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practice management
Think Like a Practice CEO
These
six steps will start you on your way.
By NEIL GAILMARD O.D., M.B.A.,
GARY GERBER O.D., JERRY HAYES O.D., AND
PETER SHAW-MCMINN, O.D
ILLUSTRATION BY SIMON SHAW
He,
and increasingly she, is a familiar figure in corporate America — the workaholic
middle manager. He is a dedicated soldier in the corporate army, obsessed with his
work. He can be found at his desk late most evenings, slogging through endless mounds
of reports and e-mails. No problem or issue is too small to command his attention.
Our tireless corporate servant immerses himself in the minutest
details within his sphere of responsibility and is convinced that no one else in the organization is capable of managing
his turf. He will jump in and prepare the report that someone else failed to deliver
on time or will spend hours tracking down and resolving a customer complaint, even
if outside his area of responsibility.
The heroic recoveries from snafus and the loyal service he provides
are invaluable but seldom noticed by his superiors. Overworked, underappreciated
and usually anonymous, he gets stalled in the scramble to the top of the corporate
ladder and financial freedom. Bosses label him as unpromotable — lost in detail
and tasks, focused on today and not tomorrow, unable to delegate, unable to inspire
colleagues. He does not think or act like a chief executive officer.
Does the shoe fit?
What does this profile of a familiar corporate type have to do
with you? All too often practice owner/optometrists find themselves trapped in the
role of overworked chief employees. While they dream about escaping the daily grind
and increasing their personal income, they can see no way out of their predicament.
They believe that stepping off the treadmill means reducing their income. From our
consultations with practices throughout the United States, we know that is simply
not the case.
To maximize financial success and gain control of your personal
schedule, you must begin to think like a CEO. This does not mean abandoning your
primary role as care provider. It does mean performing both the duties of patient
care and small business executive management well.
Learn the balancing act
We find that there is a universal trait among practice owners
who achieve both high-gross revenue and a high-net income: They have discovered
the optimal balance between their duties as practice CEO and as patient care provider.
Achieving a high net income is never an accident. It requires planning, goal setting,
delegation, leadership and constant oversight, all of which are the key skills of
any CEO.
The Management and Business Academy's (MBA) surveys of large optometric
practices in the United States (MBA median gross practice revenue = $1.4 million,
median number of employees = 10.5) revealed that large practice owner/optometrists
spent 85% of their working hours on patient care and less than 10% of their time
on planning and leadership activities. We think this allocation of time dooms many
owners to the fate of our passed-over, workaholic corporate hero. While this group
has been highly successful, the owner must step off the treadmill and begin to
act like the practice CEO to achieve the full potential of the practice asset. We
advocate that owners of large practices spend no less than 20-25% of their time
on management duties.
The six-step plan
It's easy to agree in principle to become a practice CEO, but
quite another matter to take the first steps to change the practice routine and
make it a reality. It will not occur overnight, but here are six steps that will
help you become a practice CEO.
>
Step One.
Get out the appointment book and mark off the hours that you will devote to planning
and leadership duties. You cannot have it both ways — a full schedule of exams
and sufficient time to manage. Don't be too busy to make more money.
After you reduce the time you spend in patient care, you will
discover that the time spent managing the practice yields a far higher return per
hour than seeing patients. Your CEO hours will become your most productive at increasing
net income. Many doctors discover that these are also the most enjoyable hours they
spend in the office, because they stimulate the imagination and involve creativity.
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Step Two.
Create a practice budget. MBA surveys reveal that less than 20% of large optometric
practices have a formal practice budget. No business, large or small, can be run
effectively without on-going measurement of income and expenses. What is good enough
in managing family finances is not adequate for a well-managed practice. Without
basic financial information, planning and control is impossible.
You do not need to be trained in accounting to budget and it is
not time-consuming. Establishing a budget is quite simple with the basic spreadsheet
tools that most practice software systems incorporate. The budgeting process starts
with an accounting of the prior year's income and expenses and monitoring progress
toward defined performance goals throughout the year.
The financial performance of practices that establish a budget
always begins to improve immediately. The mere process of measurement sensitizes
the practice to control income and expenses, and to adjust spending to achieve financial
goals.
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Step Three.
Establish a vision of the practice and concrete financial goals. Nearly every optometrist
wants to make more money without spending a lot more time to do so. Yet many feel
trapped in their daily routine and would love to have more free time to enjoy life.
Those facing imminent retirement hope to improve their practice net to make their
asset more valuable. Many also need to reduce the practice's dependency on their
own personal relationships with patients. All of these goals are achievable when
you put on your CEO hat and set measurable financial goals.
Establish goals for gross revenue and net income as well as for
the major expense categories. Beyond the near-term financial goals, articulate your
longer term aspirations for the practice in measurable terms. How large an enterprise
do you wish to create? How much time do you want to spend in the practice each year?
What are your personal goals? How much would you like the practice to be worth at
retirement? What is your exit strategy?
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Step Four.
Conduct weekly staff meetings. Staff looks to you for executive leadership, not
just for your medical expertise. Only you can set practice goals, define staff roles
and responsibilities and establish operational guidelines for the practice. Your
role as team coach and cheerleader is often vital. But most optometrists are so
preoccupied with seeing patients that they interact little with the staff. Most
practices spend far too little time in staff management. In our research, we found
that only 35% of the larger optometric practices hold weekly staff meetings. Yet
MBA program participants cite staff management as the most vexing problem they face.
Your first few weeks of staff meetings should be devoted to reviewing
the practice budget and goals, and brainstorming with the staff about how to accomplish
those goals. Your staff will have many ideas about how to control those expenses
that involve their work as well as how to increase patient revenue and profitability
per patient.
Topics for subsequent staff meetings can include:
> Staff
roles and responsibilities
> Resolving
patient complaints
> Improving
patient loyalty and satisfaction
> Product
training and case presentation skills
> Team
appearance
> Patient-handling
standards.
You will never run out of topics. What's more, staff meetings
will become the basis for continuing improvement of the office process.
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Step Five.
Manage by walking around. Don't get so trapped on the exam treadmill that you overlook
inefficiencies and patient-displeasing aspects of your practice. Is the upholstery
up-to-date in the reception area? Are the bathrooms well maintained? Are patients
treated personably at the front desk or is there an over-emphasis on fees and immediate
payment? The only way you will become sensitive to these issues is to get out of
the exam room and observe your office through the eyes of the patient. During the
weekly staff meeting you can get the staff to help fix the problems you observe.
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Step Six.
Delegate. The only way most doctors can free-up time to perform their executive
role, without reducing the patient load, is to delegate more duties to the staff.
Start by ridding yourself of all routine administrative tasks, such as meeting all
sales reps, ordering products like contact lenses and frames, actually doing all
the steps in paying the bills instead of just overseeing the process.
Next, examine how much time you spend with each patient during
the exam. In many well-managed practices the doctor spends no more than 15 minutes
with each patient while completely satisfying the patient's need for personalized
care and attention. If you are spending more time per patient, consider taking steps
to delegate testing tasks to the staff and streamline the entire process.
Change from the inside out
To become a practice CEO requires a change in mindset. While your
role as eye doctor is primary, your roles as business owner, asset manager, merchant
and team leader deserve a substantial portion of your time. Start with the steps
outlined here and you will find yourself well along the journey to practice success.
Optometric Management, Issue: November 2005