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Medical Practice Business And Marketing Articles

Article #8 - Feb. 2010


“Lessons Learned From My Medical Office
Business
Mistakes”
(Part 1 of 3)

If you don't know how a successful business functions,
how can you recognize and avoid mistakes?

The full story behind this doctor’s medical practice downfall isn’t unique, nothing to excite the non-fiction writers about, unless it can be defined as a model of what not to do in medical practice management and medical business management. 

Having absolutely no background knowledge, college courses, or medical school education about medical practice small business management, office business education and management, or small business marketing strategies at the time I started my private medical practice, I never thought, let alone even considered, this knowledge would be of
much value to me. 

During all those years of education and training, never once can I remember any mention by anyone that having the knowledge to effectively run a small business was critical to medical practice success.  It must have been assumed that all college and medical school students already knew that.

But, taking action on it, even if that was the case, almost never happens.

Success is defined here as the ability of any physician in medical practice to reach maximize practice potential in terms of income, service to patients, ever improving skills, and complete attainment of all goals any physician visualizes from the beginning, for his or her lifestyle and practice evolution.

Unfortunately, even today, most physicians continue to consider small business office management knowledge and systems like a popcorn movie—entertaining, but nothing of practical value.  Something worth thought, but not action.

Over the next 20 years in private practice I gradually came to recognize the covert signs of a doomed medical practice.  I am ashamed to admit to anyone I didn’t know how to handle the quicksand of disabling factors which surrounded me in my practice. 

I say this with the recognition that those unrelenting factors were simply the features of the landscape that I was entirely responsible for managing and resolving, as all physicians should.
 

The specific events, which spelled out and magnified my medical practice business ignorance, were...

1. Violating common sense budgeting for the business

         By the third year in private practice I had an opportunity to purchase a small medical building with 5 medical office suites with a very small down payment, and paid the mortgage with the lease income paid by the physician tenants.  Seemed like the right decision and good investment... right?

But, to add wood to the fire, my next decision soon after was to spend about $70K to renovate and upgrade my own office in that building and figured I’d pay for that over the next 15 years, never considering I might need to move elsewhere sometime, or struggle with the attrition of my practice, or confront my tenants might move out, or be side-swiped by the uncertain economics of medical practice which might change for the worse (as they did in 1976). 

  •     Going into heavy debt just never worried me... big mistake! 
    Have you ever had the feeling that you could handle any financial
    debt that came along?
     

  •     Certainly, relying on my overconfidence and professional status, how could I lose no matter what came along?  Could sound business knowledge have prevented this... I’d like to think so. 
     

  •     My CPA sure didn’t help me. My corporate attorney didn’t whimper any suggestions either.  None of my family had any business expertise to offer me.  I never knew what a business consultant was good for nor if they knew anything about medical practice business management since they were not physicians. 

    Note: The fundamentals and principles of business are the same for any business, anywhere, and for any type.
 

 2. My vision of my life in medical practice disappeared

    I’ll never know why but one day I sat down about 5 years into my practice to try and figure out how my medical practice was doing and get an idea of whether it was going anywhere. 

    I’d never even thought of keeping statistics such as the number of new patients each month, or on anything else related to measurable statistics that would have been a far better indicator of how my practice was doing.

    So, I relied on the monthly financial statements from my CPA (huge mistake), which I really didn’t know how to read or make sense of in any effective manner as a means of formulating critical decisions about my practice business—not that you have ever been there too.  The methodology I was using was like rearranging the chairs on the deck of the Titanic.

I read the numbers, calculated amounts, categorized the results, and came up with what Winston Churchill called, “A riddle wrapped in a mystery inside an enigma.”  Evidently, I had boarded the clue train leading to alternative possibilities.  One thing was abundantly clear. 

    It would never be possible for me to make enough money in my practice of OB-Gyn to pay for my three kid’s college education, nor ever be able to fund a retirement plan to any sufficient level. I based all that on inappropriate accounting fingerprints and chasing the wind of prophesy.  

Psychologists, spiritual leaders, self-improvement experts, and mind benders can very well look at my behavioral pattern as a true example of collective insanity, intellectual immaturity, or need for a psychic hotline. 

    They’re probably right, within certain bounds and without knowing my personal attributes.  But, when it comes to comparing myself to other physicians, then and now, I wonder how many of them are a mediocre jockey on a hell of a horse.

My thought was, “I’ve gone through the entire educational gauntlet,
sacrificed years of my life to my ambition, invested thousands of imputed dollars in the process, and now I see that what I had to show for it—it stinks (a replacement word for the ones I was originally thinking)”
.

How could I resolve my practice dilemma (or how would you)?
 

        
 --Start a new career that offered more financial gain?

          --Start a sideline business to supplement my income?

          --Become a paid employee of a managed care group (again)?

          --Move my practice to another area?

          --Work longer and harder daily till I burn-out (about 4 years)?

          --Focus my practice on high income patient procedures?

          --Retrain as a plastic surgeon or anesthesiologist?
             (highest income specialists among several) 

 

Considerations

You will never convince me that you haven’t run these thoughts through
your own mind from time to time and noticed some form of mental heartburn.

Although you can put yourself in my position and probably can understand the unending analyzing and agonizing one must go through under those circumstances, and perhaps you have already; a choice had to be made. 

The choice of taking on business management and marketing strategy courses should have been added to the list above and would have been a better choice than most of the others. Unfortunately, those business options remained unappreciated as a business tool among most physicians at the time—even today.

Note: I still can't fathom the utter total disregard, by the elite educators responsible, for arming physicians with the business tools and strategies for medical practice that increasingly accounts for the increasing present day attrition of physicians. Think about fee restrictions and how many practices are failing from dropping incomes.

Because most of the choices involved extra costs, some time away from practice, and my own rigid thoughts about what I mentally and physically could and couldn’t tolerate, I decided to do real estate investing as a sideline business.  It seems to be such an outrageous synthetic experience when I look at it now. 

Here, I couldn’t even think of a practical way to inject my practice with growth hormone, and then went ahead and involved myself in another business I didn’t know how to manage, but believed it would be much easier to learn than memorizing the origins and insertions of all the muscles in the body. It was and is. 

Problem is, outside forces which have direct effects on real estate investing success ran the red light and t-boned me right where it hurt.

It didn’t work out as I had planned--but you already guessed that.  I lost everything except my practice—back to page one.  Would all of this have happened if I had been educated in the basics and principles for running a small  business (involving marketing as an integral part of that) as
well... maybe.

When you suffer from the lack of medical office business principles, here's a few examples to show you about my malnourished
business system
.
 

1. My complete incompetence in managing employees 

Although most physicians are able to eventually, after a Sabbath journey to reach holy ground, reluctantly accept the “spontaneous” office management system that ultimately emerges among his or her employees without any effort on their own part.  It’s an inevitable source of practice destruction.

I know because I used that system, never understood how to make it any better, and many times sat behind my desk after everyone had gone home and had what Joel Osteen, the pastor, calls a “pity party” for myself.  Did I really do that?  I can't believe I did such a thing!

But then, as the decision maker, I always remembered the saying, “If you’re not ahead of the threat, you’re reacting to it.” And, boy was I reacting to it, especially when I found out certain things going on with my employees behind my back in my office such as...

My receptionist secretly using the copy machine to print up her church bulletins for the congregation weekly without my knowledge.  She had been doing it for almost a year before I found out it had been happening.

2. Example of my working “in” my business instead
    of “on” my business...
 

My front desk employee assigned to do all the left over filing, answering the phone, and keeping the office open and running on Wednesday when I was not there, decided on her own to close up the office, put the phones on the answering service, and have a free day off to do her personal things for herself. 

The other employees knew it and never told me.  I made the discovery when I met up with her one Wednesday moving through the shops in the mall.  Did I fire her?  That’s my next section of
discussion below.

3. The importance and danger of employee comradery

It didn’t mean to me any more than social interaction happening around the office until the truth slapped me in the face.  I decided to send my top notch back office staffer to an Ultrasound training course about 90 miles away so she could also do the OB ultrasounds. 

She was not able to tolerate being without her husband for the 2 1/2 days at the meetings and insisted he go along. I paid for everything for the venture including hotel, food, travel and the course... Oh yes, I forgot to mention her usual salary she earned while at the meetings, which I also paid.

A couple weeks later I found it necessary to terminate my front desk employee. Within two days the back office employee that I had just paid hundreds of dollars to educate in ultrasound procedures quit also with no notice.

The back office employee knew why I had fired the front office lady and what she had been doing behind my back unethically. I had no idea they were such closely attached friends and bound by their own “employee honor system.” It created a perfect window for her to quit because the firing of another employee created the perfect opportunity for her to leave also. 

Of course, the back office employee, after spending over a thousand dollars on her training, being nice enough to pay for her husband’s vacation with her, and for 7 years in my office learning medical office functions, never mentioned she was thinking of quitting, yet abused my generosity without a second thought.

She refused to explain why she was quitting but I suspect she had already lined up a job in another doctor’s office to do his ultrasounds--for higher pay as a result of her free training and a valuable educational experience.

Lesson: If you pay for the medical education for your employee, or even if they pay for it themselves, you should expect to be coerced into a higher salary for that person. In every case it's smart to sit down with the employee beforehand to determine their thoughts, plans and alternatives regarding what they expect from you.

Will they be demanding an increase in salary? Or other benefits?

Are they intending to get a higher paying job elsewhere
after the training?

If they paid for their own education, then these increased benefits would seem appropriate... but not if you pay for it.
 

    Can you stomach the results when you let your medical
office run itself?

My blunders should be a resounding wake-up call for you to start marching to a different drummer.

Blunder #1

I wanted everyone to like me, especially my employees because I have always been a very generous person, easy to like and work with, made few demands on my employees (Big Mistake).  My very first office employee was an older lady that I shared with two other consultant physicians from the next town. 

       She was very likable, friendly with everyone instantly, and could charm any hostile patient right out of their "pull-ups."  Her experience in medical office work spanned many years.  Her choice of working only part time enabled me to hire a full time office manager after we moved to my own office suite.
 
She was happy doing my medical office billing and collections part time. 

Twenty years later she was still there doing the same job.  I could never let her go or replace her in spite of the poor job she was doing because she was my greatest promoter, seemed to know everyone in the medical community, had more connections with other medical offices than anyone else, and bragged to almost everyone how great a doctor I was and how wonderful I treated my patients. 

    My office income wasn’t the best and the billing processes often came up lacking, but new patients kept coming in with her name in hand.

To this day she remains a close friend to my wife and I.  I was trading a relationship for practice profits which at the time seemed a good thing.

Let's face it, it's what Michael Gerber, author, consultant and business
advisor to hundreds of physicians calls a “physician employee.”  He describes me exactly in his book, The E-Myth: Physician, as a doctor who settles for a mediocre medical practice that seems just “good enough” ... not perfect, not dramatically growing, not exactly what you dreamed of, just OK!

Yes, I should have replaced her right at the start instead of having to worry all those years about what practice income she lost in her shuffle this week. Without a change in my personal business management mindset, I would have done the same again.

Note: You can't be close friends with your employees and manage your office efficiently. Friendly, is enough.
 

Blunder #2

It was one of those examples of how a employee reward system over time became “expected” rewards on a regular basis without any increase in their work efforts, efficiency, and productivity. My fault.  You see, my thinking was and is commonly what many doctors still think, rewards = results. Absolutely, not true! Rewards don’t increase motivation. It has to come from inside. 

An example of the extremes I went to in order to fortify my self image were a bit unusual and overly generous at times. My excitement about how well my medical practice was growing, mixed with some social jujitsu, and a neck wrestling desire to reward all my employees, led me into objective amnesia concerning the event. 

After appropriate arrangements were made, office closed for the day, we
piled into a commuter flight from San Francisco to San Diego for a joyous day of sport and entertainment.  We toured “old town,” made it through Sea World OK, spent the rest of the time shopping on the waterfront, and had a great meal at a fine restaurant before flying back to the bay area. Naturally, it didn’t cost the employees a nickel.   

The rewards day became the topic of conversation in the office for the next few days, the thank you’s were plentiful, and the office work never improved.   Sometimes, when you show the caveman “fire,” it triggers an increased responsibility and loyalty---but usually not in reality in most medial offices.

Another of my similar such inspiring attempt at business smarts a couple years later resulted in a good face licking, but not much more.  In another of my eureka moments I arranged for a special dinner meeting for all my employees and their spouses at one of the most expensive elegant restaurants in town. 

Near the end of the dinner I presented a unique shiny 14 inch beautiful wooden wall plack to each employee which included a gold plate engraved with their own name. 

Below the name was a 4 to 6 line personal description I wrote about their expertise and value to my office team. It impressed the hell out of the employee’s significant other and was a terrific way to praise my crew and was sincerely appreciated. My mistake was not taking advantage of the follow-up and demand more from my employees.
 

Blunder #3

This has to do with my hiring and firing high octane incompetence.  Of course, it was the first time in my life I had to do such things, and had absolutely no understanding of the best hiring strategies, interview process, format for extracting information from the candidate, or qualities a candidate needed for working in a medical office.  Experts tell us to “hire slow” and “fire fast.” Thirty years later I finally
heard that. 


I had invested a considerable amount of money in an office computer system in the early 1980’s knowing that it would increase office efficiency. Of my six associates, I was the first to acquire a computer system. None of my office staff were computer literate business wise and had to be trained.

Shortly after, I hired a member of the computer company's training team
who lived close by and seemed well qualified for medical office work. I didn’t really interview her (bad decision), just asked her if she would like to work for me full time. 

Her chuckling boisterous personality along with being mentally sharp was a cover for her overly ambitious personal agenda. My first clue of an upcoming series of rug-stomping antics showed up on day-one of her job. Everyone of my employees were required to wear an office uniform, or white coat and never complained.

This lady, once hired, flat refused to wear a uniform or a white coat. It angered me, but I rationalized (another mistake) my acceptance of her choice not to comply because she knew computers inside and out and would be an asset to the office.

Note: You must convince yourself of the need to fire an employee who repeatedly challenges your tolerance because they won't change. You will be manipulated if you forgive them, and the longer you delay the issue the harder it is to terminate them. They are more often than not a bad influence on the rest of your employees and disrupts office efficiency.

Over and over again she continued to be a problem, and I continued to rationalize each time.  She knew exactly how to manipulate me and do exactly what she chose to do using her computer expertise as leverage. 

After tolerating her antics for a few years, feeling all along I would never be able to find a good replacement (wrong again) for her expertise, she had to be fired. I mentally could not do that procedure (what a wimp). My office manager fired her. 

The rest of the employees, were happy she was leaving. I had no idea they felt that way. The office staff members were well aware of her manipulation tactics she even used on them. Remarkably, the other employees chose to never once come to me and tell me all she had been doing which I never found out about. 

The whole experience woke up my sixth sense for the first time, drove
red hot spikes through my brain to keep reminding me, raised the bar on employee qualifications, established new rules of engagement with my employees, and became a permanent example of the complexities of medical office hierarchy. 


Comment about incompetence

I am way too ashamed to tell you about the rest of my business
incompetence's. What is amazing to me is the fact that most physicians
suffer with some of these disabilities, know it, contend frequently with them and never do anything about it just like I did for so many years. Getting unstuck from this mindset is not difficult once you know how to go about it (Part 2 of this paper). 

In the next newsletter I will discuss in detail each of my operational hiccups noted above and how you need to feed your mind with the right stuff, avoid these perpetual hassles, and develop a mindset appropriate for good medical office management and reliable medical practice marketing using the tools I will tell you about. 

Feedback always welcome!

The author, Curt Graham, is a highly experienced business and marketing expert, copywriter, and entrepreneur who has been published in various media over 50 years while in medical practice and after.
Discover what it takes for you to reach the optimal limits of your potential in medical practice, and how to do it: Click Link NOW!
www.howtopropelyourmedicalpracticeincome.com

© 2004-2011, Curt Graham M.D., All rights reserved.

handwritten signature of Dr. Graham

Article #8A

ARTICLE---DAN KENNEDY

photo Dan Kennedy riding on a bull

Why People Fail

 series of No B.S. Articles from Dan Kennedy

"The Price of Negligence"

In my relentless search for I don’t know what, I found an article in the December 1, 2008 edition of Nation’s Restaurant News, the trade journal of the restaurant industry, headlined : “Operators Bank On Profit And Loss Scrutiny To Stay Afloat.”   It made me laugh out loud. The article states that “maximizing the profit and loss statement has become a mantra for restaurant operators during the current economic downturn.”  

 

This is then presented as some sort of horrific torture imposed on the owners by a vicious economy.  What is not said, but should be, is that maximizing profit shouldn’t be paid attention to only after dire economic conditions occur, to be given temporary priority, only until ‘things get better.’ 

 

It’s supposed to be what anybody responsible for operating a business does everyday. Including what’s then described in the article: ferreting out and cutting wasteful spending, controlling labor and administrative costs; creating products, offers and price propositions customers really want. Any business owner complaining about having to attend to these priorities because of a recession is a moron, and any trade-journal writer taking them seriously is dumber
than a sandbox.

 

But this is why so many businesses fail. When you turn on the news to see insurance giants exposed as valueless houses of cards, venerable auto companies as manufacturers of nothing but debt, retail and restaurant chains announcing massive store closings, make no mistake: their managements can point their fingers at the recession all they like, but it’s a lie.

 

All the tough economy has done is expose the failures of the people at the helms. Businesses never fail. People fail to run them profitably. Much of that is pure and simple negligence. To be clear, negligence is, by definition, the failure to act with the care a prudent person would exercise.

 

So, when Mort Zuckerman loses 30-million or 300-million of his charity’s dollars by having it all invested with Bernie Madoff for three years, claiming he didn’t even know the money was invested there by somebody he delegated its management to, he is obviously negligent. If you leave a rake pointy side up on your front porch steps, with the lights burnt out, and the pizza delivery guy steps on it and falls and breaks his leg, you are negligent, will be successfully sued, and see your insurance rates go up.
 

There is a price for negligence, and there’s supposed to be. In business, failure to closely and constantly monitor all the important numbers and benchmarks and predictive indicators (as detailed in Chapter 43 of my book ‘No B.S. Ruthless Management of People and Profits’) is negligence of the highest order.

 

Its bill may go unnoticed in boom times when money flows easily and everyone does well, but when the warm breezes change to bitter cold wind, and the accumulated tab for such negligence is presented and payment demanded, much pain occurs, much hand-wringing and whining and crying about the mean ‘n nasty recession is heard, and fools commiserate with each other, sharing the misery of their own sins of negligence.

 

If you own a business, by gum, run the darned thing. Maximize profits every way you can, and never stop trying to find new and better ways to do so, from every valid source of input, ideas and information you can get your hands on or get connected with. At day’s end, ask: what do I know now (about maximizing profits) that I didn’t know this morning? And: what am I going to do tomorrow as a result of what I’ve learned?

 

Anything less is negligence.

 

 
 

The WHY PEOPLE FAIL articles are provided by Dan S. Kennedy, serial entrepreneur, from-scratch multi-millionaire, speaker, consultant, coach, author of 13 books including the No B.S. series (www.NoBSBooks.com ), and editor of The No B.S. Marketing Letter. WE HAVE ARRANGED A SPECIAL FREE GIFT FROM DAN FOR YOU including a 2-Month Free Membership in Glazer-Kennedy Insider’s Circle, newsletters, audio CD’s and more: for information and to register, visit:

 

Articles © 2009/Glazer-Kennedy Insider’s Circle LLC. All rights reserved.

GIFT OFFER FROM DR. GRAHAM-----  https://gkic. infusionsoft.com/go/newmifge/drgraham 

 

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    E-mail = cgmdrx(at)gmail.com
 
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