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Ester Horowitz, CEO of Marketpower
Certain basic assumptions abound in healthcare. The first assumption is that skills are enough to open a practice or business. The second assumption is that office managers are responsible to run practices so physician/owners can direct their attention to delivering care. The third assumption is that practice management and business management are one and the same. The fourth assumption is that physicians earn income only when seeing patients. Underlying these assumptions are others, and all are a recipe for practice failure. Assumption: Office management Delegation is the act of empowering or representing the interest of others. Abdication is giving up responsibility to others with no intention of resuming it. Physician/owners prefer to abdicate financial and administrative responsibility to office managers and staff. While the office manager is valuable to the practice's day-to-day operations, the vision and strategy for long-term and diversified growth of the practice can only be crystallized by Dr. CEO, a.k.a. the practice owner. Employees are vital and central to the success of all medical enterprises. However the rule of thumb, in any business, is that no employee should become so important that replacing them could derail the practice. Assumption: Physician time and money Physicians/owners are not taught basic business strategy and design in medical schools, nor are there any CME credits offered in the subject matter. The thought of taking thirty percent of their time focusing on the business of their practice is difficult to comprehend because they assume that money is made only when seeing patients. What is not understood is that accountability, R&D, and practice evolution contribute to sustainable incomes not just seeing x amount of patients daily. Assumption: Practice Management vs. Business Management Practice management, commonly taught in most health organizations, focuses on the processes that support the delivery of care. Business management focuses on the business of medicine. That includes business design, strategy, and implementation processes responsible to support practice success. Business management provides the platform by which practice management succeeds. Generally assumed to be an accounting or MBA graduate function, most accountants and MBAs are not engaged or involved with physicians in that aspect of business; nor is collaboration encouraged. Physician/owner involvement is an essential prerequisite for success. Healthcare, whether for profit or not for profit, must be a business first, if it is to survive. Physician owners are business entrepreneurs and, in most cases, their practices are for profit enterprises, but they are not recognized as such or treated as such. Assumption: Expert skills create viable businesses All too often experts with a certain set of skills choose to open a business with the assumption that their skills are in demand. However true that may be in healthcare, it is not enough to open a practice of any kind without understanding how to run a business. What To Do First steps to opening any practice, be it group, single practitioner, or department of a health organization, is to throw out the assumption that how you conduct business now is correct. Just because everyone else is doing it in similar fashion does not make it valid. In fact, it contributes to the fractionalization of healthcare and increases costs. Business success is intentional, not accidental. Unfortunately, most practices succeed by accident. Eighty percent of new businesses fail because owners do not take the obvious steps to develop a business design and strategy that is implemented correctly. It is the same in healthcare. The next step is to recognize who takes the economic risks and what responsibilities are required by the investor. If the physician/owner invests in opening and running a practice, he cannot abdicate economic responsibilities to employees with no vested interest other than a paycheck and a desire for benefits. Physician owners can delegate responsibility, but it must include monitoring staff activities and holding personnel accountable, if they are to guarantee that the investment is safe-guarded and heading in the desired direction. If physician/owners do not want that responsibility, they should not invest in or open a practice, including group practices. The third step is to learn to hire based upon desired goals, not just salary and experience. An experienced office manager hired at competitive rates does not guarantee a good hire. It can also guarantee a disaster. It is better to outline the kind of functions that contribute to practice goals and hire accordingly. Include incentives that encourage staff accountability and positive performance. Part of the investment is to hire right, not by price. Finally, every practice, regardless of its size or who owns it, can benefit from having a business manager. If not on a full time basis, then at certain mile markers such as start up, change phase, growth phase or when economic shortfalls need to be evaluated. In addition, every physician/owner should be willing to give up a minimum of 3 days in their career to learn basic business strategy, design, and implementation, and not abdicate that responsibility to the office manager or business manager. No practice should be so reliant on any one individual for its success. Include staff in the learning and implementation process with the help of a business manager. Once learned and understood, it will provide a platform for lifetime success. There is a reason why physicians go into medicine and then into owning practices. Every reason is personal and different and becomes the basis of practice goals. When goals are derailed by the realities of practice ownership, it creates active and building frustration because assumptions are not replaced with good basic business training in what is a rapidly changing healthcare environment. Any physician that does not intend to retire in the next five years and owns a practice, is a partner in a practice, or intends to invest in owning a practice, should seek training in business design, strategy and implementation. Sustainable incomes and practice survival will depend upon it. Ester Horowitz is CEO of Marketpower, a business management & entrepreneurship firm located in Merrick, New York. Marketpower is responsible for growing the prosperity of health enterprises. Ms. Horowitz also conducts business education for the medical profession with the National Center For Business Growth and as a faculty member of the University of Phoenix online. She can be reached by email at marketpower@bigplanet.com
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