How well will you adapt to the future eye care business environment?

Streamlining operating expenses and enacting a disaster plan can help keep your practice flexible enough to adjust to an unstable economy.

John B. Pinto

Sir William Osler, one of the great teachers of pre-modern medicine, said in an 1897 address to the New York Academy of Medicine, “When schemes are laid in advance, it is surprising how often the circumstances fit in with them.” In other words, for success, plan your work and work your plan. It sounds like he was time-traveling to the present era, yes?

Had he worked in today’s fast-changing environment, Sir Osler probably would have underscored his philosophy of practice success. I also think he would have included a fourth item in his now-familiar axiom: “Availability, affability, and ability are what young doctors need to build a practice. And, in that order of importance.” He would have added adaptability and put it at the front of the list.

You should too in this weird, peri-recessional, breath-holding era. This moment in medical economics should be stimulating your instincts to loosen up and become more adaptable.

This month’s column discusses practical tips for keeping you and your practice agile and nimbly adapting to the world ahead for all of us.

Eliminating staffing expenses

First things first. The largest operating expense in every practice is lay staffing, so that is the first place to be braced and ready to take action. If, against all sound predictions, fee cuts do occur in the next few years — or indeed if fees do not rise but inflation does — you may have no option but to trim staffing costs. Cost-cutting measures come in numerous variations, with effects both large and small:

• Cutting the number of staff to transit a given volume of patients.
• Cutting staff hours across the board to accomplish the same economic result.
• Freezing or reducing wages. This could include eliminating annual cost-of-living allowances (replacing them with spot bonuses) or selective pay cuts.
• Labor substitution. This can take many forms: replacing full-time staff with part-time to save benefits costs, replacing low-level adult clerks with casual labor from the local high school, eliminating tech positions and performing some of your own workups, or terminating underperforming associate providers (putting their patients on your own schedule).
• Outsourcing back-office business functions such as billing, payroll or HR, which may be more costly for you to manage than for an outside specialist.

Most of these changes are painful to one degree or another, which gets to the heart of being “adaptable.” You have to be able to personally accommodate to this kind of discomfort and be willing to confront tough decisions with the interests of the practice placed ahead of any one individual, including yourself as a leader. Not to press the survivor analogy too far, but this is no different than a lost hiker adapting to his new situation by fighting back fear, drinking brackish water and pushing his body to the edge of endurance.

Such unpleasant, even painful changes must, of course, be in line with the rest of your behavior as a practice owner. If the day arrives when you have to prescribe bitter medicine for the staff, you can’t turn around and order a new luxury car, buy a nonessential clinical tool or book an island cruise.

Reducing facility expenses

The second largest outlay — and a target for adaptation efforts — is for office facilities. There are several ways to increase adaptability in this area.

• Commit to shorter lease periods and more liberal escape clauses, even if it might cost a bit more. This is especially the case for any facilities beyond your core location.
• Unless growth is highly assured, err on the low side of how much space you will need.
• When opening up in a new area, lease office space until success in your own building is more assured. Of course, the catch-22 with this more cautious strategy is that by that time, land and building prices may have gone back up.
• Rather than owning or leasing your own dedicated office, rent space (and staff) by the day or month from compatible colleagues, who may also be in a position to refer patients to you.
• Be more circumspect in examining satellite office opportunities. Having two offices can be four times more complex than a single location and lead to operational mix-ups in the original office.

Of course, enhancing bottom-line performance is more a matter of boosting revenue than containing costs. Remember that adding just one patient per clinic day can generate enough incremental revenue in a year to cover one staff member’s salary and benefits.

We are entering an era when the demand for services is rising while fees are stagnant, (and falling in real, inflation-adjusted terms). Now is the time to discover a few new personal “gears.” If you have been operating two cases per hour, call the team together and shoot for three. If you have a backlog of patients — increasingly common in some areas — and are topping out at 45 visits per day, take a field trip to a 60-patient-per-day colleague to see how it’s done. Remember the words of ophthalmic legend Dr. John Corboy: “If you’re not smarter than those other fellows, you may have to work harder than them to keep up and get ahead.” The times certainly call for it.

Planning for the worst

Looking more broadly at adaptability, your practice should have a written disaster plan. This can be a few short pages. Here’s a way to get a quick start. As soon as you finish reading this issue of Ocular Surgery News, take 10 minutes to write down the potential disasters you now face: fee cuts, unfriendly moves by the competition or local hospital, loss of an office to natural disaster, your own disability, or worse. Then take another 10 minutes to write down what you would do in each circumstance.

If you think about it, this informal disaster (read “adaptability”) plan is not unlike how you now prepare subconsciously before every surgical session. What if a patient moves or has a health crisis? What if the electricity goes down or you drop a nucleus?

Everyone likes a simple scorecard approach: “Am I ready or not for what lies ahead?” Here’s a quiz that will test your own adaptability to the environment we may well be facing. If you can answer yes to most of these five questions, you may already be sufficiently armored for the future:

1. Imagine that double-digit fee cuts are a reality. Your personal income will soon also drop by double digits. Are you the kind of person who could probably learn to live with this new reality and shift your source of satisfaction to other spheres?

2. Adapting means changing, and all change, even the good kind, is stressful. Would others say that you have always adapted well to stress and change?

3. Do you have a clever, inventive nature that makes you relish the thought of operating an eye clinic in tougher circumstances? (Hint: If you have ever been on an overseas eye surgery mission, that was a perfect test for this kind of ingenuity and ability to do more with less.)

4. You can’t control the trajectory of fee reform, but you can control your ability to mitigate softer fees with harder work by seeing more patients every day. Do you possess the health and energy reserves that would allow you to ramp up your output?

5. If you work with partners, are your relationships with each other strong enough to endure any financial or other resource challenge anticipated in the years ahead?

I would like to acknowledge and thank Dr. Richard L. Lindstrom for suggesting the topic for this month’s column.

• 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; e-mail: pintoinc@aol.com; website: www.pintoinc.com.