Berning & Affiliates

A Focus On Economics Without A Strategy Is Likely To Fail

I’ve been preparing this week for my presentation at the Greater Philadelphia Society Of Orthodontists Annual meeting. The meeting has the theme "The Economics of Orthodontics in Today’s Financial Climate". In my view this is an important and especially pertinent area at this time. As if to emphasize the timely nature of the meeting, in the course of the last few days I have had consultations with several doctors worried about their practice starts and drop in practice collected gross. Most of the inquiries have focused on what quick fix there may be available to stem the tide. The answer, as I’ll be sharing at the meeting in Philadelphia, is that quick fixes are just that, a fix that is likely to be temporary. There are some "fixes" we suggest, of course, but it is far better to use any available time to revisit the practice vision (which may require changing given our economy) and even more importantly the underlying strategy the practice is using to gain practice growth or at least hold even. My presentation "What’s Your Strategy, Doctor?" will emphasize that without a strategy to guide using practice resources carefully and to provide benchmarks for performance all that is left is flailing around grasping at straws. I intend to provide group of resource materials for the attendees as a helpful start in ensuring they develop a clear strategy.

Quick Action Framework

One of the difficulties I have noticed with practice leaders as their practices evolve and grow is that they keep applying the same management approach. The reasoning of many Doctor CEO’s is if it worked when the practice was small it will work now. But a smaller practice is not just a small and less complex practice than a large practice. Instead a larger practice can be many times greater in complexity given the range of issues that both contribute to growth but also to maintaining grow. The issues of complexity, require in my view setting at least two levels of decision making or the leader risks delaying action and hurting the forward momentum of the practice. The first layer is to have repeating decisions categorized: for example, financial decisions and personnel decisions. With repeating decisions delegate these decisions, unless there is something quite unusual. For example, all prior supply statements were in the range of $15,000 and a new statement comes in, absent any other reason, for $18,000 (a significant 20% increase). Staff must alert the practice owner to this aberration. The second layer is strategy related, for example, what will be done to advance the practice given the current economic circumstance in the local patient drawing area. My experience has been that having decision making layers allows for quick action and maintaining momentum for a larger growth oriented practice.

Addressing CEO Transition Opportunity In The Current Economy

Given a difficult economy some doctor CEO’s are turning away from plans made over many years to add the next doctor. Others are embracing a good prospect even with the economic turbulence and proceeding to offer a transition opportunity. Specifically, in several instances recently doctors who had planned to add an associate leading to a partner stopped their plans and withdrew their offers. Their instinct told them that with the practices down in production 12-30% it was not the time to continue to add the next doctor. Others in a similar situation are not stopping. Why the difference? In my view it is the doctor CEO’s understanding or not of the context of the practice and the underlying demographics that acts to have one stop and another proceed with a practice transition in this economy. For those practices that have the facility, the staff, and the planning indicating that the practice will benefit, perhaps not immediately but over the intermediate to longer term, they are proceeding to add a good candidate now. For those that have expenditures to make to expand the facility, add the cost of additional staff and in addition marginal demographics indicating the local economy may not recover for a significant period of time, they are the ones not moving forward. Prudent leadership in this economy means basing decisions on facts, including the context of the practice and the underlying demographics.

Transitional Stages for Doctor CEO

A dramatic meeting this past week served to emphasize a growing perception I have had for the last several years. Namely, with practices growing to accommodate additional staff, a new associate or new partner, and possible new locations, management direction from the CEO can lag or worse. Where once the doctor gave timely and clear direction, as growth sets in actual or perceived fumbling of execution degrades the leader doctor’s ability to execute. In this case the practice had been following the timeline we developed together and acted aggressively to expand. But as the growth hit with new staff, a new associate and a second location the Doctor CEO retreated (that is the best word I can apply) from being a forthright decision making leader. As a result the practice suffered at the very time it should have been hitting high standards. To avoid this occurring, in my view, Doctor CEO’s need to anticipate that their practice growth stages also means that they must make fast and successful transitions to the next leadership capability level or execution and growth will suffer. Reading contemporary leadership texts, such as those on our web site under Recommended Reading List and our performance based coaching sessions are two ways to address this area.

Communication Resolutions Start The New Year

Most of the doctor CEO administration, personnel and practice transition difficulties that I see troubling practices stem from clarity of communication. Usually, the CEO thinks that she or he has given guidance through their actions or verbal communications when in fact they often leave ambiguity. Many doctor CEO’s know that they must first listen to gain an understanding of the matter a staff or colleague has inquired about. But the problem generally starts right there. With the first statement or question the doctor provides an answer. Often in a hurry the response is out and given and no further thought is given to it as the CEO rushes on. If the CEO took the time to probe, to ask follow up questions of their own and to consider the implications of what their response will be, significant changes would be seen. The first change is that staff and colleagues would anticipate the thorough discussion and prepare for it. The second is that the CEO would more carefully direct the actions and results of his or her team members. I heard a good phrase recently, it was "we are all starved for time". It implies that there is no time for all the things we are trying to do. And yet, for the CEO the precious time they do have for guidance can be best spent in my view, taking a careful, thoughtful approach that ends up saving time in the long run by resolving the matters the first time

Avoid Over Confidence

In a recent email a doctor of a larger group practice shared with me that no matter what happens in the economy his practice will always be fine. Looking at his local area demographics and being aware of his new and current patient statistics I could see why he made the statement. I usually encourage Doctor CEOs to be confident and act accordingly and this doctor knew my position. And yet, nothing in our recent economic history is quite like what we are experiencing in this current time. We have all levels of the economic strata effected and consumers tightening their purse strings seemingly across the board, health care expenditures included. So a word of caution for all Doctor CEO’s that may be acting or talking like they or their practice will go untouched. At this time, It is far better to be cautious, to budget carefully, to treat financial arrangements with patients and suppliers with attention to detail than at any time in the recent past. Coming across as over confident, indicating treatment plans or starts without empathy for your patients situation may be exactly the wrong behavior.

Sad Downfall of Dentist

Most of my readers anticipate that I comment on doctor CEO leadership, practice transition approaches, valuation and related topics. Today, I write to share with you the downfall of a dentist. This excerpt is so sad for me because I have worked with association presidents, both ADA and AAO among them, and many board members, chairs and many wonderful members in the great volunteer ranks of dentistry. I know the potential for dentists and their practices, the wonderful life they can lead in their community and with their family. This dentist turned his back on all that and for what? Now it is prison. The article in the Chicago Tribune, Nov 21st is titled Dentist-landlord for pimps gets prison, subtitle, Prostitution ring was run from his apartments in Marina Towers by David Heinzmann. Here is an excerpt, for the complete article see the Chicago Tribune.

Chicago dentist Gary Kimmel told a federal judge Thursday that he didn't know at first that he was doing business with pimps who trafficked in women and underage girls.

And by the time he realized that he was laundering money for criminals, he was up to his neck in a financial mess he couldn't get out of it.

But U.S. District Judge Blanche Manning sentenced Kimmel to 3 years in federal prison, saying plenty of evidence showed he knew for a long time what was going on.

In addition to renting apartments to pimps, Kimmel also bought them flashy luxury cars, using prostitution money to make the payments. And in one instance, he did dental work on a prostitute after her pimp knocked out her teeth. Kimmel's payment for the work was sex from another prostitute for an elderly friend, prosecutors alleged.
Defense lawyer Joseph Lopez described Kimmel as a naive "teddy bear" of a man.

But Assistant U.S. Atty. Julie Ruder said that over several years of doing business with the pimps, Kimmel regularly saw evidence of violence against the prostitutes. And many of the prostitutes with whom he had contact were clearly minors, she said.

Kimmel apologized, saying: "I'm terribly sorry for what I've done. I've ruined my life, and I've ruined my children's lives."

Understanding Doctor CEO Consistent Performance.

My experience has been that the environment of most healthcare practices works against top level performance by the Doctor CEO. The reason, in my view, is that the doctors attention is fully engaged for most of the day in providing patient care (this may not be the case where the doctor CEO is an administrator, which is not the case with the practices I generally work with. Of course, there can be breaks for lunch and calls, but for the most part the day speeds by and is gone. Unlike most other CEO’s who spend their day focused on leading and managing the enterprise the doctor is in this respect clearly at a disadvantage. Yet, my experience has also been that when the Doctor CEO sets out a written vision, creates a linked in mission to the vision and sets performance objectives and does not waiver, staff and other doctors in the practice will act to move the practice forward. The key seems to be to have the structure set, the reinforcement in place and the commitment to consistent leadership.

Leverage Your Strengths

Very interesting recent conversation with a doctor CEO who has had the good fortune to discern the areas that he is very good at and then leverage them. How? He related that through some trial and error and discussions with family and staff he had arrived at a list of his core strengths. For him this included his very warm and friendly personality and when talking with anyone an authenticity that with great frequency translated into a trusting relationship. This particularly helped to build his new patient flow. But his practice skills in the areas of financial management, personnel and regulatory compliance were poor. He for some time has focused on being in the community actively, on charitable boards, on local government panels etc. In his office his accountant and key staff coordinate the financial policies and "run the numbers". He has an outside personnel firm help find staff and administer periodic personnel reviews. He is so pleased and confident of the powerful approach being used that I thought it would be beneficial to share this success story with you! By the way, his "numbers" are impressive.

Overconfident Doctor CEOs

Observing and probing the actions of doctor CEO’s can be instructive as it relates to nailing down abilities that help predict success. One of the most interesting came up again this past week in a consultation. A doctor for the past 4-5 years had been focused on practice building. As most of you know, developing a practice to a pre-designated patient level can involve sequentially tackling facility, equipment, staffing and marketing items with, in many cases, considerable overlap. This doctor was very effective and so her confidence grew with each milestone accomplished. Now, staff and partner doctors report that she is crossing from confident to overbearing. It seems to be a case of only she knows what is best, after all, look what has been accomplished in the past few years. A good discussion raised the need for understanding how to develop a buy-in from the now larger group of doctors and staff, tactics for arriving at joint outcomes drawn from many viewpoints and how to reconcile underlying interests. With a new goal, running what has been built, and having the practice team positive and engaged in the practice the Doctor CEO will continue to be confident but not over confident to the point of overbearing and divisive in the practice