Over the past 10 years, we have helped a lot of medical practices with their strategic growth. While all the changes in the healthcare industry have created a lot of challenges for medical practices, it has also created a lot of opportunity. The practices that are agile in reacting to these changes and brave enough to make bold decisions, when needed, are the practices that benefit most from those opportunities. They experience stronger growth with fewer problems than the practices that have a hard time diverting from their old/existing course of doing business. The following are the most common mistakes we see that are crucial to prevent in order to maximize your growth:
Lack of understanding of your practice management needs
Let me describe a scenario I have often seen. A practice was formed 15 years ago by two doctors. Over the past 5 years, they experienced rapid growth, added 3 locations and are now a practice with 14 doctors and 80 staff members. The practice manager has been with them since the beginning and had a significant impact in helping the practice get to this point. The problem? Your practice management needs have changed significantly and now need to be adjusted. As it relates to your practice manager, there are two common scenarios:
- The practice has outgrown the capabilities of the practice manager: Often the practice managers are not qualified to manage a large organization. While they might have made a huge impact on getting the practice where it is today, they might not be qualified to manage the practice with today’s size. Not adjusting to this situation is a huge and very critical mistake. This doesn’t mean you have to fire or demote your practice manager. At one point a practice has to realize its size and consider managing the practice like a real business and hire a CEO or chief administrator. The practice manager could report to the CEO and still have a significant role and responsibility, while the CEO is responsible for the more outwards facing growth activities, as well as providing strategy and direction.
- The practice manager has grown with the practice and is capable to provide the needed management, vision and operational skills. However, often practices end up just loading more and more responsibility onto the practice manager, without allowing the practice manager to hire the necessary support structure needed in order to succeed. Instead, often the result is a completely overworked and overwhelmed practice manager and the practice can’t progress to the extent it should or must.
Not empowering decision making
One of the most common mistakes is related to the lack of management structure and adjusted decision-making processes. Successful organizations are agile in their decision-making and have a functioning hierarchy that ensures timely decisions. At one point, the founding partners have to decide how that void will be filled. Often, the solution is having monthly partner meetings where all decisions are made in a more or less democratic fashion. While this sounds good, it prevents the needed decision making agility. You have to re-assess and redefine who can make what decisions. Your practice manager/CEO has to be empowered to make important decisions that are in alignment with the overall business strategy and direction. I know it is hard to give up control. It is like seeing your kids grow up and coming to grips with the fact that they make their own decisions now. It is no different for your practice. You have to let it grow up and empower your senior staff. It doesn’t mean you have to give up control over your business. You can still have control over the strategic direction as a board member, owner or committee, but it should be within a framework that allows your organization to function according to its needs.
Not understanding the need for new structures
With the growth of your company comes the need for new structure. The time will come when you need positions that were not necessary before. Size creates needs. Often these positions are not filled, because they are new positions that were never needed before and therefore seen as an unnecessary cost. However, in reality, not realizing your new structural requirements usually creates more cost due to inefficiency and lack of scalability.
Not realizing the need for scalability and standardization
Processes can be perfectly fine for your organization while you are 20 people and completely inadequate when you are 80 people, with 5 locations and 10,000 patients a year. This requires a strong practice management and a constant commitment to the continued improvement of processes, the standardization of processes and ensuring that everything that is done is scalable. If you miss out on
this, you will struggle with increasing cost and decreasing profits.
Forgetting the patient
Remember when you where a small practice and you knew most of the patients by name? Well, I know this is not possible when you reach a certain size. However, your goal should be that your patients still feel the same way. As you grow, have more people, make more money and expand your business, the voice of the patient is often lost in your growth. As a result, it often backfires and your brand starts to get hurt through bad patient reviews or negative word of mouth. This may not be done intentionally, but is the result and culmination of mistakes related to your growth.
Lacking a current Business Strategy
Last, but certainly not least, I am continuously amazed by the lack of ongoing strategic business planning. Often it is a result of the above issues. I know of many medical practices that have $10 million, $20 million or even well over $50 million of revenue, but they don’t have an annual business strategy creation project/process. In fact, many companies don’t have a documented business strategy at all. Instead the company is mainly managed through tactical decisions that are decided in the monthly partners meetings. Once you reach a certain size, this is just not good enough anymore and creating a business strategy that is updated every year is a MUST DO. NO IFs, ANDs, or BUTs.
The above mistakes are common and tackling them is very often painful, because it forces everyone to have very difficult conversations and make tough decisions. However, not tackling them is even more painful and results in slower growth or reversal of growth. If you can manage to successfully transition from a small practice to a medium-sized one and then a larger practice, the rewards are huge, both financially, as well as intellectually. Highly advisable is the involvement of external experts that can help you navigate through the processes. External experts provide experience in company transformation and provide independent opinions that are not tied up in internal politics and past decisions.
If you are interested in learning more about how to transform your organization, feel free to send me an email (Thomas Hofstetter, Managing Partner, email@example.com).