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Consulting for physicians' office labs; a planning guide.

Consulting for physicians' office labs: A planning guide

Everybody seems interested in becoming a consultant these days. Most people, however, are unaware of the complexities of operating a successful consulting business. They naively believe it will be easy to make a living selling their expertise.

It's just not enough to have a strong technical background: The stark truth is that 95 per cent of new independent businesses fail. If you are serious about being a consultant, you had better be serious about business--not only your own but your client's as well. Most laboratorians and most physicians in private practice fail to recognize the business side of testing. As a consequence, their labs aren't nearly as productive or profitable as they could be.

Common reasons for becoming a laboratory consultant include desires for increased freedom and flexibility, independence, self-expression, increased income, tax advantages, and personal satisfaction and recognition. Most medical technologists are just plain tired of doing the same thing day after day. They are bored with the traditional laboratory environment and yearn for new challenges.

Clinical laboratory consulting is just the ticket for some of these individuals. Those who succeed are likely to have an entrepreneurial personality. They are self-disciplined, highly motivated, ambitious, flexible, resourceful, persistent, and self-confident. If you are interested in consulting, take a moment to assess your attributes, and be honest. Remember, not everyone has what it takes to be successfully self-employed.

If you are still interested after the self-assessment, the first step (see Figure I) is to develop a business plan. This helps define your business objectives; without clear definition, failure is inevitable. As you sort out the requirements for establishing and running a business, the plan should help answer the following questions about your prospects:

Is there a reasonable market for your services? The answer depends on the services you intend to provide, what geographic area you will cover, and your prospective clientele. Market surveys can provide valuable information concerning demand. What these surveys usually don't tell you is how the service should be provided --an element that is critical to success.

Can you afford the start-up costs? Launching an independent business, even one based in your home, can be very expensive. You will need legal counsel ($75 to $150 per hour) and tax and accounting advice ($25 to $75 per hour). Then there are business cards, stationery, and advertising materials. A small brochure alone can cost well over $5,000 to develop. And what about liability and/or malpractice insurance? As a general rule, if you can't afford the insurance, you can't afford to be in business.

You can't skimp too much, either. With any new venture, it is important to start out on the right foot. The more professional you look to prospective clients, the likelier they are to sign up. Never sacrifice quality--develop it.

Can you get and keep clients? Only time will tell. Being able to provide a service does not necessarily mean you can sell that service. Unless you have a very clear understanding of exactly what it takes to establish and retain clientele, chances are you will encounter considerable difficulty. Practical knowledge and experience are the best teachers. That's why franchises have such a high success rate (nearly 95 per cent). The franchiser literally sells his knowledge and experience to the franchisee--a great way to help insure success.

Can you make a profit? My dictionary defines profit as "the return received on a business undertaking after all operating expenses have been met.' You must estimate as best you can the potential revenue and weigh that against the cost.

Are you willing to take the necessary risks? No pain, no gain. If you don't know what the risks are, this is a good time to consult legal, tax, accounting, and insurance professionals. Don't forget to seek advice on liability protection. The type and amount of coverage you need depends largely on the services you intend to provide. Suppose you will specialize in staffing, which can be very profitable. You hire laboratorians and then contract with clients to staff their laboratories. Are you liable if an erroneous test result leads to a malpractice suit? Find out about your potential exposure.

As long as there are clinical laboratories, there will be a need for qualified lab consultants. The outlook is especially encouraging right now. Health care legislation has boosted in-office testing, particularly for Medicare patients, at a time when physicians are looking for ways to increase their practice income.

A consultant must fully understand the legal requirements and regulations that affect physician laboratories as opposed to hospital or reference labs. You need to know the pros and cons (financial and organizational) of licensed and unlicensed laboratories. For example, it is sometimes better to license a small laboratory even though that is not required by the state's regulatory agency. A consultant must weigh all factors and advise clients accordingly.

A properly developed, managed, and staffed office lab can not only provide increased income but also make the practice more efficient and self-sufficient. In-office testing is more convenient for physicians and patients alike. It can produce test results that are faster, less expensive, and often of higher quality than work sent out.

As a laboratory consultant, you will want to call on physicians whose practices require a lot of testing--primarily those in family and general medicine, internal medicine, and obstetrics and gynecology. Other potential clients may include allergists, pulmonologists, neurologists, dermatologists, urologists, and otolaryngologists.

Generally speaking, it may be more advantageous as you start out to concentrate on solo practitioners and smaller group practices that are independent of large entities like health maintenance organizations, preferred provider organizations, and hospital or satellite clinics. Your chances of breaking into consulting are better if the practice does not have a large, well developed on-site lab; those who run larger labs think they already have the appropriate talent within their organization.

Most physicians practice in medical complexes near hospitals. Physician directories and the telephone Yellow Pages can help you locate your market.

Develop a marketing plan at the start so that you can proceed in an orderly fashion. This can be extremely difficult if you have not had considerable experience in physicians' office labs, but it is not impossible. The marketing plan is the strategy used to notify physicians that your services are available. Physicians are often in the dark when it comes to the business end of their office labs, so you must show them how they can benefit from your services.

The marketing plan should include materials such as business cards and brochures that will be used to promote your services. These must be eye-catching, informative, and appeal to the prospective client's needs and desires.

Make "cold-calling'--the salesman's term for unannounced visits--part of your plan. In addition to informing the physician's office staff about your services, try to get information about their current laboratory status. The more you learn about what a physician needs, the better your chances of success.

For example, suppose the receptionist mentions that the doctor is reluctant to reactivate his lab because he can't find a technologist willing to work only three hours a day. If you happen to provide staffing, suggest that you may be able to solve the problem. On all cold calls, leave a copy of your brochure and ask for an appointment with the physician.

Follow up by mailing additional information, touching base with a phone call, and scheduling another visit. Repeat the process at quarterly intervals. Physicians change their minds all the time. It may take six months of aggressive marketing to make a prospective client see the light.

Referrals and recommendations from existing clients are the cornerstone of any successful business. So as you accumulate clients, make sure you keep them. Do it right the first time, and deliver the top-quality cost-effective services you promised. Negative word of mouth can destroy your business before it gets started.

Many new consultants unwittingly work for free. The goal is to give the prospective client enough information to fully grasp the scope of your capabilities without sharing so much that he or she no longer requires your help. For example, a physician may ask for recommendations on equipment selection. Comply, and you're giving away free advice. Since this is one area where physicians tend to make costly mistakes, your suggestions are valuable and worth a fee.

Use the first informational meeting to dispel any preconceived ideas about your services. Most physicians have never met a lab consultant and are totally unaware of how much they could benefit from such assistance. Be prepared to answer, and ask, all sorts of questions. Again, learning as much as possible enables you to tailor your marketing presentation to the needs of a particular office.

If your first contact with a physician is over the telephone, ask for an appointment. Offering a free laboratory evaluation can help get you in the door. When you know what to look for, you should be able to evaluate most small laboratory operations-- those serving fewer than 10 physicians --in a matter of minutes.

A quick, accurate assessment enhances your credibility. The physician realizes you know what you're talking about, and that's a big step toward signing up a new client. In our concluding article next month, we will discuss what a laboratory evaluation in a physician's office involves.

Photo: Figure I A blueprint for consulting
COPYRIGHT 1987 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1987 Gale, Cengage Learning. All rights reserved.

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Title Annotation:part 1
Author:Wood, James R.
Publication:Medical Laboratory Observer
Date:Jun 1, 1987
Words:1568
Previous Article:A new twist to the traditional career choice.
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