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Basic principles for the business of private ophthalmic practice
Decades of experience help provide a synopsis of the inner workings of running a commercially viable ophthalmic practice.
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“I have learned all kinds of things from my many mistakes. The one thing I never learn is to stop making them.” – Joe Abercrombie
“In teaching you cannot see the fruit of a day’s work. It is invisible and remains so, maybe for 20 years.” – Jacques Barzun
“Teaching creates all other professions.” – Anonymous
Somewhere along the long path of your medical training, you probably had several professors who took a liking to you and in an unguarded moment shared their real feelings about life as a medical practitioner. They passed along the inner-game knowledge you would need as a newly minted provider. Some of it you immediately recognized as wisdom you would use the rest of your life. Some of it took a while longer to sink in.
In the years since then, you have added your own hard-won lessons, so that now, at least if anyone asked, you could pass on to a fellow physician or doctor-to-be a synopsis of what you think it takes to serve patients, treat disease and generally thrive.
I am in the same boat as you when it comes to the business end of ophthalmology.
For nearly 40 years since my own student days, my professors’ pearls have been woven together with those of business colleagues and clients. Today, this body of knowledge is fused into an amalgam, which could be reasonably considered a synopsis of the inner game of running a commercially viable ophthalmic practice.
There is enough here to work into a new book I am chipping away at that will be out in 2015. Here is a midterm glimpse of the genre, a few meta-pearls for your consideration.
Points for consideration
1. Managing a practice and treating a patient are, at root, the same craft. If you want to be a great manager or practice owner, do not try to think like a business person. Think like a doctor as you go through these steps to solve problems:
Finding a problem → Gathering information → Making decisions → Acting → Assuring a cure
In these simple steps, where are you strongest? Weakest?
2. How do we make decisions in the business of ophthalmology? It is a simple two-part question set: Is it moral/ethical/legal? Is it more profitable to do A or to do B?
3. I am asked all the time for my opinion on tactics such as adding exam rooms or launching a marketing campaign. But this is starting from the wrong place. It is much more effective to manage your practice from the inside out: What do you want to see/do/accomplish in the remaining years of your sentient, physically active life? Do you have an income and a personal financial plan that supports this plan? Does the practice’s longer-term strategic plan fit your financial plan? Does the practice’s tactical plan this year fit the strategic plan?
4. When you are in the board room, making decisions about your practice, consider that there are only three buckets of money you are taking votes on:
- Lifestyle today (your paycheck)
- Lifestyle tomorrow (retirement investments)
- Practice-building investments (people, facilities, technology, marketing, etc.)
It is a zero-sum game. Money for one bucket is taken out of the others.
5. In the present environment, in which pundits are once again forecasting the demise of solo practice, it is frustrating to realize that there are numerous diseconomies of scale as one grows. Big practices often have to work harder to be as efficient as nimble solo and small-group settings. Think twice before plumping up the scale of your enterprise, or joining a large group, just because you think that is the best solution to the coming challenges in health care.
6. People make too much of judging the work of their employees. Make a list of your staff. In the first column, write the name. In the second column, rate each person globally on a 10-point scale in which 1 is low and 10 is high. In the third column, write down the highest score you think each person is capable of. In the fourth column, write down what each person would have to do in order to reach his or her highest potential score. Commit to improve or terminate those who today score below a 7 or 8. With all new hires, aim for 9 and 10.
7. Control is happiness. Most practice problems are, at root, caused by a lack of control over things such as access to patients and contracts, practice costs, operational integrity, responsiveness to competitors and service quality. Fear and ambition are the key drivers for new efforts to gain control. Fear and ambition, to be properly harnessed, require leadership to focus your efforts. Absent leadership, a practice is a wandering generality, growing by opportunity, not by plan.
8. The laws of change. All practice failure, great and small, arises from an inability to change. All change is driven by a desire to seek pleasure or avoid pain. Change, itself, is terribly painful. You must develop a tolerance for this kind of pain. Data that support the need for change is worthless. The mere intent to change is meaningless. Committing to change is without value. Action alone has value and meaning.
9. The greatest medical enterprises in the world are run by a strong doctor leader and a strong lay leader working together. A weak or less-engaged medical director obliges a strong administrator and vice versa.
10. Practice boards make objective, measurable policies and standards. That is it. They do not actually do anything else; that is the job for administrators, who are your practice’s resource allocation authorities, responsible for executing policies using practice resources. These resources include:
- Expertise
- Data
- Staff
- Capital
- Facilities
- Technology
- Training and retraining
Resources and standards must be in balance. When boards set higher standards, management may require greater resources.
11. Few practices hold enough meetings. These should include:
- Doctors (at least monthly for clinical, business and social purposes)
- Lead doctor-administrator-managers (every 2 to 4 weeks to convert board policies into daily operations)
- Each doctor with the administrator (at least quarterly to coach individual performance)
- Administrator-managers (every 1 to 2 weeks to monitor and improve performance and celebrate wins)
- Manager-staff (every 2 to 4 weeks to develop objective skills and build teamwork)
- All hands (to generate group-wide cohesion)
12. The best practice teams look and act like teams:
- All hands are in the same uniform
- All hands are perfectly clear on near-, intermediate- and long-term goals for the team
- All hands know to make a “score” (and where the scoreboard stands today)
- Wins are celebrated by the group and rewarded by much more than wages and benefits
13. Few practices can afford to provide truly “100% first-class” service to all patients, any more than an airline can afford to provide 100% first-class seating for all passengers. As revenue per unit service continues to erode, we are moving toward an environment in which we will be constrained to provide “sufficient” care at “superior” prices. Ever-more-efficient providers will be able to sustain their personal incomes. Others will see their compensation erode.
14. Quality comes in two basic varieties:
- “Q-1” subjective quality: The patient’s perception, based on things such as office cleanliness, waiting time, staff friendliness and caring, room comfort, refreshments, doctor affability, etc.
- “Q-2” objective quality: Actual, measurable care outcomes such as low complications rates, excellent continuity of care and superior postoperative vision enhancement, along with tangible superiority in such areas as education, technology, documentation and care pathways.
(Note: Patients, behaving as “customers,” are more often inspired by Q-1 than Q-2.)
15. Delay no further. The time has come. We must now act intelligently and prepare for the future reimbursement environment, whether the environmental change is abrupt or gradual. A 10% fee cut equals a 20% doctor pay reduction. We are shifting to a “hypervolumetric/hypoeconomic” era, in which we need to learn how to do more (patients, tests, procedures) with less (time, staff, facilities) if we want to preserve physician income.
Pinto’s 10 commandments
1. Hire the best people you can afford. Treat them right.
2. Provide staff with 1 hour of education for every 79 hours of work.
3. Keep tomorrow’s appointment book 100% full.
4. Treat every patient as though he or she were your only customer.
5. Ask every patient to refer a friend.
6. Know your numbers. Cold.
7. Find a doctor more competent and successful than you, and copy what he or she does.
8. Sweat every detail. Even the ones that bore you.
9. Financial success is measured in profit per hour, not cases per month.
10. Live on less than 80% of your after-tax income. Invest the rest intelligently, both inside and outside your practice.