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Practice Management Series:
Navigating Through a Challenging Economy

Part One of Three.

Today's economy has forced many medical practices and businesses to reevaluate the way they operate. Some practices were fully prepared and are actually growing. Other practices were caught unaware and are struggling. In this practice management series of articles, I will discuss 3 Rules, 3 Steps, and 3 Strategic Initiatives that will help you emerge from this challenging economy stronger and healthier.

The Three Rules
Rule #1: Don’t Panic.

When people panic they make mistakes. Panic can cause you to react to a situation versus respond to a situation. Reacting is typically a knee-jerk versus the calculated action of a response. It is Important to take a deep breath, gather your thoughts, assess the situation and evaluate your options. Then you will be able to respond.

Rule #2: Get Engaged

It doesn't matter whether you are the physician or the manager; it is time to take an in-depth look at your business. Involve yourself in the operations of the business that you may have put on auto pilot in the past. It is crucial to provide oversight and hold people accountable for their job duties and responsibilities.

Rule #3: Be the Leader

In any challenging time, the people need to hear from their leader. It isn't the time to bury your head in the sand and expect the bad wind to blow over. In the absence of leadership, employees will be confused, scared, and possibly disruptive and unstable. It is time to step up and lead from the front.

The Three Steps

There are three steps that I recommend keeping in mind during tactical and strategic planning activities. I have attempted to simplify the process and provide a guide that will help organize your thought process and activity planning.

Step #1: Inspect

The first step is to inspect. One of my first managers told me to "inspect what I expect". What he was conveying was to not take things for granted and keep my eye on the ball. Assuming that all is well because you have issued the marching orders and provided directions is not usually a wise course of action. You need to check on the key operating metrics regularly in order to ensure that your business is operating up to your standards. Examples of inspection tools include the income statement, productivity reports, and the accounts receivable report.

Step #2: Evaluate

The second step is to evaluate the information gathered from step one. Take the information and compare it to industry benchmarks. Assess and analyze this information. You can use benchmark data that is readily available from the ASDS, MGMA, The Health Care Group, Allergan/BSM Consulting, or ASAPS.

Step #3: Modify

This is the "take action" step. It is the most important step of the whole process and is also the most neglected step. With the economy in its current condition, I am seeing many more offices beginning to take action and modify their business practices. Change begins with a positive mental attitude and a willingness to explore all of the options. A decision needs to be made and then action needs to be taken.

Strategic Initiative #1: Strengthen the Infrastructure

What types of practices are doing well? The practices that were prepared for the economic downturn are weathering the storm better than most. Did they anticipate this economy? Probably not, but they simply recognized early that they needed to make changes in their business approach in order to remain competitive. The increasing pressure from the competition for the patient has been significant. This is true for most medical practices but especially in the aesthetic medicine arena.

There are many areas within the four walls of you practice that can be addressed. I will discuss a few tactics that have delivered a good return on the investment of time and money.

Tactic: Communication Improvement

The staff needs to hear from you in this difficult time. They need to hear an honest, positive message from the management team. Your staff needs to hear a message that provides reassurance, clarity and focus. You really need to set the tone of the conversation. The honest message is that "we are in for some lean times. We may need to tighten the belt, eliminate wastage and inefficiency." In order to achieve success, the whole team must work together. Each staff member needs to dedicate himself or herself to the common cause. They also need to support each and every member of the team.

I've heard many 'bosses' tell their subordinates "you are lucky to even have a job in this economy." This may be true; however, that message is rather abrasive. Maybe a better way to convey the message is worded similarly to this: "We are both fortunate. I have a good employee, and you have a good job at a practice that appreciates and values you."

An "all hands on deck" staff meeting is probably the best way to begin the communication improvement tactic. Additionally, regularly scheduled staff meetings will be even more important now than just about any other time in the practice's history. Regularly scheduled staff meetings are an excellent habit to form. These meetings should continue to be held indefinitely regardless of the economic environment/climate. The practice will benefit from the increased communication and team-building opportunities.

Staff Meeting Strategy

  • Create an agenda and distribute it to all attendees.
  • Start on a positive note.
  • Provide clear direction and your vision to the team.
  • Challenge and inspire the staff to achieve a shared vision/goal.
  • Challenge the process to achieve continuous quality improvement.
  • Build a consensus and rally the team.
  • Set realistic goals and track your progress.
  • Reward success in achieving goals and celebrate individual and team accomplishments.

During the staff meeting, communicate your expectations and also identify the team's expectations. The most successful meetings will be a two-way conversation. A leader must demonstrate active listening skills consistently and be empathetic to the daily challenges that the staff faces.

I like to begin these types of meetings on a positive note. Communicate what is going well, the strengths of the practice, and individuals that have demonstrated noteworthy actions or gone beyond the call of duty.

I like to gather information from the team on what challenges they are facing. Be careful that the meeting doesn't turn into a non-productive, gripe session. Solicit their feedback on what the areas of opportunity are. If someone has an issue or an area of opportunity that they feel strongly about, ask them for a solution; "How would you fix it?" This time can also be used to develop tactics for both the short and long term.

Tactic: Evaluate Service Offerings

Another tactic used to strengthen the infrastructure is to identify areas of opportunity within the Aesthetic Pyramid. Are you offering services on all levels of the Pyramid? Missing services or offerings provide your competition the opportunity to lure your patient away from your practice. This is significant from a financial perspective simply because it costs you on average, five times more to recruit a new patient than it does to retain an existing patient.

The base of Aesthetic Pyramid represents the highest volume services with the lowest price entry point. As you move up the pyramid, the price point increases as the volume decreases. The goal is to move your patients to different areas of the Aesthetic Pyramid as their needs change.

The Aesthetic Pyramid

Once you have completed your evaluation and identified opportunities in your practice offerings, there are several considerations that need to be addressed before you make modifications:

  • What is the return on investment for filling in the gaps within the Aesthetic Pyramid?
  • What is the risk level of not filling the gap in services?
  • What are the dynamics of your market?
  • Does your competition offer these services?
  • What is the break-even point?
  • Is there a need in your market?

Flexibility and adaptability are attributes that the successful business demonstrates consistently. The most successful medical practices are willing to alter course as necessary even if it means moving out of their comfort zone.

Tactic: Personnel Management

Without a strong staff, your day can be miserable. It is hard to make positive improvements if you are just trying to keep your head above the water. Building a stronger team while business is a little slower is an excellent investment for the future.

An effective way to inspect the strength of your team is through the implementation of an employee job satisfaction survey. The quality of the information gathered from this can be dramatically improved if you use a third party or a mediator to administer an anonymous survey during a staff meeting. Encourage honest feedback and limit discussion while the survey is being administered.

During the evaluation of the feedback, remember not to take the information and comments personally. Refrain from trying to identify who may have made a specific comment; and, at all costs, resist the temptation of taking punitive action.

Tactic: Keeping Good People

Staff retention is not always about the money. You can keep good people by doing a few things that cost very little time or money, a simple hello and using their name go a long way. Saying thank you and recognizing a job well done in front of their peers is also a good tactic. Challenge yourself to catch people doing things right and resist being the boss that only communicates to employees when they make a mistake. Don't be a Lumberg.

As hard as we try to keep good people on our team, turnover is unavoidable. When this happens, you have several options in this difficult economy. Evaluate whether or not your existing personnel can pick up the additional duties until the economy picks up. If you reach the conclusion that the position needs to be filled, there is some good news. A by-product of a weak economy is higher unemployment which results in a higher number of qualified candidates from whom you can choose.

Focus your efforts on an effective recruitment process, don't settle for someone that meets the minimal requirements. Be selective and hire the right person for the right job. Offering a competitive wage and benefit package will help set a positive tone in the new relationship.

Invest time and dollars in staff training and development. This can be applied to both new and existing employees. Turnover can cost the business anywhere from 25 to 200 percent of the employee's annual salary. This results from lost productivity, advertising, recruiting, and training costs.

Manage your employees with objective tools. This starts with a job description. A job description lets your employee know exactly what it is expected from them on a daily basis. The second tool is a Human Resource or Policy and Procedure Manual. This defines the parameters in which the employee can complete their assigned duties. The last tool is a performance evaluation. This is the score card that provides the management team with the tool that can be used to measure and communicate the performance level of the individual. A performance review can also be used to take corrective action if needed and to support a pay increase or decrease.

Tactic: Focus On the Management Team

The last topic in this section is by no means the least important. It is one of the most crucial components of a healthy and successful practice.

The relationship between the physician and the manager/administrator is one that needs to be based upon trust and support. The management team needs to support one another mutually in public. Disagreements are a natural part of every relationship in the office, but they need to be addressed in discussed in private, not in front of the staff. Show a unified front. The lines of communication need to be open at all times in order to foster and efficient, healthy work environment between the physician and manager.

CME's are important to a physician's professional growth in the same was as continuing education is for the manager. Without physician support and guidance, this area is often overlooked. There are many high quality organizations that are available to assist in this area. ADA/M, The Cosmetic Bootcamp Marketing and Management Symposium, and the MGMA are excellent organizations that can provide professional education, information, and peer support.


Part Two of this series will appear in the July edition of Currents and will focus upon improving the financial health of the practice. Part Three will appear in the August edition and will cover the strategic initiative of making the most of every patient encounter. This series of articles will be followed up by a lecture at the ASDS Practice Management Pre-conference on Wednesday, September 30 in Phoenix, Arizona.

About the Author: Page S. Piland is the founder and president of Core Healthcare Consulting. He has more than 20 years of management and operations experience. He has been a featured speaker and has lectured on the subject of Healthcare Practice Management at multiple national medical society meetings.