty “recession-y.”

Putting this in an ophthalmic context, the typical practice today is growing its collections — its GDP, if you will — at about 3% to 5% per year. This coincides with the rising demand for eye care services, which should continue to be leveraged upward by the growing ranks of senior patients for at least the next 20 years.

Revenue growth is easy to measure and palpable. But a few contrary economists are advancing the concept that GDP growth and shrinkage alone are a poor, perhaps even perverse, measure of national advancement or decline.

These economists have coined a new metric, the genuine progress indicator, or GPI, to replace or supplement GDP. Wikipedia reports: “GPI is an attempt to measure whether a country’s growth, increased production of goods, and expanding services have actually resulted in the improvement of the welfare or well-being of the people. … GPI advocates claim that it can more reliably measure economic progress, as it distinguishes between worthwhile growth and uneconomic growth.”

Could the same GPI concept be useful in thinking about ophthalmic economics? Even if your practice collects more revenue and generates more profit today than in the past, are you truly better off as a surgeon-owner?

Performance, progress of a practice

Some of the happiest surgeons I know are soloists in boutique practices who work 3 or 4 days per week and have kept their organization small enough to be able to personally understand and have fairly deep control over the enterprise. These doctors don’t have the volumes needed to support the surgery centers, optical shops and employed associates needed to optimize their personal income, but they do generally report a very satisfactory professional life.

Another class of happy doctors I work with are in small group practices, with two, three or four surgeons. They keep things simple with only an office or two and well under 50 employees.

At this mid-range scale, ancillary profits from employed optometrists, optical dispensaries and surgical facilities begin to nicely boost the personal incomes of owners without veering off into the enterprise complexity and partner frictions that can be seen in the largest practices today.

When the practice includes more than about five or six ophthalmologists, a provider’s professional satisfaction can slip, in my observation. More evenings are taken up with meetings to make decisions and solve problems. Any individual doctor loses both control over and even an understanding of how her practice works and becomes highly dependent on a few key staffers and advisers to keep the machine running.

A practice with 20 doctors instead of one and 200 workers instead of 10 can easily have more than 20 times the frequency of doctor conflicts, lay staff intrigues, regulatory near-misses and malpractice threats.

Even though practice growth, like national economic growth, is the gold standard for certifying real progress, there can be diseconomies and inefficiencies of rising scale and fast growth.

This is especially seen in selected settings, such as when:

• A purely ophthalmic practice merges with a multi-specialty group
• A few small eye practices combine into one large practice
• An especially dynamic managing partner spurs practice growth at a pace faster than doctors and staff can handle

Well-run ophthalmology practices now measure their economic performance as diligently as countries measure their GDP. And there is plenty of agreement on what constitutes great benchmarks. But there is not yet an ophthalmic equivalent of the GPI. I believe that coming up with a GPI measure in ophthalmology will be increasingly important as now-merely-threatened fee cuts eventually come to pass and surgeons grasp for ways to communicate with their management staff and each other about whether the practice is truly progressing or just racking up bigger numbers and bigger headaches.

Dimensions of progress

On the way to eventually developing a formal, objective measure of practice progress, the following is a list of 10 possible dimensions of progress, in no particular order of importance.

1. Physician net income per hour worked. Surely, earning $300 per hour is more satisfactory and less frustrating than earning $150 or $75 per hour. High income per unit time gives you the freedom to explore a new work-life balance, especially as you shift gears from your go-go 40s to your 50s and 60s. A low income density may keep you on an involuntary treadmill.

2. Sufficiency of income. Studies have shown that a person’s happiness rises with income to a point and then plateaus. If you are not yet up to what, for you, is the necessary plateau, your sense of professional progress and satisfaction could be less than ideal.

3. Sense of innate fairness in all partnership matters. Compensation modeling, buy-ins, buy-outs, communication and voice in the board room are just the start of a long list of partnership terms that can help an owner, in the aggregate, feel satisfied or unhappy.

4. Change density. Change, as researchers have learned, results in stress. This is true whether the change is something positive (a new home) or negative (a health setback). Too many practice changes in a year can be terribly stressful. Imagine launching a new clinical service, building a new office, converting to electronic health records and adding two doctors all in the same year. Great progress on the surface, to be sure, but perhaps over the top in terms of your ability to personally cope.

5. Staying at the cutting edge professionally. This is perhaps the counterpoint of too much change density. It feels rotten to perceive that you and your practice have fallen behind the times. This includes personal and staff training, as well as access to the latest clinical tools and adoption of vanguard business systems.

6. Intellectual satisfaction. They don’t call physicians “med heads” for nothing. Ophthalmologists thrive on learning new things and interacting with other smart people, whether these smart people wear scrubs or business suits. Interesting time spent solving problems with colleagues and administration can be just as rewarding as clinic or ASC time.

7. The highest possible surgical density. Most eye surgeons would like to see half as many clinic patients and twice as much surgery. Not only is this economically effective, but it increases professional satisfaction and accelerates surgical skills.

8. Stable cash flows and freedom from economic or regulatory anxiety. The practice of medicine was once quite static from generation to generation. Even as procedures changed, although at a much slower pace than today, economic sufficiency was assured and regulations were simple to follow. We are now in an era with tapering profit margins and with far less cushion for business, legal or clinical misjudgments.

9. Pleasant facilities to work in. You spend more waking hours in your clinic than anywhere else. When you walk up to the threshold of your office, do you feel pride or pain? Are the public spaces up to date or shopworn? Do you like the art displayed there? Is your personal office a comfortable, efficient and calming refuge?

10. A gratifying patient base. There is a reasonable complaint leveled by providers who are locked into serving some patients populations; non-compliant public assistance patients, HMO patients with a sense of undue entitlement in accessing your care, and snooty affluent patients can all be vexing in their own ways. Some of the most satisfied surgeons I work with serve high-functioning seniors and families in polite, friendly college towns.

Feedback wanted

I would be interested to hear from Ocular Surgery News readers about this. What dimensions of practice and career progress besides those listed above count to you? What is their relative weighting in your own setting? Do you measure and discuss these broad elements of progress during your board and management meetings or get bogged down in daily minutiae? Are we on the right track for measuring more than money and case counts in a world in which these things may one day be rationed?

Depending on your feedback, I will expand this into a cohort study and report on the results.

• John B. Pinto is president of J. Pinto & Associates Inc., an ophthalmic practice management consulting firm established in 1979. He is the author of John Pinto’s Little Green Book of Ophthalmology; Turnaround: 21 Weeks to Ophthalmic Practice Survival and Permanent Improvement; Cash Flow: The Practical Art of Earning More From Your Ophthalmology Practice; The Efficient Ophthalmologist: How to See More Patients, Provide Better Care and Prosper in an Era of Falling Fees; The Women of Ophthalmology; and his new book, Legal Issues in Ophthalmology: A Review for Surgeons and Administrators. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.