Efficiency key to survival during economic hard times

“ef·fi·cien·cy: effective operation as measured by a comparison of production with cost (as in energy, time and money)” – www.merriam-webster.com

John B. Pinto

A few years back, I wrote and edited a book, The Efficient Ophthalmologist. It should probably be released again with a new subtitle: How to Survive and Prosper in The Great Recession of 2009.

Eighty years and some three frail human generations after The Crash of 1929, we find ourselves as a profession, as a nation — and as a planet, really — once again trying to understand, adapt to and ultimately accept the unbelievable.

You are asking, “Will this be as big as The Big One? How will my patients and payers respond? Can we still afford the new building we’ve just poured the foundation for or the new associate who arrives next summer?” And the most important question you are asking yourself is “How will I get through all of this?”

In the past 8 weeks, a flurry of surgeon calls reflects both sides of the current crisis, both the danger and the opportunity:

• “Finally. A good excuse to freeze wages around here and cut out the dead wood.”
• “Well, I guess that does it. I’m going to have to work the rest of my life.”
• “Let’s merge with all of our friendly competitors, and push the weak practices out of the market.”
• “Time to close down that satellite. I never did like driving out there, anyway.”
• “I’ll bet there’s a lot of great, lightly used equipment coming on the market we can use for these new exam lanes.”

Just like you and me, the average American consumer has been moving through the first two of three discrete stages, according to Thom Blischok, of Information Resources, a consultancy, who was quoted recently in the Financial Times of London. “The first stage was January to October (of 2008), when there were increases in prices around the world and the consumer was rethinking about things through the lens of affordability. Stage two began as the banking crisis came alive across the world in October. The third stage (not yet here) will be settling into the reality — it will come in the first quarter of next year — as people recognize that the economy will be in this condition for 18 to 24 months.” Mr. Blischok sees consumers shifting from branded items to generics, from upscale department stores (and your eye clinic, perhaps) to Wal-Mart.

How is this affecting the typical practice today?

Most clients are reporting in with 2008 refractive surgery volumes at about two-thirds to one-half of 2007’s baselines but with much greater patient resiliency and loyalty in general/geriatric/disease management segments and only modest tapering in optical sales thus far. It sounds quite familiar.

If this recession turns out to be merely a bulked-up version of past downturns, I believe we can expect refractive surgery to remain soft during the core recessionary period and a bit beyond. However, on a bright note, one might reasonably expect to see that cases delayed for the next couple of years will not be lost forever, merely shifted down the calendar a bit. This is just as we saw with a nice acceleration of patient interest and case volumes in 2003 to 2006, after the acute post-9/11 decline, or before that in prior recessions.

For surgeons with a major business and professional investment in LASIK and other forms of elective refractive surgery, now is probably a time to rebalance your portfolio of services and shift enough of your resources to general care to ride through the next few years. For practices with relatively little commitment to refractive surgery, now may be the time to cede this work to others (with or without a comanagement fee) while doubling efforts in the far-more resilient general eye care segment. As for practices that are already positioned in the “bread and butter” segment of geriatric eye care, with baby boomer demand growing steadily, you may (with a little new effort) arrive in 2011 or 2012 saying, “Recession? Is that what we just had? I didn’t feel much of anything.”

Wherever you are on the arc of practice services, it is time to circle back around and ask, “How efficient are we?” And shed some of the occult wastefulness that has probably crept in during the last few fat years.

Improving efficiency at every level can increase the intensity with which you use all of your resources, especially the ones you may not have thought much about lately: staff, doctors, facilities, equipment, community relationships, marketing dollars and every practice vendor.

Time to ask questions

It helps to review each of these segments in turn rather than amorphously, all at once. Here are a few examples and questions to ask yourself — just a short starter list:

• If patient volumes are down, do you still need daily custodial service or bi-monthly carpet shampooing?
• If you are no longer using older equipment, is it gathering dust (and falling ever lower in value) or are you selling it on eBay?
• Just because you once guaranteed all support staff a full 40 hours per week, have conditions changed enough to warrant a revision of this generous holdover from the days of the $2,000 cataract?
• If you do not already benchmark staffing levels by department, check to assure that you are within norms. For example: In most settings, you should have 0.5 or fewer receptionist payroll hours per patient visit. Such benchmarks are now widely published and available from the AAO, ASCRS/ASOA and every industry consultant.
• Are you asking your office manager to just make the practice run on time or, for the same annual salary, formally holding him to the much higher-valued responsibility of boosting profitability?
• If your main or satellite office sits unused part of the week, could you bring in a part-time subspecialist to help cover rent or even join the practice full time?
• Could you do with fewer phone lines? Fewer Web site updates? Fewer ad dollars?
• What is the measured return on investment from each marketing outlay, especially notoriously poor investments such as Yellow Pages advertising?
• If one of your surgeons can perform the practice’s blepharoplasties or handle medical retina but has not because up until now she has had plenty of work to do, is it time to bring such care back in-house?
• What happens when you audit to see if the doctor’s return-to-clinic order has been followed? Are 100% of such patients appropriately rebooked, or is there some slippage? Typical results when we audit are a 10+% error rate and tens or hundreds of thousands in lost revenue each year per practice, not to mention a slippage in quality care.
• If your techs are standing around while the practice’s surgeons are refracting or taking routine histories, is it time to shuffle work duties downward?
• Is it time to find a new accounting firm that can allow you to take a more aggressive approach to development or a more vigilant tax posture?
• If you employ a full-time associate physician with only enough patients to fill half of a daily schedule, how are they using the other half of the day? Returning e-mail and reading obscure journals, or hitting the pavement to meet new referral sources?

There are literally hundreds of dark corners, even in the best-run practices, in which you can shine a brighter light to find lost profits. But what is the most important, practical, bottom-line counsel for surgeons and ophthalmic executives alike at times like this? Relax. Take a deep breath. Things are never as good or as bad as everyone says they are going to turn out.

Not as bad as it seems

It took years for the first shock on Wall Street in 1929 to circulate the globe. Not so today. Given the pace at which information flows around the planet, we are all wired up and hair-triggered for mass panic. This year’s alarm to the worldwide herd could just as well morph into mass sighs of relief. Falling commodity prices, rolling federal bailouts and an “Obama bounce” may well reverse the consumer and institutional funk and allow the world to re-leverage all over again faster than expected.

I am not much of a macro-economist, but as the most experienced “ophthalmologist-ologist” in America, let me predict here in black and white that we are all going to get through the next few years just fine in eye care land, no matter how grim the rest of the country gets. We are all a pretty smart bunch. If necessary, we will find and adopt remarkably new practice efficiencies folks have not dreamt up yet. Pushed to the wall, we will rediscover that it is easy (even a fun game at times) to “use it up, make it last or do without,” as our wise parents and grandparents did in the ’30s.

The smartest surgeons, managers and consultants among us will figure out first how to get ahead and lead the way for almost everyone else. But beware. The tardiest responders to current and coming conditions may well pass away this time, teaching us all a hard lesson that will inform the next three generations of ophthalmic providers. Anybody want to lay down bets on what ophthalmology, medical economics and the S&P 500 will be like in 2089?

• 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, Cashflow: 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 and The Women of Ophthalmology. He can be reached at 619-223-2233; e-mail: pintoinc@aol.com; Web site: www.pintoinc.com.