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When is it appropriate to bring in a consulting firm to set the management course for your practice?
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Remember medical school
Everything you need to know about business you learned in medical school. Think of your practice-business as the “patient.” All businesses, like human patients, have varying degrees of health and illness, which are driven by their good and poor commercial habits and the luck of their organizational “genetics.” (Were you lucky in securing great partners? Are local payers generous? How fit is your administrator?)
As a business owner, simply do what medical doctors do:
- Develop a memorized command of objective business norms such as normal profit margins and normal labor productivity stats, which are cognates of things such as IOP and cup-to-disc ratio.
- Examine your business, like a doctor examines a patient, at appropriate intervals. Read your financial statements monthly — they are a lab report on your practice.
- When you discover something that is outside the norm such as low profits or excess staffing, gather additional data, make a diagnosis and apply a treatment plan.
- Finally, make sure the treatment you apply is working.
As a physician, a majority of patient conditions you see each month are routine and completely within the scope of your training and experience. But even with years of experience, you still send some patients to a specialist or get a curbside consult from a respected colleague.
It is the same in business. Chances are, you and your administrator are able to diagnose and treat most of your business problems. A few technical problems (legal, regulatory, marketing, finance) may need a subspecialist. Other problems require a generalist’s experience and perspective.
The smartest practice owners — like the smartest doctors — develop an on-call cohort of business advisers. Some are consulted regularly; some are only needed for a once-in-a-career problem. Here is a list of engagements that consultants commonly perform:
- Upskill an underperforming administrator.
- Fix productivity and profitability gaps.
- Assess and improve boardroom habits.
- Develop a long-term strategic business plan.
- Evaluate/facilitate/negotiate a merger or acquisition.
- Help a mid-career surgeon rethink professional goals.
- Mediate partner conflicts.
John B. Pinto is OSN Practice Management Section Editor. Disclosure: Pinto reports no relevant financial disclosures.
Keep practices lean
Consultants can be helpful for a variety of issues, many of which are self-limited or narrow in scope, such as coding, marketing, billing or training staff. Setting the management course for your practice, however, would be a major and potentially unlimited endeavor depending on whether the consultants stay on board to manage the practice or just give advice and help change the direction.
My first year in practice was with an ophthalmologist who used an outside management firm to run his practice. For someone who enjoyed a lavish lifestyle, including how he had run his office, this was probably a good decision, and it isolated him from having to be “responsible” for decisions regarding staff. However, it added an extra layer of cost to his business. Most solo physicians have been able to manage and direct their practices efficiently and cost-effectively.
There are times even in successful practices when one may need to have outside help in setting a management course. I think the most common situations are when a partner is brought into a solo practice, a group practice has a departure of a leader(s) who had directed and held the group together, or a group reaches an impasse regarding what direction to take the management and control of the practice. In these situations, outside consultants can provide benchmarks and options for successfully accommodating and protecting all concerned parties.
What is an appropriate buy-in and/or buyout? What are different options for governance or compensation for management roles for physicians? How can you deal with a staff member who seems to be the square peg when everyone else is round? These issues can lead to sleepless nights and strained relationships.
Overall, ophthalmology has been much luckier than many other medical specialties in which physicians have had to become employees of hospitals or corporations. Especially for experienced physicians, these changes can be depressing and frustrating. Consultants may be needed more in the future for ophthalmology to keep practices lean and competitive as we see more corporate takeovers occur in both our profession and large segments of health care. What we do have in our favor is a tremendously growing need for eye care and a decreasing supply of ophthalmologists. This may bode well for both ophthalmologists and consultants.
Francis W. Price Jr., MD, is an OSN Cornea/External Disease Board Member. Disclosure: Price reports no relevant financial disclosures.