Chapter 6: Business management 101 - basic business skills you need to know
|"The conventional definition of management is getting work done through people, but real management is developing people through work."
- Agha Hasan Abedi.
Every medical practice is a small business, and being a successful doctor is not just a question of having the requisite medical skills or purchasing the newest medical equipment . You also need to be an entrepreneur and to learn basic business skills in order to run a private practice successfully.
Many doctors adopt a self -oriented rather than a patient -oriented approach to their activities. This means that they decide what medical services to provide, and at what price to sell them, without analysing what patients want and need. They try to sell their skills, rather than try to provide what sells. They blindly follow tradition rather than look for market opportunities – and as a result , they are more likely to fail.. They are going against the law of business, which says that businesses exist in order to satisfy demand, not to satisfy their owners.
Physicians often fall into two distinctly different profiles: "healers" and "dealers." The healers prefer to practice medicine free of management, financial and administrative demands; they see business as a necessary but unappealing part of health care delivery. The dealers, on the other hand, are energized by the business of medicine; they apply their entrepreneurial energy to building organizations that can compete for business in a demanding market.
For many physicians, management is not a pleasant role. They dont see management as being consistent with their altruistic mission of helping patients. They are simply not motivated to manage, since they dont derive any satisfaction from being efficient administrators. However, doctors must learn that they need to manage their clinic efficiently, if they hope to achieve their final goal of providing good medical care to their patients !
Remember that its not possible to provide good care to your patients unless your employees are happy. Instead of focusing solely on patients, you also need to focus on the satisfaction and happiness of your employees. Physicians can derive immense satisfaction from knowing they have created an environment in which their employees enjoy work – because this is the sort of practise in which their patients will be well looked after ! As more physicians get the sense of satisfaction that can be derived from caring leadership , they will no longer perceive management as being at odds with patient care but instead will recognize their unique position to enrich the lives of their employees – and through them their patients.
The principal issue facing most medical practices is simple: Will you succeed or perish? The business, regulation, technology, and profession of medicine are quickly evolving. Your medical practice needs an advantage, and you need to act upon the advantage to assure your continued success. A well thought out strategic business plan will provide that advantage. While most doctors just muddle along, and grab opportunities as and when they come, strategic business planning can help you improve your chances of becoming successful. Use this basic business tool to help improve your practice.
Typically, strategic planning is performed in five stages.
Stage 1: Analyze Your Practice and Its Environment
You need to evaluate several factors, including :
Patients: Where do your patients come from? What attracts them to your practice?
What do they expect from you? Are you satisfying all their needs, providing all the services you should ?
Referring physicians: Visit your top referrers personally, and find what they like and, more importantly, dislike, about your practice.
Services: Know which medical procedures you offer make money and which lose money. Understand where your profitability lies and try to maximize these.
Competition: Find out what competing doctors are doing for their patients and referrers. Know which ones are forming networks and what kinds of deals they are offering. Most importantly, know each competitors strategy and philosophy.
Regulation: Know what legislation has been recently enacted, what is proposed, and how your practice may be affected by it. Keep tabs on changes in practice patterns and standards of care.
Stage 2: Analyze Your Strengths and Weaknesses
How is your practice different from anyone elses ? You should assess your practice in the following key areas: patient friendliness; referrer convenience; "clinical" quality (outcomes); technology (state of the art); price/cost (economic advantage); and allies and barriers (competitors, financing, networks, etc.). A candid analysis of these factors will help you determine the strategy for your practice. You may be a technology leader, or have an inherent price advantage. Whatever your strength, go with it. If you have no strengths, seek a way to obtain one. As for your weaknesses, instead of ignoring them - do something about them.
Stage 3: Establish Goals
You must establish objective goals to monitor your success. Establish practical goals in income, patient visits, referring sources, and procedures performed. Your plan should include: a prioritized timeline for adding specialists, equipment, and administrative support staff; a continually updated (every year) list identifying possible expansion sites; and multiple, contingent funding options.
Stage 4 :Implement Your Plan
Your plan is absolutely worthless if you leave it in the computer or in a desk drawer and expect it to implement itself. Most strategic plans fail because they are ignored or forgotten. Involve your staff in the planning, execution, and monitoring phases.
Stage 5: Monitor and Adjust Your Plan
Dont expect all your plans to become reality. Just like complications can occur after surgery, often through no fault of yours, you need to handle business complications the same way – dont ignore them, but correct them and keep going without altering your core strategy.
If you are planning to offer a new service, you can use the following formula to develop a business plan.
For (target customers - your main market segment only)
Who are dissatisfied with (the current market alternative)
Our product/service is a (new product category)
That provides (key problem-solving capability)
Unlike (the product alternative)
We have assembled (key whole product features for your specific application/solution)
Heres an example of how it might work for an infertility clinic, for example.
For infertile couples
Who are dissatisfied with running around from gynecologist to sonographer
Our medical practice is a new personalized, integrated infertility clinic
That provides couples with complete clinical services under one roof
Unlike current gynecologic clinics
We have assembled a complete service including sonography, specialists, lab tests and counseling
Sometimes its hard for a doctor to understand business terms . Just like doctors use medical jargon, administrators too use management jargon. This can be easy to understand, if you remember that managing a business is very similar to taking care of a patient ! The following " translator " can be a useful guide.
Thus, if you read: " The alternatives, as a result of this audit, are to coordinate a plan, delegate to our department managers or develop a solution on my own. ", in your mind, you can translate this as: " The treatment options, as a result of our annual checkup, are to integrate a service care plan, refer to specialists, or to treat the situation myself."
If you encounter a business problem while running your practise , think of it as a patient with an illness and it will be much easier for you to develop a treatment plan to solve it ! Thus, if you are losing money, then this is the illness, and your balance sheet is the equivalent of the pulse and BP of the patient ! Just like you ask your nurse to monitor the patients vital signs to ensure he is getting better, you need to ask your accountant to monitor your cash flows to ensure your practise in improving. Think of a bank loan as the equivalent of a blood transfusion for your practises financial health;
and just like stopping smoking helps to improve your patients vital capacity, getting rid of surly and inefficient staff can help to boost your practises profitability . One can carry the analogy even further. If you have a patient with a difficult problem and find that you are stuck, what do you do ? Ask a specialist for help, of course ! Similarly, you can use a tax consultant to help you to reduce your tax liabilities. As a doctor, you are used to managing patients with complex medical problems. You can apply this expertise to managing your practices business problems as well !