Berning & Affiliates

In Search Of Young Professionals That Get It

Contemporary younger professionals that are examining practice opportunities often compare an existing practice to one that exists only in their head. Here's an example. Existing solo specialty practice produces $2.2 with a single doctor. A younger professional specialist and his wife, a GP, look at the practice. It is located in an expensive area of the country to purchase a house and live. However, a reasonable projection using existing production would have the young couple taking on the practice and taking home $500-600K to start. This is not shabby. This is after paying on a 5 year purchase note. But the couple turned away from the practice opportunity to start their own practice in a more suburban location. They will now negotiate with lessors, equipment vendors, and a host of others to get their new practice out of the ground. Compare the simple act of signing a purchase contract with a take home income starting the first month with a start up with no income! Hopefully, other younger professionals will see the ease of stepping in as a benefit and not a negative. If they do, they will "get it" - it is more cost effective in my view, assuming valuation and cash flow supports the transaction, to take over a producing practice than to do a start up.

Visiting Doctor's Offices Brings Insights

Just finished another tour of 5 offices on this most recent California trip. Practice situations ran the gamut, from the immediate purchase and sale, the new equity partnership formation, development of a life and practice plan for a last-"5-years-in- practice" doctor, to a major 5 partner practice day long retreat. Fascinating to help set in motion so many aspects of doctor CEO's practice and personal lives! It is the insights however that teach so much about the direction of the profession, current practice and achieving the constant improvement of both doctors and practices. One of the insights is that moving across the profession is a desire to have certainty in the direction of the practice and the smooth integration of new technology. Gone are the days of making a decision without careful plotting of the consequences and consulting with appropriate resource professionals. The result is that doctors overall practice environments are more in line with their state of growth than ever before.

Focusing on Opportunities

Over this coming weekend a larger group practice I have worked with for many years will have its annual retreat for the equity partners. Although many topics will be discussed to reach consensus and reaffirm or modify the practice vision and mission one important theme will underlie the meeting. The theme is the search and evaluation for opportunities that will help advance the practice. This particular practice has focused not only the partners but top level administrative staff on seeking out and then making a point to discuss opportunities that strengthen the practice. Their view, and one I support, is that if there is a reasonable potential for a new approach to a persistent and challenging area to be successful, try it out! Don't be afraid of if not working. Try again! In doing so the practice has a vital feel. Everyone seems engaged. Focusing on opportunities to advance the practice, it is a winning approach in my view.

Sustaining Longer Term Growth

I find that many doctor CEO who discuss their practice direction with me are focused on the short term. One recent example is a doctor rolling out a two location practice, refurbishing one location and building one. At the same time he is seeking a partner and a specialist associate. Yet because he has had one bad quarter he is cutting back on certain practice new location expenses and allowing a staff attrition not to be filled for the foreseeable future. All this in spite of his acknowledged need for the expense items to work more efficiently and that the staff members position is "vital". When I am designing strategy to move a practice to a particular size and financial result there is no question that I take a longer term view. The key, from a planning perspective, is to have sustained longer term growth that takes account of short term set backs but continues the focus on the vision and mission of the practice. Here's the suggestion: don't short change your long term position by making short term adjustments that compromise the long term.

Harness Your Magic

Do you think your patients understand how you do what you do? They no doubt see the result. But very few have even a basic conversational ability to explain all the considerations that go into your practice, staff and doctor delivery of care. To a point that's OK. Our world is increasingly complex and most of have little understanding what the next person really does. But when it comes to health care many people want the reassurance that the doctor and staff understand them, their needs and will give at least a basic explanation of what is being provided and why. In one practice they are providing the patient explanation geared to the level of interest shown by the patient (they find the mechanical engineer generally gets a more detailed response than the sales clerk in the department store) but then adds as a wind up "and the rest is our magic in making it all meet your health care needs". This phrase has itself been magic! Patients reportedly now say, "tell me a bit about the magic you'll be providing today". The doctor recently went to a local community function and at the lunch counter one person, not a patient, came up and said, "I understand you do magic, and I need some!" Maybe that's what it takes, a short upbeat and friendly way for all CEO's and their staff to sum up the often very difficult and involved procedures that are provided to patients every day.