Business pathology 101: Applying health care’s disease management model to the management of your practice

As practice management becomes increasingly challenging, you can derive success from the same problem-solving approach required by ophthalmology.

John B. Pinto

This month’s somewhat offhand column, derived from an intentionally humorous presentation at Hawaiian Eye 2011 earlier this year, is offered up only half in jest. Between the laugh lines, I hope you will discover something essential to the success of your practice, especially as successful business management is becoming a greater challenge with every passing year.

It is the “inner game” of practice management, something I have appreciated ever since the early ’70s, when I took a left turn on the way to medical school: The key to better management of your practice is always hiding in plain sight in the form of medicine’s elegant intellectual model for finding and conquering disease.

If you want to be a great practice owner, you do not need to adopt some unaccustomed mindset. Just prepare yourself with a few underlying facts and concepts, and then keep thinking like a doctor.

Unlike formal business training, which remains pretty nonstandardized in even the most rigorous B-school settings, mastering a body of basic professional expertise is much more uniform in medicine. Medicine, like law, engineering and the like, is a so-called “learned profession,” with relatively little nuance and a high ratio of science to art.

Learn the science and they make you a doctor. By contrast, business practitioners get very little of what is needed to lead a company from formal schooling, which is why experienced high school dropouts can sometimes manage circles around younger baccalaureates.

But despite divergent training regimens, business and medicine converge more than you might imagine as professional disciplines. Medical and business practitioners both hunt for problems. These problems often first present as vague, subjective complaints, which, with tests and measurements, become hard facts: The human patient complains of burry vision, which emerges as nuclear sclerosis and a best corrected visual acuity of 20/70. Your practice (the “patient” in this case) mysteriously bogs down at 11 a.m. every day, which emerges as an easily cured 35% technician staffing deficit.

In both cases, a “cure” is applied — surgery for cataracts, hiring for the staffing gap. Weeks and months later, improvements are confirmed and you keep checking periodically, chasing down the next most important chief complaint while monitoring for regression and adverse side effects from the last treatment you provided.

Your practice is the patient. As an administrator or managing partner, you are the patient’s doctor. Looked at in this manner, you will come to appreciate that the intellectual challenge and stakes of great practice “doctoring” are as large as the challenge and stakes of being a great ophthalmologist.

Here are some of the most common forms of ophthalmic business “pathology.”

Adminorrhea

Characterized by bloated management ranks, endless meetings, elaborate feasibility studies and organization charts in 6-point type.

This is a slow, progressive practice disease that often commences in times of financial abundance and is only discovered years later when you notice that to talk to Amy at the nurse’s station about an unclear chart entry, you have to make advance arrangements with Amy’s bosses’ boss. Resistance to treatment is common. Treat adminorrhea with combined therapy: peeling back excessive layers of middle management, excising bloated staff hours and sometimes even erasing whole segments of the organization chart.

Servus redundo

Latin for “excessive staffing,” this is less commonly seen today since the advent of modern benchmarking, but it is a persistent condition in primitive settings. Servus redundo is a routine finding in practices with end-stage adminorrhea.

Signs and symptoms are readily determined and often show up as staff standing around chatting beyond their break periods, more than 1 hour of tech time for each patient visit and less than $10,000 per month in collections per lay staffer. The core treatment approach, as with all administrative hygiene, is to gather the data and let the data make the decision about how many people you really need.

Interdepartmentalitis

Presents as larger or smaller frictions between practice workgroups; can be especially great between technical and receptionist staff.

This malady is endemic to the profession of eye care. Treatment should be applied directly on the problem, counseling or removing individual bad actors. Interdepartmentalitis generally clears up spontaneously when you excise just one pot-stirring employee, although the experienced management practitioner will be vigilant about recurrence.

Metastatic overhead

The malignant proliferation of practice costs out of all relation to practice collections.

Early, subjective findings are subtle: masked administrator anxiety during each biweekly payroll cycle, doctors quietly canceling long-planned vacations. These subtle signs will be rapidly followed up by the capable administrator. In addition to gross external findings such as costs in excess of 65% of collections, various practice organ systems must undergo separate exploratory procedures. Staffing costs in excess of 32% of cash flow, facility costs in excess of 6% or marketing costs in excess of 5% are the most common observations. Unfortunately, most practice expenses are fixed. Aside from rare cases of grossly malignant supervision, in which case radical surgery is always indicated, metastatic overhead responds best to dual therapy: a gentle downward traction on costs and a gentle upward traction on revenue. Gifted managers and owners can reduce the largest cost tumors briskly, treating the inevitable residual expense nodes with stern eye contact and progressive spending authority withdrawal therapy.

Hypomedicos

Characterized by an abundance of patients and an insufficiency of doctors.

This has been a very rare administrative condition since the 1960s and the bloom of medical training slots. Studies show that hypomedicos is now mostly limited to the rural outposts of America. Gross symptoms include provider fatigue and 3-month delays until the next available appointment. If your practice is one of the few now experiencing this condition, early treatment is preferred. If allowed to linger, hypomedicos can lead to the infiltration of your service area by competing providers and rebound hypermedicos, which could be fatal to your practice. Take steps to add doctors such that local population ratios settle in at 20,000 people per ophthalmologist and 10,000 per optometrist.

Polyedificium

More Latin, for the creation of excessive, often part-time satellite offices, resulting in low aggregate profitability and excess enterprise complexity.

This was once, in the era of $1,500 cataract fees, a harmless, even beneficial condition. If you suspect your practice has polyedificium, you can screen for this simply by determining the net profit per physician-hour for each location. This exercise may reveal office locations with well under $200 in net profit per hour; such facilities can then either be rehabilitated or amputated from your system.

Officemia

An insufficiency of office space.

The key finding is more than 200 patient visits per month per exam room. The only treatment options available are more exam rooms, longer hours, fewer patients or a new espresso machine in the staff lounge to accelerate throughput. At times, in a zeal to cure officemia, treatment is carried too far, resulting is polyedificium and rebound metastatic overhead.

Promotional atrophy

Also known as “skinny practice syndrome.” The withering away of new patients, which can be readily predicted to develop whenever marketing budgets fall below 3% of practice collections.

The most prominent finding is a persistent year-on-year trend of fewer new visits. Diagnostic caution is obliged when evaluating a practice for suspected promotional atrophy. False positives emerge when comparing summers and winters in Miami (or Detroit). Restoring promotional nutrition is the first line of treatment. However, it is critical that these marketing nutrients be well-balanced. The atrophied patient will rally slowly at first, but baseline strength is eventually restored in nearly all cases.

Philanthromania

Giving away too many of your services for free or at an excessive discount.

This depresses the average revenue yielded per patient visit and sharply reduces profitability. Philanthromania also distresses staff when they see their next hoped-for pay raise handed out in the form of courtesy care to one patient after another. The thoughtful manager will treat this malady by measuring and reporting on the annual cost of excess kindness. In a group practice setting, managers will shift any excess generosity directly to the cost center of the too-generous provider.

Refraction fee insufficiency syndrome

A particularly virulent form of philanthromania, characterized by fees under $45, charged to fewer than 25% of the practice’s total patient visits.

The first line of therapy is intensive counseling on the benefits of daily hygienic charging practices. A single anterior segment provider, seeing 6,000 visits per year, should be charging out 1,500+ refractions for a net revenue yield approaching $68,000 or more. When not charged, this represents a 10% to 20% pay cut for the provider.

Floppy billing syndrome

Also termed “collectionopathy.” Quite common, particularly in practices with inexperienced billing staff and inattentive oversight. Floppy billing syndrome is one of the most consistent comorbidities of philanthromania.

Fortunately for the patient, the lab panel for this disorder is robust, and positive findings for the disorder are well-understood, including net collection ratios below 95%, more than 12% of open accounts older than 90 days and the absence of a collection agency. Floppy billing most often results from too few staff. About 18 minutes of clerical time are needed for each practice transaction. Once the contributing factors are corrected, all lab panels typically restore quickly to normal range.

Surgiphobia

The maddening tendency of otherwise well-trained providers to delay needed surgical care.

Surgiphobia is easily detected by examining the surgeon’s average preop BCVA figures. Average BCVA values over 20/60 commonly respond well to peer coaching and ongoing vigilance. Average values over 20/70 suggest highly advanced surgiphobia. In such cases, the kindest course of treatment may be a surreptitious editing of the doctor’s bio on the practice website and revised patient appointing directives for the front desk.

Numeralgia

Mild to intense pain experienced by practice owners during the monthly finance meeting, leading to an avoidance of all subsequent economic discussions.

Numeralgia can be treated effectively by improving the underlying performance of the practice so the numbers are less painful, as well as the application of appropriate analgesic agents during all practice finance meetings (I find that red wine works best).

Technophilic reflux disease

As the term suggests, TRD results from the excess or overly hasty adoption of new technology and subsequent disgorgement of same.

Signs include closets filled with abandoned gadgetry and providers who run chronically behind in clinic because they are always trying to master the latest time-saving device. TRD is the opposite of the equally disabling Luddite syndrome, wherein all things new are rejected. Treatment for TRD often obliges harsh aversion therapy, whereby the affected doctor is given a retrospective cash-detriment analysis of the last decade’s purchases.

Peripheral business disease

Most often found in practices owned by highly intelligent and energetic surgeons who get bored running just one great business at a time.

Peripheral business disease is characterized by many distracting side projects, juggled at the same time to the detriment of the main business: eye care. Point out to the affected surgeon the trajectory of former failed projects and hold up for contrast the comparative brilliance of the core practice. In the most challenging cases, intervention by the surgeon’s accountant is required to shock the patient into the needed behavioral changes.

Precocious sweatophobia

The intractable resistance of many recently graduated eye surgeons to work more than 36 hours per week.

Formerly known as GWAS, generalized work allergy syndrome, PS is always best handled prophylactically. Be sure to undertake a deep review of every candidate’s work history. When Dr. New says that your practice “would be, like, dude, my first ‘real’ job,” gently show him the way to your competitor’s office. Sadly, PS appears at present to be incurable with even the best tools available to management science. If prophylaxis has been unsuccessful, the only treatment remaining may be a gentle doctorectomy.

Failure to thrive

Like its human cognate, the failing practice may decline due to any number of causes. If detected early, through regular trend analysis, the prognosis can be excellent.

One of the earliest warning signs can be a drop in established patient volumes. In smaller practices, the most common etiology is provider-based: too little attention to the needs and details of the company. As these needs are rising each year, surgeons who are not up to the task should consider consolidation with larger practices. A reversal of this disorder, in practices large and small, can be accomplished with superior management talent. Advanced cases of the disease require time, patience and sustained capital infusion by the owners.

Accountus sicca

Also known as “dry bank account.” Generally an end-stage finding, not so much a disease entity to be treated as a terminal sign.

Graded from stage 1, when you inadvertently bounce the occasional check, to stage 5, when a van pulls up and two guys named Joe start removing the office furniture.

• John B. Pinto is president of J. Pinto & Associates Inc., an ophthalmic practice management consulting firm established in 1979. Mr. Pinto is the country’s most published author on ophthalmology management topics. 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; e-mail: pintoinc@aol.com; website: www.pintoinc.com.

Business is just like medicine

1. First, do no harm.

2. The diagnosis is in the history.

3. Start with the subjective complaint and move on to the objective facts.

4. Know when it is better to treat briskly and when to rely on the tincture of time.

5. Triage is key. Prioritize your treatment plan.

6. Businesses and bodies both have organ systems.

7. Business diseases can be organ-focused or systemic. They can be acute, chronic or episodic.

8. Business is complicated and experimental. Keep up your charting and be ready for surprises.

9. Adverse side effects are common even with the best treatments. Some cures can kill the patient.

10. Healthy bodies and businesses seek homeostasis. Excesses and insufficiencies generally signal a disease state.

11. Prevention is always best.

12. Sometimes, the patient must simply live with the disease.