Resilience is the paramount business attribute of a practice
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“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”
– Helen Keller
“The greater the force of your compassion, the greater your resilience in confronting hardships.”
– Dalai Lama
“Resilience” is the opposite of fragility. Fragility is not a good position to be in, whether it is your personal health, your practice or the wider world we all occupy.
What a year it has been for reminders of the importance of being anti-fragile and super-resilient:
- We are now 18 months into the COVID pandemic, with infections and deaths moving once more in the wrong direction.
- Hurricane Ida just gave an encore performance for Hurricane Katrina, which 16 years ago (to the day!) took out New Orleans.
- After 20 years of U.S. effort, what might be called at best an expensive stalemate has failed in Afghanistan.
- The United Nations just released the latest findings on global climate, asserting that change is widespread, accelerating and intensifying and that the net-net sustainability of life on Earth is in decline.
As I wrote in these pages long ago, one of the least fragile kinds of business is a medical practice. With an abiding customer demand and high profit margins, private practices have flourished for the last 100 years. Compare the practice of healing people with the practice of feeding people. Within 5 years, 95% of all new restaurants are out of business. It is essentially the reverse statistic in health care.
But this is changing. Ophthalmology practices are getting more fragile in the context of a changing environment.
- Wage inflation is rising sharply in many markets, squeezing already-pinched practice profit margins.
- Even at higher wages, finding new or replacement staff is getting harder.
- The “COVID Recession” (shortest on record) has cued us up for the next recession; when it comes, elective care sales will soften.
And of course, every practice operates in a larger environment, subject as we all are to natural disasters, civil unrest and financial distress.
Testing resiliency
Here is a 20-point “Practice Resiliency Test.” Score your practice on its relative strength in each dimension below based on the following:
0: We are quite fragile in this dimension.
3: We are merely OK in this dimension and could stand to be stronger.
5: We are exceptionally resilient, the opposite of fragile in this dimension.
See how close you come to the maximum of 100 points, and then start this month to shore up those areas where you are the weakest.
1. A positive momentum and history of resilience. In our practice, we have a history of stability and in transiting past difficulties when they arise. We are not surprised very often. We notice problems and challenges at their onset and quickly muster the practice resources needed to surmount them. This experience gives us both the ability and the confidence to face the future.
2. Physician leadership. We have a managing partner who is much more than a figurehead. He or she is nearly as engaged in the details of the practice as our administrator and is the eyes and ears of the board, assuring that the goals of the owners are being pursued by the management team.
3. Senior lay leadership. We have a strong, long-tenured administrator who is as skilled being the practice’s “doctor” as our doctors are at treating patients. Our administrator orbits the partners closely and understands our reasonable expectations.
4. Departmental leadership. We have a very strong bench of mid-level managers. Our department heads are not only technically competent, but they combine this expertise with excellent collaboration. Because our mid-level managers are so strong, our administrator can delegate avidly, leaving time for higher-level strategic thinking.
5. Teamwork. Even the best managing partners and lay leaders are ineffective if they are not aligned, and through that alignment bring along the rest of the team. (COVID-19 has been an acid test for effective teamwork.)
6. Compliance with the rules. We have great command over our regulatory obligations. As a federal contractor, we follow a formal compliance plan and know the right side and wrong side of the line. Nobody likes to be told what to do, but we have become masters at reading each new regulation and mustering an internal team to master it.
7. Sufficient scale. In our practice, we have a good balance between the size of the practice and the number of owners. We have enough owners so that if we lost one or two, the owners remaining would still provide enough leadership and cash flow to keep us moving forward.
8. Profitability. We have high relative profit margins (40% or higher), which give us a cushion in the event of payment hiccups or the loss of any one provider. We are definitely not in the position seen in some practices of a low-margin, single-owner practice, which is fragile and would briskly fail if anything ever happens to the one key doctor.
9. Access to funds. We have ready access to all the capital we could reasonably need. Our banking relationships are excellent. If we did hit a business reversal, such as a Medicare payment delay or abrupt fee reduction, we could get our hands on enough cash to buy ourselves the time needed to figure out what we should do next.
10. A disciplined approach to debt. We are intelligent when it comes to debt. We do not avoid debt when it is used for effective practice investments or to stay up with evolving community care standards. We score our debt levels formally (eg, measuring the debt-to-equity ratio or debt service coverage ratio) and stay at or below conservative thresholds.
11. Great scenario building. Like a country’s defense officials, we periodically update our practice’s “war games.” What would we do if we lost a key doctor? Lost our IT system abruptly? Were hit by a cyber attack? Lost a satellite office to flooding?
12. Written documentation. This takes several forms: a recap of potential hazards, critical paperwork kept in a safe place and, most importantly, especially in small practices, a written disaster plan.
13. Training and education. This is especially important in smaller practices where each staffer may cover several key functions, so cross-training is essential.
14. Links to others in the community. We maintain strong institutional and community ties. These make us less fragile in at least two ways. First, we are “in the know” and will not be surprised by changes in the health care delivery system regionally. Second, our community relationships assure that if there were any alliance of providers in our market in the future, we would be invited to the table and not left out.
15. Personal financial stewardship. The personal financial position of each of the owners is both strong and transparent to every other owner. If necessary, due to a business reversal or payer hiccup, the owners as a group could forego incomes and even get out their personal checkbooks and cover operating expenses for many months.
16. Diverse services. We have a very good level of service diversity, so that if LASIK or elective plastics faltered (as they might during a general economic slump), we would have other patient services to fall back on.
17. General risk management. We have purchased insurance products where feasible to backstop business interruptions such as natural disasters, provider disability and facility loss.
18. A personal “plan B.” Each provider, in a manner suitable to their personal circumstances, has a fallback plan. For younger surgeons, this might be a willingness to relocate if their current practice is unsustainable. For older surgeons, this might be accelerating their pace to financial independence.
19. Friends of the company. No practice or provider stands alone but instead is supported by a web of contacts, advisers and friends. These take many forms. The surgeon-colleague who can walk you through a complication or lawsuit. The headhunter who can find you another job if you lose this one. The adviser who can buttress your management staff. The attorney who can shield you from HR problems.
20. Avoidance of being overwhelmed. According to Shawn Achor, author of The Happiness Advantage, we receive 11 million bits of information every second, but the executive thinking centers of our brain can effectively process only 40 bits of information. The key is to compartmentalize your thinking so that in a crisis you can prioritize and focus on one thing at a time.
More challenges coming
COVID has been a reminder that a world without pandemics, financial crisis, war or natural disaster is actually the exception, not the rule. In the course of a single lifetime, most of us are touched by at least one of these. COVID has been such a shock because for most people living today, it is the biggest, least anticipated and most prolonged calamity we have personally endured.
Unfortunately, we are on the cusp of compounding COVID-scaled challenges. The youngest readers of Ocular Surgery News will likely experience overlapping crises in their lifetimes: climate change, financial dislocation, limits to government spending for health care, species collapse and geopolitical tensions. The COVID pandemic has been a dress rehearsal encouraging each of us to boost our personal, professional and corporate resilience.
- For more information:
- John B. Pinto is the author of several books on ophthalmic practice management, including John Pinto’s Little Green Book of Ophthalmology: Strategies, Tips, and Pearls to Help You Grow and Manage a Practice of Distinction, UP: Taking Ophthalmic Administrators and Their Management Teams to the Next Level of Skill, Performance, and Career Satisfaction (with Corinne Wohl), Simple: The Inner Game of Ophthalmic Practice Success, and Ophthalmic Leadership: A Practical Guide for Physicians, Administrators, and Teams. Available now for purchase at slackbooks.com. Receive 20% off with promo code PINTO20. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.
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