Monday, June 9, 2014

Medical Practices are a Business and Doctors are Business Owners

Medical Practices are businesses
Specialized professionals - like attorneys, CPAs, and physicians - own and operate multi-million- dollar businesses while performing the services that generate most of that revenue. And in most group practices, the owner-physicians are often employees of the practice, too. This multi-role existence creates some real challenges in time management, decision making, and overall attitude and behavior. Most physicians were not attracted to the profession by the prospect of owning and operating a business. Doctors usually see their chief role as that of medical caregivers - and rightly so. No one else is so uniquely prepared to provide the knowledge, judgment, and skills sought by your patients.

Some doctors have very little interest in owning a medical practice; in fact, recent studies show a growing number of medical graduates are choosing employment in larger organizations over practice opportunities featuring partnership offers.

Practice consultant Kenneth T. Hertz, CMPE, finds that many physicians have a very difficult time assuming the business-owner role. Professional training for physicians includes precious little content about owning and running a business, and its importance pales in comparison to the volumes of science and medicine a medical student must master.

Physicians seem to have the most trouble mastering at least three key areas of practice ownership and management:
  • Establishing and maintaining an effective partnership with their administrators; 
  • Paying attention to and nurturing the development and health of the practice; and 
  • Understanding and responding to financial and operational reports.
Hertz advises physicians to start with the three areas he identifies as crucial:

Partnering with Your Administrator 

There are at least three big mistakes physicians make when it comes to managing their managers: 

1) Under-hiring. A few solo practices today get along pretty well on a “mom-and-pop” basis, with the physician-owner happily covering executive-level management and an office manager who has risen through the ranks to a position of trusted responsibility. Many great administrators got their starts this way, but only if the physicians they served supported them in training and networking through organizations like MGMA. If your practice has already grown beyond one or two providers, and you find yourself needing a new top manager, however, consider just how complex the modern group practice has become. Spend the extra bucks to hire a professional administrator who has additional education and/or experience in leading a practice in the eight “domains” identified by the American College of Medical Practice Administrators as essential knowledge required for effective practice management:
  • Business operations;
  • Financial management;
  • Human resource management; 
  • Information management;
  • Organizational governance;
  • Patient care systems;
  • Quality management; and
  • Risk management.
2) Over-managing. Once you go through the considerable effort and expense of finding just the right professional to run your practice, let him or her run it! Ironically, business-savvy physicians who recognize their need for professional management often have a hard time turning over appropriate control to their administrators. It’s hard to avoid micro-managing your practice, but you’ll spend your time better doing what you’re trained to do, and you’ll enjoy a better-run practice with a healthier group culture, if you let your expert do his or her job.

3) Under-communicating. Does your administrator know what you expect from him or her? Probably not, unless you’ve taken the time to develop and maintain:
  • A written employment agreement;
  • A written job description;
  • Written performance standards and goals; and
  • Weekly meetings for the physician leader(s) and the administrator.
It really is a matter of partnering with a trusted professional. Don’t demean your administrator and other management staff by treating them as second-class citizens. Respect their professionalism, and let them feel safe enough to discuss practice issues with you honestly and openly.

Nurturing the Practice

You’re not operating a piece of equipment here - you’re leading an organization made up of living, breathing human beings. Even as you long for your operation to run like a “well-oiled machine,” never lose sight of the fact that your practice is more like an organism than a machine.

Nurturing requires an attitude adjustment for most doctors. Traditional training and socialization emphasizes a physician’s independent decision-making; but to grow a baby practice into a healthy grown-up business, you need to engage your partners and employees so everyone feels included in the group.

Nurturing includes teaching and training, providing physicians and support staff with everything they need to get the job done, helping everyone feel cared for, and inspiring everyone with confidence that their leader knows where he or she is going.

Monitoring the Reports

Too many physicians ignore financial and productivity reports. They don’t really understand how to interpret those numbers and charts, and they’re too proud to admit it. But those reports are as critical to your business as diagnostic images and lab reports are to your patients. Often it’s the first early warning of poor performance.

If you don’t understand that page of numbers, ask someone who does. Or, better yet, read a book like Owen Dahl’s, Think Business!

If you can’t bring yourself to ask a senior partner or your administrator, buy an hour or two with your CPA or attend a few physician-executive courses. The return on that investment will be huge.

If you enjoy reading the blog entries in "Solving Problems in the Medical Practice" you may want to check out all the great products at Greenbranch Publishing.