Boston’s mayor announced an innovative service to help residents find primary care physicians in one of America’s oldest cities: a telephone referral service staffed by city workers.  A concierge health desk of sorts, the calls will come in through the mayor’s health line and attendants will provide callers with a list of primary care physicians who are accepting new patients.

The primary care referral service is a result of outrage by Mayor Thomas Menino in response to the primary care crisis in Boston, whereby many sick patients are unable to find physicians.  It appears that the retail healthcare movement in Boston spurred recent concern by the mayor over the “allowing of retailers to make money off of sick people.”  (Read more about retail clinics here and here)

An innovative idea, the primary care referral service is not the only card up the mayor’s sleeve.  The mayor is also considering the feasibility of requiring medical institutions to subsidize housing for primary care physicians in order to lure them into the city. 

The primary care crunch has been in the works for a while now and there isn’t a clear end in sight - in fact it’s looking like it’s going to get a lot worse before it gets better.  Hats off to some healthcare innovation out of one of America’s most historic cities.  Click here for a link to the article on Boston.com.

“One of the most important things we need to do as a city this rich in resources is make sure that all of the residents, particularly those who are most vulnerable, have really good access to primary services.”

If the “it” is e-medicine, and the “they” refers to patients, the “build it and they will come” strategy doesn’t necessarily apply - not without a bit of work, that is.

Readers of this blog will know that we support efforts to challenge normative business models in the practice of healthcare, including those that incorporate the use of the Internet to communicate and interact with patients (here are some posts about Jay Parkinson and the use of e-communication in medicine).  We don’t know exactly what the practice of healthcare is going to look like in 20 years, but the Internet will definitely play an increasingly important role in the future - and we will be there to greet it.

Many of the healthcare providers that are using the Internet to provide care to patients today will someday be acknowledged as pioneers that helped to shape the evolution of the industry, regardless of whether or not their efforts were immediately successful in today’s healthcare economy.  One of these pioneers, Dr. Ben Brewer, has developed a savvy and secure electronic interface for patients of his Illinois medical practice - one that helps define “cutting edge” e-medicine in today’s largely status quo healthcare economy. 

The problem is - patients aren’t interested.  It’s a common problem in business, where great products in the absence of interested markets do vastly worse than decent products in ripe markets.  Dr. Brewer likely has a great service, but if patients aren’t interested in (more likely, not ready for) it, it’s not going to sell, and the doors will have to close if changes aren’t made.

The key to selling “cutting edge” services, especially in healthcare, is to make sure a market exists that will demand the service, and if no market exists, create the market yourself through a combination of customer education and market hype.  This takes a lot of work to do, and though it may be too late to pay off for Dr. Brewer, there will likely be no shortage of opportunity to introduce cutting edge services into the healthcare market in the coming years.

The Wall Street Jounal’s Health Blog recently commented on the fate of Dr. Brewer’s practice:

Brewer counts himself among the minority of doctors willing to take the online plunge. “Most doctors I know seem unwilling or unable to make even email part of the way they practice medicine,” he writes. Legal worries and data overload are the deterrents.

At Brewer’s office the technical end works as promised, but patients don’t really seem interested. They don’t want to pay the (usually unreimbursed) $30 for the online visit with Brewer, and they’d rather just send a regular email, even though it’s vulnerable to snooping.

I came across this great post by Peter Levinson on the Medical Practice Business Blog in regard to the future of physician practices.  The post is from 2007, but the principles remain the same and it is a good, quick read that summarizes the major issues and objectives faced by medical practices and physician clinics.

If you read this blog regularly, this won’t be the first time you’ve read a post about the growing trend in medicine that favors reimbursement for procedures over time spent with patients, regardless of how important or necessary that time is to the overall plan of care.  As the leader of many trends in medicine, Medicare is the driving force behind this direction our reimbursement system is taking, and there isn’t an immediate end in sight.  This article from the Wall Street Journal explains how this trend is reducing the availability of needed specialty care in the United States by providing a disincentive for medical students to pursue specialty areas that rely on cognition rather than procedural expertise.

A discipline built on spending time with patients to gather clues for a diagnosis, neuro-ophthalmology could become another casualty of a medical payment system that favors high-tech procedures over low-tech exams. The median income of a neuro-ophthalmologist at a teaching hospital is $200,000, according to the North American Neuro-Ophthalmology Society. That’s a third less than most general ophthalmologists, who undergo less training but can see more patients, and do more pricey procedures, in a given day.

Many in health-policy circles have focused on how the current health-care payment system is helping create shortages among primary-care doctors, internists and others on the front lines of medicine. But often lost is how the system is endangering some of the country’s most highly trained specialties as well.

Endocrinologists, rheumatologists and pulmonologists — specialties that also don’t involve performing many procedures — face acute shortages. Many of the severest deficits affect children. Though nearly 300,000 children in the U.S. are diagnosed annually with juvenile arthritis, lupus or other complex rheumatic diseases, there are fewer than 200 pediatric rheumatologists to take care of them, according to the U.S. government’s Health Resources and Services Administration.

Solo provider medical practices in Canada are having a tougher time making money than their multi-provider facility counterparts, according to NRM’s Survey of Medical Practice 2007.  The study indicated that physicians in group practices achieved net profits 400% greater than physicians practicing in solo practice facilities. 

An inability to benefit from economies of scale as well as government incentives that benefit multi-specialty practices are cited as the primary reasons for the discrepancy in profits.  This article from the National Review of Medicine, a Canadian medical practice journal, explains.

Part of the reason for the decline of solo practice is the simple reality of economies of scale: buying in bulk saves money. Group practitioners, because they can share some costs, typically have lower overhead for things like rent, office maintenance, staffing, office and medical supplies and technology support.

But the trend towards group practice is largely attributable to the slew of hard-to-resist incentives that governments are using more and more to encourage physicians to practise in collaborative, group settings. It’s simply becoming less and less financially rewarding to run a solo practice instead of joining a group.

A medical practice business plan is fundamental to the financial success of any medical practice, regardless of whether the practice is a small physician clinic or a large multi-specialty facility.  A good business plan is both a guide and a tool that should be used to plan, communicate, improve decision making, and attract talent; all of which are critical to the success of medical practices and healthcare clinics.  This guide will serve as a brief resource used to create a medical practice business plan, speaking to a number of key components that should be included in the business planning process: mission and vision, objectives, company, market analysis, marketing strategy, exit plan, and financial projections.

Mission and Vision
Defining a mission and vision is the most fundamental step in creating a longstanding medical practice.  Simply stated, the mission of a medical practice serves as the most elemental definition of what the practice intends to do, and why it exists.  Good mission statements are easy to understand, to the point, and meaningful.  A mission should be practical as well, used to assist in the decision making process when a medical practice considers expansion, joint ventures, or other shifts in practice operations.

The vision for a medical practice outlines what the future should look like.  The question, “What do I want this medical practice to look like in 5 or 10 years?” helps to bring clarity when identifying a medical practice’s vision.  A vision can be complex and intricate, or can be more vague and esoteric depending on how it will be used.  It is important to note that if the vision is not clear enough to help provide direction to the medical practice however, it may not provide the necessary guidance that should be found in this important section of the medical practice business plan.

Objectives
In contrast to the mission and vision for a medical practice, objectives must be clearly defined, measurable, time-based, and integral to the success of the medical practice.  Objectives are often outlined in 1-year, 3-year, and 5-year increments, but they can be defined for any time frame pertinent to the exact business plan at hand.  Meaningful medical practice objectives are usually relevant to the financial health, efficient operations, and quality of care of the medical practice.

Company
The company section of a medical practice business plan discusses the detail behind the history of the medical practice, the ownership structure, staff members, clinical specialties, and overall operations that constitute the day-to-day existence of the medical practice.  A good description in this section often helps to clearly communicate the general operations of the practice, as well as the community benefits that are achieved through the care that takes place at the medical practice.

Market Analysis
One of the most important elements of the medical practice business plan, a comprehensive market analysis provides justification for the existence of the practice within the community.  A good medical practice market analysis includes an understanding of the market demographics, competition, sources of payment, referral sources, and clinical need; all of which combine to support the services provided by the medical practice.  Red flags in any of these areas may be cause for considering adjustments to services provided, populations served, or location of the medical practice.

Market Strategy
If the market analysis supports the potential for success of a medical practice, there is still the need to define a specific strategy that will open the pipeline of patients to the front door of the practice.  In the medical profession, this pipeline revolves heavily around the existence of a referral network, however the most successful medical practices also execute a clear and consistent general marketing and branding strategy in order to “widen” the pipeline through name recognition and brand awareness.

Exit Plan
Though sometimes difficult to think about during the planning phase for startup or new growth, an exit plan should always be in sight, and should align with the overall business objectives identified earlier in the business plan.  Lack of a defined exit plan leaves much room for ambiguity and unclear decision making in regard to potential partners, mergers/acquisitions, joint ventures, or other important possible exits that are presented over the years.  A good exit plan will include a number of contingencies for possible scenarios that may unfold, both good and bad.  Remember that not all that happens in the operation of a medical practice is expected, and knowing when and how to exit in response to a number of scenarios will improve the likelihood that a practice owner will be able to extract value from their hard earned investment upon exit.

Financial Projections
After all of the previous sections of the medical practice business plan are defined and documented, the business plan elements must be integrated into a comprehensive and articulating picture of how the numbers will flow through the medical practice.  The culmination of a well crafted business plan, financial projections provide the actual roadmap to be used to guide the practice on a monthly, quarterly, and annual basis.  At a minimum, medical practice financial projections should include one to five year profit and loss and cash flow projections.  Good projections will also include an analysis of key ratios and metrics, benchmarked against industry standards.

Conclusion
There are many elements that should be included in the creation of an effective business plan, and it is important that the medical practice owner think through and document their plan according to those elements that are most crucial to the success of their practice.  The elements described in this article have served as the framework for the creation of many business plans specific to the healthcare industry, and provide a solid foundation for considering the important aspects of building a successful medical practice.  Know that it is the time and energy that is applied toward the creation of a comprehensive business plan that is of the most value, and the better the analytics and forethought that goes into a business plan, the better the end result.

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Vantage Clinical Solutions is a private practice consulting, management, and financing firm that specializes in business planning, marketing strategy, and financial analysis for small to medium-sized healthcare practices nationwide.

With ever increasing economic and regulatory pressure on health care practices from all sides, clinician-owners are realizing the need to educate themselves on the business of their practices.  More and more are doing so by returning to school - business school.

For reasons that are both varied and complicated, having an MBA degree is proving vital for many in the medical profession.

“Health care is not going in a healthy direction,” [Dr. Timothy] Willox said. “It’s fine being a surgeon and helping people on a day-to-day basis. But in order to change a process, you have to look at the bigger picture.”

And the big picture is troubling for many doctors: rising malpractice costs, fights with insurance companies, Medicare rates that don’t pay the bills, increasing regulations, competition from bigger groups. Hospitals are merging and single-doctor offices are becoming rarer. All around, the practice of medicine seems to change yearly.

Willox wanted to have a bigger say in how the changes affected him.

Alan Wechsler, in this recent article, mentions that in addition to the increasing number of physicians returning to business school we are also seeing an increase in number of schools that offer dual MD and MBA degrees.  Many will agree that medical schools have not done a great job preparing physicians for the business of their practice, and as the pressures of business increase it seems that schools are responding in turn.

It appears that physicians entering the work force these days are looking for more than good pay and desirable working conditions.  They want a good work-life balance, too.  At least they do in Canada, anyway.

A 2007 National Physician Survey reported that 60 percent of medical students and 52 percent of residents felt that work-life balance will be the most important factor for them when choosing their professional landing spot following school.

This is viewed as a good thing by Shaheed Merani, president of the Canadian Federation of Medical Students, as it holds the potential to make for the delivery of improved care by more well-balanced physicians.  This article from CTV explains how changing the physician culture and the use of technology may play an important role in achieving this desired balance.

“I think the medical students, the medical residents and doctors alike will tell you that a good life-work balance is important in not only maintaining a healthy family, maintaining a healthy physical ability and maintaining a healthy mind, but it’s also important in the work you do and the quality of care you deliver to patients,” Shaheed Merani, president of the Canadian Federation of Medical Students, told CTV’s Canada AM on Monday.

“So I think that the focus that medical students and residents are taking towards their own work-life balance is very important and will result in better care offered to patients across Canada.”

For many of us, email has become a primary means of building relationships, conducting business, and keeping in touch.  It is very effective in doing so, and while it isn’t a full replacement for phone and face-to-face interaction, it does provide a very efficient means by which to communicate.

In business, email has another important benefit; it provides a document trail that can be used to record activity and conversation, creating a transcript of all that is said (and not said) via electronic format.  Along with other benefits, the efficiency of use and ability to document in real time provides some obvious appeal to those who communicate with clients on a regular basis.

Enter physicians, dentists, physical therapists, and other healthcare providers that interact with clients (i.e., patients) on a daily basis.  While drawbacks exist in the use of email as a means of communicating with patients, we are finding that patients like it and doctors are on the verge of getting reimbursed for it; both important drivers for the regular use of email in the near term.  There will be many pitfalls to avoid for the physician and patient alike, but we will soon be seeing more and more use of email between provider and patients in the years to come.

This article in Modern Medicine explains in detail the key benefits associated with the use of email between physicians and patients, and speaks to the trends that are currently underway in this important area of medical practice.

If you haven’t yet begun using e-mail to communicate with patients, there are plenty of reasons to start. First is the increasingly loud patient clamor for e-mail, as indicated in one survey after another. The latest is a Harris Interactive/Wall Street Journal poll in which three out of four respondents said they should be able to schedule medical appointments via e-mail or the Internet, and e-mail their doctors as part of their overall medical care—at no extra charge.

Ironically, that proviso is precisely what has discouraged many time-pressed doctors from giving their patients e-mail access. But as patient demand rises, the “no extra charge” barrier is slowly but surely coming down.

Late last year, Aetna and Cigna HealthCare announced that they would dramatically expand programs that reimburse physicians for “virtual visits.” Until recently, only a handful of health plans paid doctors for this service, and the news has sparked speculation that other insurers will soon follow. Not surprisingly, the number of physicians who communicate with patients electronically is also on the rise—going from 19 percent in 2003 to 31 percent in 2007, according to a Manhattan Research survey of more than 1,300 doctors. Among physicians who did not yet use a secure online messaging service, one in four said they intended to start in the next 12 months.

Albert Fuchs is a primary care physician and business owner.  After realizing that he couldn’t keep up with the pace of his busy practice, his answer wasn’t to simply hire additional staff, but rather to drop the least profitable of his insurance contracts…then another…and another…and another. 

Dr. Fuchs kept dropping insurance contracts until he had none left, leaving him with a practice free from the rules imposed upon him by insurance companies, and a practice that provides great care and excellent service. 

This won’t work for all medical practices, but this innovative approach to the issue of excessive volume has contributed to a practice that is likely more profitable than if approached by hiring to keep up with the pace of unprofitable contracts.  This solution has also provided him with the resources to provide regular free clinics to serve those that can’t afford his services.

Read this article by Dr. Fuchs in today’s LA Times to hear how and why he did it.

Every politician and his Aunt Martha has a scheme to overhaul American healthcare. But not one of them will solve this problem: Most doctors are awful at serving their patients. The typical hair salon pays more attention to customer service than the typical doctor.

Why? Even the best medical schools give short shrift to practice management. So a doctor can emerge as a skilled diagnostician without a clue how to run a business that serves consumers. In fact, many physicians find it distasteful to think of medicine as a business at all. They feel that it’s their mission to serve as many patients as possible rather than to provide the best care possible. Most significant, today’s doctors are preoccupied with the bureaucracy of insurance companies, so much so that they’ve lost the simple logic of the doughnut shop model.