More than just two offices.

Some believe that there is an entrepreneur inside every one of us just waiting to get out (and get rich!). Others counter with the old saw that physicians make poor businessmen and businesswomen. Although we tend to laugh at old saws, they often provide significant insight. Thus, when considering becoming an entrepreneur, perhaps one should begin by pondering the business and philosophical differences between a medical practice and an entrepreneurial endeavor.

Entrepreneur. What is it?" Ten years ago, the words physician" and "entrepreneur" were seldom mentioned in the same breath. Now there is a how-to monograph for physicians on the subject! Yet the questions still arise: What exactly is an entrepreneur? How is entrepreneurship different from what 1, as a physician, have done before? Could I be an entrepreneur? Is an entrepreneur just a doctor who has two offices? Or is it more? Medical practice is the archetype of a nonleveraged business. If one works more hours, one makes more money. If one golfs more afternoons, one makes less money. Physicians, for many years, have been able to extricate themselves from economic scrapes by working more hours. This ability provides a psychological safety net upon which many physicians become very dependent. Make a bad investment? Work a little harder. Replace the boat? Work a little harder. Of course, there is no shame to working harder for greater economic return. However, the ability to do so at will does have an effect on a physician's world view. This is repeatedly demonstrated by those physicians who approach age 65 and find that they must work a little harder" into perpetuity to support themselves in the life-styles to which they have become accustomed. Entrepreneurial endeavors, on the other hand, are virtually all characterized by the leveraging of resources to achieve high returns. Although entrepreneurial endeavors involve extraordinary amounts of hard work especially in the start-up phase), the results are seldom directly proportional to the work invested. In fact, most entrepreneurial failures would not have been salvaged with any amount of extra work,. Rather, the yield of an entrepreneurial enterprise is tied much more closely to a different set of parameters: The strategy underlying the endeavor, the entrepreneurial organization's ability to respond to the marketplace (or, even more important, to respond slightly ahead of the marketplace); the ability to develop a niche and to keep that niche despite aggressive competition; and the ability to balance risk against reward. The list is long and covers many operational and strategic issues that can, in general, be largely ignored in a typical medical practice. There are other differences as well. Medical practice horizons are usually measured in hours, days, weeks, and months; entrepreneurial horizons generally are measured in years. Medical practice has daily rewards and disappointments. In contrast, there are virtually never instant entrepreneurial rewards, and there are often large numbers of disappointments before success is achieved, if it is achieved at all. So medical practice and entrepreneurism are different. Why, then, should a physician consider being an entrepreneur? Why now? The reasons can be summarized in two words: "change" and opportunity." When there is change, there is opportunity; where there is opportunity, there is potential reward. In this new era of dramatic change in all areas of medicine and medical care delivery, the opportunities for innovative solutions are unparalleled. Many possible solutions might conceivably lead to new businesses; some new businesses eventually produce profits, some handsome. Yet many (in fact, most) who attempt to turn an idea (even a good idea) into a business eventually fail. Perhaps the most dramatic example of this in the medical arena over the past few years has been the dramatic rise (and fall) of a number of health maintenance organizations. Here was a new practice modality that seemed very appealing to many budding entrepreneurs. It was responsive to change, the market appeared ready, and a physician surplus was building; one would have thought that everything was perfect. Yet, many of the HMOs started over the past few years have failed. Most of them succeeded for awhile. However, for many the success lasted only as long as they were rapidly acquiring new members. When the rate of new member acquisitions dropped or stabilized, the plans were not able to meet their expenses, and failed. For the purposes of this discussion, failure is defined as nonrealization of expected success.) Were these HMOs all poorly managed? Are HMOs a bad idea? As hindsight is always 20/20, it is easier to arrive at answers to these questions now. However, appropriate attention in advance to the fundamentals of regulation of consumer demand for flat rate services, population demographics, and potential competitive pressures would probably have saved many of these entrepreneurs from the problems that later beset them. There are, of course, conspicuous entrepreneurial successes that inspire further endeavors. In the medical arena, perhaps the most dramatic innovation in the past 20 years (in terms of dollars) has been the rise of proprietary hospitals. Such entities made little sense in a preMedicare era. However, some clever entrepreneurs figured out (quite rightly) that in a cost-reimbursement world, a potential gold mine lay in the hospital business. Voila-a $10 billion industry arises! It must be noted, however, that the successful for-profit hospital operators were those who not only had the right ideas, but also executed them skillfully. In the nonmedical community, there are many recent entrepreneurial ventures that have become such a routine part of life that it is hard to remember when they were not extant. Scotch Post-It Notes and Federal Express come immediately to mind, but the list is long and everchanging. Ten years ago, almost no one saw any reason to deliver a package of documents overnight; now we get irritated if a package doesn't get there overnight! From such concepts and successful niche fillings are great companies (and fortunes) made. Entrepreneurism is not for everybody. Being an entrepreneur involves taking risks. The most successful entrepreneurs are those best able to minimize their risks without sacrificing their innovation. There are two components to minimizing risk. First, a better idea (i.e., a better niche) will support more risk than a poor idea. Thus (not surprisingly), good ideas are more likely to succeed than bad ones, all other things being equal. Second (and more important), the more planning, scheduling and information gathering done before a venture is begun, both to determine whether to launch the venture at afl, as well as to predict contingencies, the more likely it is that the venture will be successful. The search for opportunities and ideas that will be maximally rewarding is the "glamorous" side of entrepreneurship. All enterpreneurs hope to come up with another Federal Express or Humana. Unfortunately, although such companies and products keep entrepreneurship on the front pages of the business press, they represent a small minority of successful ventures. Most successful ventures are careful attention to details in the conception, organization, and execution of the venture. Even brilliant concepts need careful execution to be successful. It is the nuts and bolts of assembling an enterprise and making it work that seem to be the most problematic aspects of successful entrepreneurism. In a new monograph from the American Academy of Medical Directors Entrepreneurism and the Physician Executive, 19.95 ($14.95 for AAMD members)), John R. Hastings, MD., presents exactly that: a nuts and bolts" view of entrepreneurship in health care-what it is, how to do it, and what not to do. Dr. Hastings does not make an attempt to provide a list of creative new ideas for medical businesses of the next decade. That part of entrepreneurism, the part that is maximally dependent upon originality, cannot be condensed into any book. However, what is concisely reviewed in this monograph are the myriad conceptual, technical, and procedural details that must be thought through to maximize the possibilities of entrepreneurial success. Of special note is the chapter on the business plan, probably the single most important part of the creation of any new entrepreneurial business. Most fledgling entrepreneurs do not pay enough attention to this important document. The business plan provides a forum for describing all phases of a new business: start-up, operations, marketplace, and competition. It is critical for two reasons. First, it forces the entrepreneur to consolidate his or her own ideas on the business. The mere act of writing a plan will uncover important areas that must be examined. Second, the plan gives an outside observer an opportunity to critically respond to the venture. It is likely that the entrepreneur will have missed some important points. Examination of the plan by other business experts will help in the risk reduction process. Without the plan, both of these valuable benefits are lost. The lost value is often discovered only when the enterprise fails. Chapters on financing and selecting the right venture capital sources provide important additional facts that must be

full considered in the creation of a new business. "Happiness is positive cash flow" is the adage by which a new venture lives or dies. Many successful companies would not have been successful without the financing to pun them through the lean start-up years. Federal Express, recapitalized three times before becoming successful, is perhaps the best recent example. This monograph also considers some of the philosophical and social issues concerning entrepreneurism in the arena of medical care delivery. Any opportunity for making a profit in the health care industry has always been viewed askance by significant numbers of those with other social viewpoints. Entrepreneurs who step into this muilieu must be prepared to address such viewpoints, for their own peace of mind as well as in defense of their projects. Although many of us do not see a necessary conflict between profit and high-quality health care delivery, there are some who do. It is important for each of us to be comfortable with our personal stance in this regard. As the health care industry changes, there is perhaps more opportunity for both personal enrichment and the enhancement of health care delivery than there has ever been before. Those who are challenged to take advantage of these opportunities will do wen to consider carefully the many points elucidated in this volume; every problem avoided is one greater chance to prevail in the quest for entrepreneurial success. May all your entrepreneurial endeavors be satisfying and enriching!