Cesar Aldea explains the mindset required for practice growth.
Running a business without measuring its performance is like piloting an aircraft without instruments, you will likely get lost along the way. This time we will talk about how successful medical corporates utilise and influence certain metrics to achieve growth. Over the years we have met with several practice owners with the purpose of helping them find additional doctors, assist them through the process of selling their businesses or simply to help them grow their practice.
One big difference between the small and the larger operator is the way they see their clients. Most small operators are still seeing their clients as “patients” who are supposed to tolerate the service. On the other hand, corporates see their clients as customers who deserve the best possible service. This is one of the biggest fundamental differences that drives the disparity in the performance of both.
For quite some time corporates started to implement strategies widely used in other customer-focused industries such as retail. For instance, in the clothing industry when a customer walks into a shop, the job of a well-trained sales staff is not just to make sure that visit results in a sale, but to always aim to upgrade the sale from one item to a multi-item sale. Not only because it is financially favourable to the business, but because those items were designed to complement each other.
By using the example above, we will concentrate on understanding what metrics are important to observe and influence in order to explore further growth without any financial investment.
Most practice owners tend to focus their attention on the number of patients as their main metric, something we call Total Number of Patients (TNP). Therefore, the strategies implemented aim to drive more clients to the clinic. This strategy often results in a significant financial investment including; marketing (flyers, letter drops, websites, etc.), hiring more doctors (recruitment fees), building more rooms for those new doctors (construction fees), an increase in reception staff to handle the increased flow of clients, etc. Another important metric, is customer loyalty. This is usually measured by the repeat business from the one client. In today’s world, the concept of a loyalty card is well known and is there to influence customer’s behaviour by keeping them coming back to your business. The intention behind rewarding loyalty is based on capturing the long- term value associated to the life of the individual as a client.
In general practice whilst time is your most precious commodity and the only way to run a profitable business is by being efficient; the quality of the service outside and inside the doctor’s room will dictate if that client will or will not return to your clinic. When the job is to help our clients to grow their practice, the first thing we do is to understand what are the available strategies that are easy to implement and have a high return on investment (ROI). The main strategy and usually untapped, is maximising the existing client base and concentrating on influencing what we call the Fee Per Client (FPC).
Let us show you how this process normally works:
Prior to implementing any strategies, we need to decide what metrics we are going to measure and how often you will measure them. It is important to keep an eye on all main metrics since sometimes focusing on one metric alone could lead to positively influencing one whilst you could also be negatively influencing others and so the overall outcome is detrimental.
For example, before implementing the strategy you used to service 40 clients per day with an average FPC of $50, therefore your daily billings were $2,000 per day. Now, after focusing solely on improving the FPC you have achieved a great result; $85. However, your treatment time doubled and now you can only service 20 clients per day, therefore your billings are now $1,700 per day.
Think about this concept as the core algorithm to your business: Revenue = FPC x TNP
Let’s explain this concept through a business case:
You are the principal of a 5 FT GP Bulk Billing practice that operates
6 days per week 8-6pm. Your Practice Stats:
- FPC: $51 TNP (per week): 1,200 clients Weekly billings: $61,500 Individual GP Stats: GP1.
- FPC: $65 TNP (per week): 250 clients Billings per week: $16,250 GP2.
- FPC: $55 TNP (per week): 250 clients Billings per week: $13,750 GP3.
- FPC: $50 TNP (per week): 250 clients Billings per week: $12,500 GP4.
- FPC: $45 TNP (per week): 200 clients Billings per week: $9,000 GP5.
- FPC: $40 TNP (per week): 250 clients Billings per week: $10,000
As we can see, GP1 and GP2 are doing are great job (from a numbers perspective). Their FPC is $14 and $4 above the average.
On the other hand, GP4 and GP5, their FPC is $6 and $11 below average representing 12% and 22% under the average FPC. What to do next? We drill deeper spending time in understanding what the doctors above and below average are doing different. In terms of FPC the reason of the difference is usually associated to way they use the MBS.
Two questions we need to answer; How many items on average these doctors are billing?
What are those items? Returning to the retail example; if we extrapolate this case study into analysing the performance of a retail business under the same lens, we could find that the answer to those two questions would take us to a couple of conclusions: The best performers are better at making every sale a multi-item sale. The best performers are better at selling the most expensive items.
By knowing this, the strategy we want to implement will focus on influencing and training the underperformers in getting better at doing multi-item sales and getting better at selling the most expensive items.
Coming to these conclusions is not the hardest part, the most challenging part is influencing your doctors to wanting to change and improve. By doing the above exercise, you have now identified the metrics you believe need to be influenced and the people that need to improve. Next is to set up a very specific plan and execute it accordingly. Remember, to achieve sustainable change you need to influence people so they want to change. The person leading the motion must be someone who is an influencer within the practice. Amongst clinicians, preferably it should be a well-respected colleague.
The delivery of the message is fundamental and so we recommend the following way: In your next doctor’s meeting, ask the practitioner you have chosen to be the influencer to talk about their billings, preferably focusing on one item per meeting.
As a group, review the MBS and get familiar with the definition of the item. Ask your high performing doctor to talk about the circumstances in which they use it. Also discuss in what clinical circumstances they don’t use it. Offer the opportunity for further questions Having offered access to the information, the next step is to meet with the underperforming doctors individually and offer assistance and support to help them improve their performance.
Finally, under the percentage model where you pay your contractors a percentage of their billings, you have less leverage as if they were your employees. Therefore, you fully rely on the willingness of the doctor to come on board and be ready to change and improve. As a conclusion, your job must be focused on engagement.
To improve performance, firstly you need to decide what metrics you want to influence. Establish the frequency you will measure these metrics. Consider if other metrics will be influenced also and keep an eye on them too. Establish your starting point. Analyse your team as a whole and individually.
Define your implementation plan. Find the influencer within your practice and use their experience to influence the rest of the team Work with the underperforming part of the team by tailoring a plan individually Measure and provide feedback.