To weather this recession, Peter Lucash makes the suggestion that the healthcare clinic owner should consider cutting salaries instead of letting staff members go.  Fedex, as opposed to many other large companies, has recently done so by cutting back on executive salaries in addition to the rest of their employee’s wages.  First impulse for business owners and managers is to cut jobs to reduce labor expenses significantly.  However, as Lucash points out, there may be more benefit in trying to keep good employees around.

Cutting staff will reduce expenses, but the pain will be felt in many ways – short staff, stressed staff, a lessening of the quality of your care for patients, and more tasks that drop to the physician, whose is the key revenue generator. At some point, however, business will pick up and you will then be scrambling to recruit, hire and train people, something that costs you in dollars, time and disruption as the new employee learns how you do things.

Given the current economic environment, here is a great reminder from Peter Lucash for all of us who “lead” healthcare practices.

Now is the time where staff needs to see – and hear – your confidence and plans going forward. You are in a position to be a calming influence and a reassurance – to the extent that you can – that together the group will continue to work through these difficult times.  

You may want to have a short, all hands meeting to reassure and invigorate the troops. You can be honest – expenses will be held back, you will see about raises as things play out this fall, and that you are able to pay the staff and the bills. You want your staff to come away with the message that your plan to work through the recession is to focus on what you do – focusing on caring for patients, a focus that will pay off in better patient care, a firmer patient and service base, and financial position for the practice.

It goes without saying that it’s the portion of payment for healthcare services that the patient is responsible for that is the hardest to collect.  And it doesn’t matter if it’s a co-pay or a patient responsible portion invoiced to the patient after services, it’s not easy to move the money from the patient’s pocket to the clinic’s bank account.

This is not to say that collecting from insurance companies is a walk in the park either, but at least insurance companies aren’t sitting across the room from you, benefiting from your services, then realizing that they don’t have the resources to pay.  It’s a bit tricky when you’re collecting money from those with whom you’ve helped, and likely have established a good interpersonal relationship.

Patients, as a whole, should absolutely not be held in contempt, as healthcare for the most part is not a discretionary, scheduled service.  You get it when you need it, and money doesn’t necessarily happen that way.  I know that my responsible portion has drifted beyond the “current” column in an A/R aging report or two, and I think I’m pretty responsible.  Sometimes patients just can’t pay their part when they need to.

So how does this drive the practice of medicine, dentistry, physical therapy, and the like?  Do doctors, physical therapists, dentists, and other healthcare professionals treat patients differently based on their ability or willingness to pay?  Should they?  We would all hope not, right?

Well, a few comments found in this post from Kevin, MD show that some providers do admit to treating the uninsured differently, and it might just surprise you.

With some states considering cutting already low Medicaid payment rates, those with this insurance are rapidly joining the uninsured by being treated with preferentially poor care.

Being “in the know” isn’t easy.  Knowing all of the elements that go on within a private practice, or any small company for that matter, can appear to be a daunting task, if not impossible.  As such, delegation takes a prominent role in the management of many important matters responsible for the sink or swim of small healthcare practices, replacing owners’ ”in the know” with “in the dark.”

For any practice owners that think that there are aspects of their businesses that are above (should be taken care of by other partners, practice administrators, consultants, etc.) or below (should be delegated to lower paid or more specialized staff) them, they’ve got another thing coming…and it’s likely not good.

Not knowing how money is spent, decisions are made, or customers are treated can only lead in the wrong direction.  It is not above or below us in the role of practice owner, CEO, or VP to know these things, and it is quite important that we do.

Here is a great example from the Atlanta Journal-Constitution, of the new Grady hospital CEO who has taken it upon himself to be “in the know” within the first few weeks on the job.  He’s charged with a large task - turning around a $740 million budget to save the failing health system that’s been in the red for years - and he’s addressing it not behind a pencil, podium, and PowerPoint presentation that speaks of great vision and execution (well, he might be doing that too, actually).  But he’s doing it by sifting check by check through expenses made during a single week in July.  “‘The best way to figure out what’s going on is to look at the checks,’ he said, noting that he now has made this mini-audit a weekly practice.”

Let’s not forget that if we own the business, it’s ours.  And knowing what’s going on in our business is our responsibility, no matter how far above or below us the tasks may seem.

Good luck to Michael Young and Grady Memorial Hospital.

This is not the usual work of a hospital CEO, especially one overseeing a medical megalopolis like Grady Memorial Hospital. Grady operates a 600-bed hospital, 60 specialty clinics and its own nursing home. It has 4,800 employees and serves as metro Atlanta’s top level trauma center and last refuge of care for the poor.

The Grady health system also runs deficits of up to $40 million a year, so saving money is a priority of the CEO, who officially started work Sept. 2.

Young hit upon checks that shocked him, such as the $100,000 one-week payment for temporary employees, including nurses and X-ray technicians. Not only did Grady have to pay the temp agency — some of the temp nurses made more than a staff nurse, he said.

I’m a medical practice consultant (I’m all for full disclosure so I thought I’d start this post out with just that).  I enjoy healthcare consulting and our company does a fantastic job of helping new practices start up successfully, as well as assisting existing medical practices thrive in the face of turbulent times in our healthcare economy.  We love what we do.

I’m also a clinician.  I actually consider myself a clinician first, and consultant second.  What this means is that I understand the core business of healthcare - patient care.  Yeah, I understand the numbers, and how finances, marketing strategy, and operations all work hand in hand, but I never forget that a patient exists at the ultimate end of every equation we help to solve.

As a medical practice consultant and a clinician, I’m here to tell you that medical practice consulting, while extremely valuable, is not a panacea.  Much the same way as having a good doctor doesn’t make you healthy, a good medical practice consultant doesn’t guarantee the health of your medical practice.  Likewise, as it’s also not necessary to have a doctor in order to be healthy - many times, if not most often, you can have a healthy practice without a consultant.  You just have to be willing and able to spend some time and energy, and do some research.  We always recommend that this is the first place to start, and only after exhausting your internal resources, should you seek the services of a medical practice consultant or consulting firm.

Here are a few recommendations from a clinician-slash-consultant that may help you determine when (and when not) to look for help from a medical practice consultant.

1. Something’s broke, but you don’t know what.  Most often it’s not difficult to know when something’s awry.  If there’s something wrong in our body we usually don’t feel well.  When there’s something wrong in a medical practice it usually shows signs of decreased performance.  Decreased cash flow is a common indicator that there’s a problem, but it usually manifests only after a period of time - making a diagnosis as to the true cause of the problem somewhat complex.  This is a good time to have a medical practice consultant to help.  A consultant should be trained to move through each of the practice systems in order to confirm not only that something is wrong, but which specific area is the culprit - and recommendations to fix it.

2. You “don’t have time” to improve your practice.  Time is both friend and foe when it comes to improving one’s medical practice.  If you have time, it’s on your side and you can achieve just about anything you set out to do.  If you don’t have it, issues pile up left and right and bad situations can get worse overnight.  A lack of time is a big issue when it comes to a medical practice, because without the attention required to understand and fix issues as they occur, it is only a matter of time before a medical practice will show signs of fatigue and distress.  When time is of the essence, and you don’t have it to spend, this is definitely a time to seek outside help.

3. Your market changed overnight.  We live in turbulent times and between decisions made in congress, fluctuations in the stock and housing markets, and the existence of new competitors an any corner, the macro- or micro-climate in which we practice can literally change overnight.  When this happens, it’s not always possible (in fact it rarely is) to drop everything to adjust.  Often times the changes that are occurring are complex as well, making both the timeliness and quality of decisions very important.  If the necessary attention can’t be placed on your changing economic landscape, a private practice consultant can likely help.

4. Growth is happening too slow or too quickly.  Growth is a good litmus of progress.  Not enough quick enough and a practice can strangle; too much too fast and a medical practice may not be able to scale operations and capital requirements fast enough.  Either way, growth is an element that must be managed effectively in order to take advantage of the right opportunities, and avoid the pitfalls that exist along the way.  If growth doesn’t appear to be happening commensurate with what you envisioned or expect in either direction, a practice consultant may be able to help identify the internal or external reasons for this and provide recommendations for better managing the growth of your medical practice.

5. You want a second opinion.  There’s a reason second opinions are commonplace in medicine - they reduce doubt and increase the level of confidence associated with important decisions.  The same applies to your medical practice - if you’ve got a large decision underway, or you’re just not sure if you’re understanding your practice exactly as you should, a second opinion can be a great way to reduce doubt and improve your confidence that you’re trending in the right direction.

The important takeaway here is that medical practice consulting is not the answer to everything “business” that happens in your medical practice.  Just as medical care should be used discriminately and judiciously, so should medical practice consultants.  We are here to help, but want to be used wisely so that we can be most effective.  Follow the simple guidelines above to determine if you need a practice consultant and hopefully you’ll find your time and money well spent.
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Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm with offices in Oregon and Colorado.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.

At Vantage Clinical Solutions, we recently published a number of free practice management tools intended for use by private practice owners and managers. 

The tools are simplified for quick and easy use and focus on 5 areas of practice management that we commonly address with our clients: the startup process, budgeting, productivity, breakeven analysis, and strategy. 

More detailed versions of the tools are available for purchase and Vantage offers a selection of consulting and management services that work hand-in-hand with the online toolbox in order to help private practices navigate our healthcare economy both efficiently and profitably.

So, check ‘em out and let us know what you think!

Introduction by Tannus Quatre PT, MBA

I’d like to take this opportunity to introduce Dr. Richard Schoor to The Healthcare Entrepreneur.  Dr. Schoor is a urologist from Smithtown, NY, and author of The Independent Urologist blog.  Dr. Schoor typifies what we are about at The Healthcare Entrepreneur - entrepreneurial spirit within the healthcare industry, and an active voice that believes in sharing with others.  Some of my favorite posts from The Independent Urologist include, “What happens when physicians leave?” (Feb 2008), “My high tech snow day” (Feb 2008), and “E-Rx: A good use for an i-Phone.”

In this post, Dr. Schoor shares with The Healthcare Entrepreneur some tips on how to avoid a lawsuit in private practice.  Thanks Dr. Schoor - and happy blogging!

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Some Tips on How to Avoid a Lawsuit - by Dr. Richard Schoor, The Independent Urologist

Lawsuits are a fact of practice, and tort reform will continue to be hotly debated in all 50 states.  I believe that all of us can agree that the root causes for lawsuits should be minimized though I don’t think we can agree exactly on what those “root” causes are.  In general, bad outcomes result in lawsuits, not good ones.  Since opening on my own in 2006, I have become somewhat risk obsessed and risk averse.  Here are some of the steps I have taken to prevent the initiation of a lawsuit and to enable the successful defense should one occur despite my efforts.

These are some of the mechanisms I’ve put into place to minimize risk.

• Quality Assurance: I have a written QA plan that I follow on a monthly basis.  QA activities include random chart audits for appropriate documentation, process evaluations, disaster plans, data-back-up and recovery plans, patient complain t processes and laboratory complaint processes, etc.
• Lab and Study Tracking: all ordered labs and studies are logged on my PM software and checked off when completed.  Non-compliant patients are contacted and the outcomes are documented in the medical record.
• Specimen Handling: I have written protocols for specimen handling that eliminate misidentification errors.
• Patient No-Shows: Patient no-show activity is noted in the computer system and letters are automatically generated. The letters are retained in the medical record and the letter is sent certified to the patient.  The certification receipt is retained in the medical record.
• EMR: I have an EMR and a 100% paperless office.  All documentation is done in type-set with essentially no handwriting.  All paper, such as consents and hand-written diagrams, are scanned into the record.
• Templates and Macros: I utilize templates and macros liberally.  I believe this assists in enabling me to hit key features in the history and physical exam routinely.  It also makes for good documentation.
• E-Prescribing: I e-prescribe and this has eliminated prescription errors and pharmacy call-backs.
• Automation: I use automated urine and semen analyzers and perform daily quality control per CLIA requirements.  All QC activity is documented.
• In-Office Lab Accreditation: My office lab is accredited through COLA.  Many of the processes required for lab accreditation are analogous to good practice management and have been adopted as such. 
• Infection Control: I follow the strictest infection control policies and use single-use-only equipment where ever possible.  Scopes are sterilized exactly per manufacturer specifications with no deviation from protocol. 
• Correspondence Management Processes: all correspondence with providers are done via fax and ALL fax confirmations are saved in the medical record.
• Informed Consent: informed consent is a process.  All informed consent discussions are documented and the actual consents (the paper forms) are taken by me, rather than staff.  Informed consent discussions take place on multiple occasions.
• Time-Outs: prior to vasectomies, I do a “time-out” and make the patient state what they are having and why.
• Document Management: all labs and studies results come in via fax and are saved in PDF format in the medical record.  Results are electronically signed and time-stamped by me.
• Call: after hours patients can reach me directly by calling the office phone.  The phone is forwarded to my cell-phone and a second line in my house for redundancy.  I answer all phones personally after hours.  The phone system logs all incoming and outgoing phone calls.  I take call 24/7 for my own patients.  I purposely place no barriers between my patients and me and request that they contact me by phone without hesitation.  When I am not in town, I have a call arrangement with 2 local urologists that I know well.
• Emergency Management: all emergency visit request are accommodated same-day, 7 days per week (yes, even Sundays). 
• Patient Selection: patients at high risk for adverse outcomes, such as ASA class 2 or above, are referred to tertiary care centers.  I no longer perform any laparoscopy, hand-assisted laparoscopy, percutaneous stone surgery or open renal or prostate surgery.  
• Patient Intake Forms: I have none.  I take all patient histories myself.  As an expert reviewer, I have seen on numerous instances, lawsuits that have been made more difficult to defend because of discrepancies between patient-completed forms and physician-completed histories. 
• Limited English Proficiency: Spanish is the only 2nd language that I see, and am proficient in it.   I also utilize translators when needed.

These are some of the mechanisms I have put into place to minimize risk.

It’s an interesting dilemma that we often see new practice owners face.  That is, they want to keep their expenses low and end up tackling every business-related task that there is, and at the same time want to see as many patients as possible to get cash flowing as rapidly as possible.  What usually happens is that the business-related tasks begin to eat away at time that the provider should be in front of patients.  Patient time = cash flow.  Less patient time = less cash flow.  One hour with patient = more money made than it costs to have someone else perform business-related tasks.

A key challenge to handling business growth is whether you are able, and willing, to give up control and delegate certain business tasks to others who are:

• More skilled at the task
• Able to complete the task at a lower hourly rate than you
• Easily trainable to do the jobs that you dislike or are no good at

Here is a quick down-and-dirty to figure out your own “hourly rate”.

Let’s imagine you want your business to gross $300,000 in 2008. And you plan to work a 40-hour week (good luck if you can get away with this!) for 48 weeks in the year.

Your hourly rate is $300,000 ÷ 48 = $6250, and $6250 ÷ 40 = $156.25. In order to make $300,000 in a year, you need to be bringing about $156 an hour in revenue. That means that when you are answering your own emails, you are costing your business roughly $156 an hour to do so.

In her recent post, Kennealy tells us the four tasks that MUST be delegated to someone else, either in-house or to an outsourced company: 1) Housekeeping, 2) Bookkeeping, 3) Administrative support, and 4) Managing technology.  These are tasks that you can find someone that will cost less than your time to do the same job and perhaps a better, more effecient job.

Kennealy goes on to discuss three things that the owning provider MUST hold on to: 1) Strategy development and business planning, 2) Marketing, and 3) Content creation or program development.  These things are critically linked to the owner’s vision, goals and selling efforts.  This doesn’t mean that outside help can not be employed to assist with these things (i.e. consultants, branding companies), but the provider definitely needs to sacrifice some patient time to focus on these elements…these are the elements that get more patients in the door.

It’s easy to be productive with a full schedule.  As long as your office is booked solid and patients are showing up for appointments, there’s never a trouble when it comes to staying busy.  Just buckle up and get busy.

It’s trickier though when the schedule lightens up a bit.  Many aspects of healthcare are cyclical, and while it’s easy to for a caseload to diminish a bit here and there, it’s not as easy to flex your schedule so that you and your staff remain busy (er, “productive”)…that is, if productivity is measured solely on the number of patients seen.

Though revenues wane when there are less patients walking through the door, remember that the growth of a practice takes work, and the mental energy that it applied to patients on a busy day can (and should) be applied toward your practice on a lighter day.  Having a plan for slow days is important, and will allow you to quickly make the adaptation when dictated by your schedule.

This post by Dr. Schoor at the Independent Urologist Blog makes important mention of this, as well as a number of tasks to perform during your slower days.

While busy is great, an occasional slow is ok too; as long as it is only every so often. Here’s what to do on a slow day so that you can stay productive and proactive.

More and more I’m seeing healthcare practices (medical, dental, physical therapy, optometry, etc.) getting really entrepreneurial about their business models.  Most of this is born out of necessity in order to find ways to stay profitable, but some of it comes from clinicians making the decision to run their practices in a way consistent with their passions, interests, and lifestyle.

There is a lot to be learned from a client of mine who is starting up a practice.  She is really doing things right.  When developing her business concept she knew early on that she wanted her practice to be different, and truly wanted to enjoy the way she spent her time each and every day.  She began with a mission and vision for her practice model, and has crafted everything else around it.  From brand position, to information systems, to software selection, to interior design, to financial modeling, she has built a practice that all ties back to her mission and vision.  This is the first step in creating a business that lasts.

There are some very practical things she is doing right as well.  She is putting a great team of business advisors and experts around her and has allowed us all to provide her with direction and guidance.  She realizes that this is a team effort, and the better the team, the better the end result.  Financially she is sound, and has secured the necessary operating capital to get her through several months of operations based on “worst-case” scenarios.  And regarding her patient clientele, she is pounding the pavement in order to build up her caseload months before the doors even open.  She will be successful for the long term, and it’s because she’s acting not only like a clinician, but also like an entrepreneur.

I read an article today that started me thinking about the client above, and it was about an entrepreneurship forum in Kansas in which business owners were learning about how to plan for success for the long haul.  Interestingly, one of the speakers at the entrepreneurship forum was a founder of a medical group.  This is exciting to me, as I believe that entrepreneurship within healthcare is the answer to many the problems that befall us in this industry.  Private practice owners need to become entrepreneurial in their approach to business practices in order to make significant shifts in payment models, service offerings, and cost reduction.  I’m really glad to see that entrepreneurship in healthcare is being used to educate others through this healthcare panelist, and I especially love to see it within the clients I work with day to day.

Three successful Wichita service-based entrepreneurs told a story of faith Thursday at Wichita State University’s Center for Entrepreneurship.

Have a business idea, believe in it, find people who complement your talents and establish a brand, said business owners in medicine, advertising and investment.

Joseph Galichia, founder of Galichia Medical Group; Sonia Greteman, chief executive of Greteman Group; and Corporate Lodging Consultants founder Barry Downing were the speakers at WSU’s final spring entrepreneurship forum.

The advice-oriented session focused on what makes a service-based business go, something the three panelists largely agreed on.