Make Your Small Practice Thrive.

Physicians moving from big practices to small must know the business side of medicine

IN THIS ARTICLE...

Trying to gain a measure of control over their working lives, some physicians are abandoning large group practices for smaller groups. Large groups enjoy whole teams of people performing vital business tasks. Small practices rely on one or two key physicians and managers to tackle everything from customer service to marketing, medical records to human resources. Learn valuable tips for thriving in a small environment and using that extra control to achieve job satisfaction.

FLAWED MANAGED CARE contracts, low productivity from salaried physicians and poor patient service are driving some physician executives away from large groups. They're returning to what they view as a safer, more manageable working environment: the small group practice.

But going back to a small group doesn't mean the big headaches of management disappear.

In most large U.S. cities, managed care has a substantial influence on the practice of medicine. This influence rocks medical offices, large and small. Adverse effects include reduced reimbursement, the need to see more patients in less time and an overall decline in customer service. Physicians are not pleased.

Medical management under these circumstances is complicated. It's difficult for a full-time clinical physician to practice medicine and also manage a busy office. The regulations and legal scrutiny create additional burdens.

The small practice must comply with a wide array of policies: everything from human resources and risk management to billing and collections, coding, and practice guidelines. Add practice efficiency and public relations on top of all that, and managing the office becomes a true juggling act.

There are ways to keep it under control. And some of the best practices used by large groups translate to small groups quite well. Here are some tips to help make your small group thrive.

Service

Great customer service is key to your success.

Carefully examine what happens when a patient visits your office. Patients don't just want good health care. They want a positive overall experience. If you don't provide the customer satisfaction and positive experience they desire, your competitors will.

Here's how service and profitability are linked:

* Excellent service improves profitability. Likewise, profitability allows better service. [1]

* Profit and growth are stimulated by customer loyalty.

* Loyalty is a direct result of customer satisfaction.

* Satisfaction is largely influenced by the value of services provided to customers.

* Value is created by satisfied, loyal and productive employees.

* Employee satisfaction, in turn, results from high quality support services and policies that enable employees to deliver results to customers.

* Satisfied employees are less likely to leave and that in itself increases customer satisfaction. [2]

You and your staff will make some mistakes with some patients (customers), but you can immediately fix most problems. Sometimes a polite apology is all that's needed. Let your staff know what they are empowered to do to keep a patient happy.

Consider these statistics:

* It is five times more expensive to attract a new customer than to keep an existing one.

* 70 percent of customers will do business with you again if the problem is resolved in a reasonable amount of time.

* 95 percent will do business with you again if the problem is resolved immediately. [34]

For example, if a clinical laboratory loses a sample of blood, results are delayed and patients are inconvenienced. The laboratory personnel don't bother to apologize and there is nothing they can do to correct the mistake.

Some physicians may react in a similar way. The error is not their fault and they charge the patient a second time to draw more blood.

But service-oriented physicians and their office staff take the high road. They apologize to the patient for the inconvenience and redraw blood at no charge. They may even go the extra mile and offer coffee or juice to the patient.

These actions produce satisfied patients. They will remember your fairness and hospitality, and tell their friends and family about your excellent service.

Your dissatisfied customers are likely to tell their friends and family about a bad experience, too. But you probably won't hear about it. In general, people do not like conflict and will avoid bringing a problem to your attention. Customers don't feel their comments will result in any changes.

* 90 percent of dissatisfied people will never tell you that they are unhappy but they will not return and do business with you again.

* Each dissatisfied customer will tell at least nine other people.

* 13 percent of those who are dissatisfied will tell at least 20 other people. [3]

You must regularly survey your patients about service items that are important to them--not only those that you think are important to them.[5] If your service is poor, it is likely that you will be forced to compete on price. That's a formula for failure.

You would much rather compete on quality and service issues. Fortunately, the service provided by your competitors is also likely to be marginal. You don't have to be great to be better than everyone else.

You should at least strive to meet customer expectations in the exam room after a wait time of no more than 20 minutes. Here are six ways to achieve this:

1. Address patients using the name they prefer.

2. Wash your hands in front of the patients.

3. Make eye contact.[6]

4. Listen to the patients.[7]

5. Touch the patients (even if you only shake hands).

6. Answer their questions or speak to their concerns.[6]

Great service supports word-of-mouth advertising.

Word-of-mouth advertising starts with the words from your mouth.[8] Be careful what you say, not only in front of your patient but also within the hearing of your staff. Your staff will follow your example even if it is a bad one.

Make your service so good that you go beyond having patients who are just "satisfied." You want patients who are enthusiastic, loyal customers. You want them to say, "Wow!"

Service is the only item your competition can't easily copy. Most of your profit will come from your loyal customers. Quality of market share, measured in terms of customer loyalty, deserves as much attention as quantity of share."[2]

Group management

As your productivity thrives due to excellent customer service and marketing efforts, you need to make sure the business side of your practice runs efficiently.

In a small group, one physician must serve as the physician leader and there must be an operations manager. The job of operations manager job is very time consuming. The manager should be detail-oriented. Only a practice that is too small to hire a good manager should have a physician serving in such a role.

A good manger will likely command $55,000-75,000 per year and hold a graduate management degree. Even though you have an operations manager, you must educate yourself in management issues in order to supervise the manager. As a physician leader, you will also need to:

* Manage physician performance.

* Ensure clinical quality.

* Develop efficiencies in patient care.

* Ensure compliance with coding and guidelines.

* Minimize medical liability risk by having policies that ensure excellent standards of care and documentation of that care. Good service helps immensely to minimize risk. Quality peer review encourages everyone to do their best.

* Demonstrate excellent customer service.

* Participate in marketing the practice. Be available to provide a presentation to almost any group that asks. Civic clubs and companies are two examples.

* Perform final managed care contract negotiation. The operations manager should do the preliminary negotiations.

* Search for new opportunities. Keep moving forward or you'll give your competition a chance to catch up. Perhaps you can offer a new service. Maybe it's time to open a satellite office. Don't become complacent.

* Be vigilant about any new or potential threats. Is there new competition? Is managed care becoming more of a threat to your financial bottom line? Do you depend on a local industry that may go out of business? Could you be in violation of any regulation?

* Develop group vision, mission, and culture. The physician leader develops group mission and vision by skillfully guiding the group through a discussion that leads to written statements. Development of group culture is a multifaceted process. It starts with the hiring of the right doctors. Careful selection avoids much pain later. Group culture also partly depends on the personal example set by the group leader in areas such as productivity, service, and respect of the staff. Telling the group "stories" further develops group culture. Look for something that one or more of the doctors did that sets an example you want to complement. Recognize them at the group meeting and everyone else is reminded what behaviors are desired and rewarded in your group. Over time, group stories define the group with the saying, "That's who we are and that's what we do."

* Lastly, once you develop mission and vision statements, keep them in plain view. Put your mission statement at the top of every written meeting agenda and put the vision statement at the end of every written meeting agenda.

Benchmarks

Some larger groups pay outside practice management companies to keep up with the business side of a medical practice. Most of these larger organizations found out too late that proper management of a medical group is difficult work. Every business must develop financial reports to determine how well the business is functioning and predict future performance. Pay attention to:

* Collection rates

* Revenue

* Average days to collect accounts receivable 

* Overhead by category

* Patients per day

* Ancillary revenue 

* Number of new patients

* Number of patients leaving the practice

* Staff-to-physician ratio

* Staff salaries compared to community rates

Comparative data are available to benchmark your practice against others. Benchmark numbers are available from the Medical Group Management Association. They may also be available from local accountants who provide service to many physicians. Some accountants participate in a nationwide data sharing service.

If the performance of your group compared to peers looks inadequate in any category, make sure you understand why your performance is different than the benchmark. Different performance doesn't necessarily mean you have a problem, but it does obligate you to investigate and understand why there is a difference.

Conclusions

Good customer service is critical to the ongoing success of your group no matter how small your practice is or where you practice. It is even more important if your practice is in a competitive managed care market.

Excellent service is related to profitability and your own satisfaction. Marketing your practice is much easier if your customer service is strong.

Medical group management is difficult, time consuming work. Even with a small group, it's worthwhile to employ a skilled manager. However, a physician still must lead the group and perform some functions that cannot be done by a non-physician.

Know your benchmark numbers and use them to make sure your group functions as well as, or better, than the competition. If your group performance doesn't compare favorably to your peer's, find out why.

With some effort on your part, your practice can thrive. As you succeed in your efforts, your own job satisfaction will increase, as well.

Dave Cowan, MD, MMM, graduated with high honors from the University of Florida and completed medical school there in 1980. He is board certified in medical management and earned his master's degree from Tulane University in New Orleans, La. He remains in private practice in Orlando, Fla., and provides speaking and consultative services.

References:

(1.) Heskert, J. "Putting the service-profit chain to work." Harvard Business Review. March 1994.

(2.) Reichheld, F. "Zero defections: quality comes to services." Harvard Business Review. September, 1990.

(3.) Youngblood, Barry. American college of Physician Executives, Physician in Management III, 1995.

(4.) Berkowitz, Eric, PhD. American college of Physician Executives, Physician in Management Seminar I, 1993.

(5.) Thies, Sheryl. "Customer service: Moving from slogan to point of differentiation." MGM Journal. September-October, 1999.

(6.) Meador, C., MD. A Little Book of Doctor Rules. Hanley & Belfus, Inc., Philadelphia, 1992.

(7.) Bradford, Vicky, PhD. "Making a difference: What staff needs to know about service." MGM Journal. November-December, 1998.

(8.) Renshaw, Domeena, MD. Loyola University, Stritch School of Medicine, Maywood, Ill.

Going to Market

Good service promotes successful marketing. Marketing is difficult if your customer service is poor. Here are some simple actions that get good results:

1. Send "Welcome to the practice" notes to new patients.

2. Send "Thank you for your referral" cards to the appropriate people.

3. Make follow-up calls to sick patients after they have been seen.

4. Post a notice in your office that referrals are appreciated.

5. Give same day appointments.

6. Be highly visible in the community. Attend community events such as city celebrations, entertainment venues, or neighborhood watch meetings. Talk to as many people at these events as you can. Hand out your business card as you are introduced. Don't worry that most of these cards are thrown away. Any card that you leave in a drawer is less help to you than a card that you gave away. Don't forget the needs of the community in times of a natural disaster. You can provide help and you may get a favorable mention in the newspaper.

7. Attend the religious organization of your choice. If they have health screenings, volunteer to attend and help.

8. Volunteer to help at a local indigent care clinic. If your practice wants to market to upscale patients, you should circulate in upscale venues such as country clubs, polo matches, operas, art museums and professional golf tournaments.