Article Date: 10/1/2005

practice made perfect
There's A Pain-Free Way To Find an Associate
BY MARILEE BLACKWELL, M.B.A., C.P.A., A.I.B.A., AND DONNA SUTER

Recent graduates and veteran optometrists tend to agree about what they want in an associate/partner: someone who possesses the necessary acumen to grow a practice, works well with people and intuitively builds a loyal patient base, and understands the concept of teamwork. Why a relationship does not "go the distance" differs from one office to another. Two of the most common reasons given for dissolving an associateship are:

► compensation, and

► the associate's production.

Happily, there are ways to increase the success of making a good match.

What to do?

Dr. Owen Cabo's practice had come to a crossroads. He was seeing patients 40 hours a week and had a six-week backlog. He wasn't willing to work more hours, so he knew that the only way his revenue would continue to grow was to hire an associate.

His solo practice was grossing $750,000 with a net of $240,000 (32%). He'd had two associates in the past. He had asked one to leave and the other had left voluntarily. He contacted us when Dr. Ned Johnson gave him a call. Dr. Johnson grew up in his drawing area and wanted to work for the practice.

Dr. Cabo had mixed emotions about Dr. Johnson's proposal. On one hand, he wanted to spend more time with his family and hobbies. He realized that in 15 or so years he might want to work part-time, or might develop health problems. On the other hand, he didn't want to repeat either of his past two associate doctor experiences. His prior associates had appeared to have no interest in marketing themselves, and with each he had ended up taking a much larger decrease in his net income than he'd anticipated.

Underneath these mixed emotions was the fear that if Dr. Cabo didn't hire Dr. Johnson, he'd open up across the street. Would his experience with Dr. Johnson be different from his past associate experiences?

The root of the problems

Some men and women seem to know what mode of practice suits their personalities before they graduate. Others aren't so sure. Most established, private practice optometrists tend to think that if a young optometrist accepts an associateship, he or she must know what it takes to be successful.

We don't find this to be the case. Graduating optometrists have financial obligations and may not want to immediately assume the risk of no guaranteed salary; they also aren't familiar with compensation formulas that are based on production. Add lack of management experience, a rudimentary understanding of advertising, marketing and public relations to financial uncertainty, and many young grad- uates will seek the safe harbor of commercial employment.

Although the clinical skills set for commercial and private practice optometrists is the same, we have found that the manner in which each approaches risk is quite different. In our consulting experience, we have found that some optometrists are more suited to be employees whereas others have an entrepreneurial spirit.

Today's optometric practices are sophisticated and today's consumer is more educated, more willing to switch providers and harder to "network" with than his or her parents. The same holds true about managing today's workers.

How to make a smart choice

With all this in mind, it requires an enormous amount of patience to nurture an associate so he or she will grow into a revenue-generating partner. Giving a new doctor too much responsibility without mentoring or coaching can be intimidating. Once you recruit someone, it is important to challenge him or her while not throwing him or her into the fire.

Our first concern was to make sure that Dr. Cabo hired the right personality for the job. We wanted someone who was either intuitively an entrepreneur and would be comfortable going out into the community and marketing himself, or someone who was open to taking direction from a public relations and marketing expert and wasn't embarrassed to ask for help. We also coached Dr. Cabo to make a hiring decision based on who was suited for the job, not the threat of new competition.

We suggested that Dr. Cabo spend some additional time with Dr. Johnson to determine if their personalities and goals were similar and then conduct employment testing before offering Dr. Johnson a position as an associate. We suggested the Kolbe A Index/Instinct Test, which can be found at www.kolbe.com. This test measures what someone will or won't do instinctually. Dr. Johnson's scores indicated that he was an instinctual entrepreneur.

Once we knew that Dr. Johnson would thrive in a situation that would require him to build his patient base, we discussed a non-compete agreement and compensation with both parties. Dr. Johnson wanted a guaranteed salary of $80,000 and Dr. Cabo agreed to cut back from five to four days per week. This would mean that $150,000 in production would be transferred to the new associate.

With no new production, a guaranteed salary of $80,000 would also result in an $80,000 reduction in Dr. Cabo's compensation. However, the new associate would be required to work with our firm to develop an external public relations action plan to introduce himself to the community and to fill the rest of his schedule.

Getting a plan

We recommended a production-based compensation formula with a guaranteed base of $70,000 until Dr. Johnson's production was high enough to move to compensation based solely on production. This approach would provide for Dr. Johnson's living expenses while he built his production, but give him a financial incentive to increase it. Dr. Johnson agreed to the following 18-month practice-building plan:

► Complete a self-study syllabus designed to familiarize him with gorilla marketing tactics, leadership development and business management.

► Work with our office to develop a $37,500 advertising plan that targeted a population demographic aligned with growth plans.

► Train the ophthalmic assistants to perform a larger portion of the information-gathering process so both he and Dr. Cabo could see more patients per hour and therefore work "smarter" while reducing the practice's backlog of patients.

► Become familiar with billing and coding and then conduct a chart audit to ensure that professional services were properly coded and accounts receivables were being processed in a manner that met "best-of" (practice protocol) guidelines.

► Supplement paid advertising tactics with a public relations plan that included both internal and external marketing tactics.

As the owner, Dr. Cabo agreed to help Dr. Johnson transition to private practice in the following manner:

• Shadow Dr. Cabo in the exam room to ensure Dr. Johnson understood his standard of care and to allow him to personally introduce himself to patients one day a week for the first six weeks.
• Allow Dr. Johnson to facilitate staff meetings.
• Revise ophthalmic assistants' job descriptions to include a training element and conduct PIP (Personal Improvement Plan) coaching sessions with each ophthalmic assistant to make sure everyone understood Dr. Johnson's role as a change agent.
• Pay for both Dr. Johnson and the billing clerk to attend billing and coding classes.
• Increase the practice's advertising budget from 2% to 5%.
• Set aside a staff meeting to role-play how to confidently shift new patients to Dr. Johnson's schedule and how to handle objections.

A Hollywood ending — sort of

It's now been six months and the practice has just enjoyed its biggest month ever. Both Dr. Cabo and Dr. Johnson are pleased with their liaison. Dr. Cabo quietly admitted that maybe he expected too much of his prior associates and didn't offer them the resources they needed to be successful. Dr. Johnson, on the other hand, can't believe all the roles that a successful owner-optometrist must assume. He says he's still developing the managerial skills needed in today's practice and enjoys his monthly executive meetings with Dr. Cabo for coaching and mentoring.

Taking a "wait and see" approach to developing an associate is a recipe for disaster. The most efficient way to resolve associate problems is to avoid having them. Because we can't prevent conflicts from ever occurring, we encourage you to become skilled at resolving them — certainly before they cause nonproductive behavior. Adopting a production-based approach to adding an associate is within your reach if you learn the knack of managing "smart growth." This benefits not only the practice's bottom line, but also, more importantly results in increased productivity and organizational effectiveness.

	Ms. Blackwell, president, Blackwell Consulting, (800) 588-9636, and
	Ms. Suter, president, Suter Consulting Group, (423) 236-5465, team up to offer financial guidance and on-site consulting services designed to increase your gross revenue and improve your net income percentage.

 

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Optometric Management, Issue: October 2005