Turning Around a Private Medical Practice – Part I

Michael S., an orthopedist, decided to leave a large group practice to strike out on his own.

Determined to get off to a fast start he designed a snazzy, four-color, tri-fold brochure, took out an expensive yellow pages ad, participated in every insurance plan he could, and pressed the flesh with countless Primary Care Physicians to generate referrals.

His strategy to fill his practice paid off. Soon his waiting room was full and his appointment book was overflowing.

But something’s wrong.

Now, 4½ years later, he finds himself cramming too many patients into too little time just to cover his overhead, inundated with paperwork, and having none of the autonomy and satisfaction he was looking for when he moved from “physician employee” to “owner.”

When you look at how Michael went about starting his practice, on the surface, it looks like he did everything right.

He leased space in a great location, promoted his practice extensively, developed good relationships with referral sources and took care of all of the billing and paperwork for his patients.

But the fact is, the results he got didn’t come anywhere near his expectations.

Now he is both overwhelmed and disillusioned. He wonders whether he has a future in private practice. And, like many physicians, he questions whether it’s even possible for a dedicated doctor to have a rewarding private practice in today’s economy.

Diagnosing The Practice

The real problem isn’t with the state of medicine today or with the economy. We can point to a number of orthopedists who own satisfying practices and have enviable lifestyles.

The problem isn’t even with the tactics Michael used to build his practice.

After all, they brought in the patients!

The problem is that Michael didn’t begin with the end in mind. He didn’t have a plan to guide his actions. So while he was able to build up a full, (practically overflowing) practice, relatively quickly, it was a very different practice than the one he envisioned. It offered him none of personal satisfaction, financial security or confidence in the future that he expected after 4 ½ years.

Before Michael can solve his practice’s problems, he needs an accurate diagnosis.

Symptoms: Too many patients. Overworked, underpaid, disillusioned doctor.

Etiology: Doing anything and everything that looks like it will bring in the patients and increase practice revenue.

Diagnosis: Lack of Strategy

Like most physicians who struggle, at this point Michael is so busy with day to day patient care that he doesn’t have time to step back and look at his practice objectively. If he did, he would see that the reason his practice looks like it does is because of the actions he took when he first opened his doors – and the actions he has continued taking ever since.

Michael, like so many other physicians, has no real business strategy for his practice. Sure, he has an income goal, but he has no clear vision of the practice he needs to create in order to achieve it.

And since he doesn’t have that clear vision, there is no path for him to follow. This means that he has no criteria for selecting the right practice-building options for him. So he ends up jumping on every opportunity that looks promising, from expensive practice management, software and billing services, to new practice marketing and promotion deals.

This floods his practice, but wreaks havoc on his cash flow.

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