Say No to Practice Management

Practice ManagementI have an issue with practice management. More precisely, I have an issue with the focus on managing medical practices. To manage is to run, to handle, to cope with. Yet this is what causes many of the problems in ophthalmology today. Managing is reactive. We wait for problems and questions to arise and then we solve them. What we really need is “practice development.” To develop is to expand, to grow, to improve.

Development is Proactive, Management is Reactive

Development anticipates needs—for space, for equipment, for expertise, for cash—and results in medical practice growth that is thoughtful, proactive, and profitable. We are all a bit skittish about how practices will perform in the future. Will elective patient volume grow? Will insurance patients continue to delay re-check visits or put off necessary treatments and surgeries? Is our staffing level appropriate? Should we open a satellite or close an underperforming location? Should we externally market? Should we add or delete services? Is our marketing budget too high or too low for these initiatives? Will payroll be easily met, or is cash flow too tight? Each question requires analysis, review and recommendation by the leadership in your practice. Do you have a leadership team, or are you surrounded by people who wait for the physician to tell them what to do? For small to mid-sized practices, and physicians who practice in solo or partnership environments, business leadership is often absent. You were trained as physicians, not business people. Yet you’ve been managing the business aspects of your practice alone or with an office manager, and you’re frustrated. You’re busier than you want to be. You make less money than you think you should. Every problem lands on your desk and requires mediation or problem-solving on the fly. So how do you grow beyond Practice Management into Practice Development?

#1 – Hire an administrator-partner

Elevating administrators to true partners is critical to practice success in the coming years. This partner is not a yes-man or woman. They anticipate problems, provide solutions and free you from the day-to-day demands of practice operation. The problem with current managers in smaller practices is they often devolve to the role of facilitator—they smooth the path between what you want and what staff or patients will do. An effective administrator will challenge you, disagree, persuade, and analyze to ensure decisions are made in the best interest of the patient and the practice. A practice manager, conversely, makes decisions to keep you happy. That’s growth-limiting behavior.

#2 – Determine practice uniqueness

Why will a patient choose to visit you? Is it simply that you are on their insurance plan? Or is there something in the treatment you provide or the care you deliver that will keep this patient, even it they have to pay personally? This is an important question because four factors will dramatically affect ophthalmology in the next 20 years: we will see improving technologies that require patient-pay of non-covered services, we will find comprehensive reimbursement cuts accelerating, we will be inundated with Baby Boomer and Millennial patients on a scale never before seen, and no significant increase in ophthalmologists will enter the service pool to treat these patients.

Consider one practice that is wrestling with defining uniqueness and planning for the future. They have a comprehensive focus and a small LASIK service line. They lost their glaucoma specialist one year ago, resulting in a significant patient drain. They are located in a city with declining population and wealth. Their corporate feeder base is small, with home foreclosures and bankruptcies high. Medicare and secondary insurance changes sent patients fleeing to HMO plans, making cataract surgery barely profitable. Although they are in the Sun Belt, cataract volumes are declining and they have had limited success upgrading patients to presbyopic and toric IOLs. The LASIK office is beautiful and well-staffed. The comprehensive office is old and out-dated, with an unmotivated staff. What makes this practice unique? What strengths can they build on to survive and thrive in the coming years? Every practice has two ways to create uniqueness, and must have administrative leadership focused on achieving it.

First, they can deliver better results. Whether in LASIK surgery, lens surgery, glaucoma treatment or retina care, outcomes create uniqueness. Invest only in equipment and devices that provides measurable end-patient results. If you can’t quantify it, don’t buy it. Second, invest in skills which improve treatment protocols and surgical technique. If you can help patients see better, recover sooner, maintain vision longer, with less pain or discomfort, you remove the shackles of insurance. You control your destiny, because you will benefit from private payment. The key to success through results is to measure, iterate and improve. Build a viable elective vision service line. Go a step further and create concierge vision service. While concierge medicine—limiting practice size and requiring payment for improved service access—is exploding in primary care, it has not yet reached ophthalmology. Innovative practices, those who want substantial patient interaction and time to spend evaluating treatment options, will move to concierge vision care in the coming years.

The second way to create uniqueness is to remain an insurance-based practice but do it more profitably. Spin off the LASIK office and reduce overhead. Re-examine use of MDs vs. ODs, take a fresh look at whether office space can be utilized more effectively through extended hours or staggered work shifts. Aggressively pursue patient triage via email or phone, to eliminate office visits while maintaining fees. What route will our hypothetical practice choose? They want to remodel the comprehensive office, thinking a more attractive environment will attract new patients. But this doesn’t address the fundamental shift in the payer base.

Profitable surgical patients may not exist any longer. Should they relocate? Or, they could choose to become elective vision specialists, rebuilding the LASIK practice and growing Lifestyle IOLs. But they’re afraid. The comp business provides cash flow, even if declining. Are elective patients are out there? The bottom line is that there are no easy answers, and every practice needs a sound administrator partner to thoroughly evaluate issues and provide solutions. What is certain is that a band-aid on this practice will not stop the hemorrhaging. Practice development, not practice management, is needed.

#3 – Measure success

Every physician defines success in his or her own way. Usually it involves helping people, treating conditions of interest, and providing a good living for your family and the families of your employees. Quantifiably track each of your goals so you know, prospectively, whether you’re achieving success.

Measurements every small-to-mid-sized practice must track, at a minimum, are:

  • New patients generated: measure leads and/or number of patients scheduled within key exam types. This provides a quick view of practice vitality.
  • Conversions: conversion to consultation or new patient exam, and conversion to surgery. These appointments feed the success of the entire practice. It’s very simple for the staff to understand, “We should expect 5 new patient visits per day.” Or “We should have booked 10 eyes to surgery today.” or “We should have done 4 injections today.”. Employees need reminded that their job is not simply to show up and see patients, but to work toward education and conversion of key patient types.
  • Average price per procedure: calculate the amount collected per procedure for key visits. Often a global fee and a collected fee are quite different when discounts, specials and freebies are integrated. Track fee integrity.
  • Profit margin: measure by location, by provider and by key service line. It is easy to lose focus on those procedures, people or locations that become a profit drain. Your administrator must be able to tell you who is contributing, where there’s trouble, and recommend solutions, so you may take corrective action.

It is vitally important that we understand the business of ophthalmology, and that we bring sound objectivity and advice to our practices. Stop managing your practice. Commit this year to developing it.

By Kay Coulson, MBA, founder of Elective Medical Marketing, a Denver, CO-based consultancy focused on helping physicians grow their elective service lines. Originally published in Eyeworld.  Updated June 2016.