Most medical practices today are failingâ€"not necessarily going out of business (though many are doing that every day) but failing to fulfill the potential the physician envisioned in those halcyon days of medical school. Most doctors who own their own practice don't own a true business but a jobâ€"doing it, doing it, doing itâ€"hoping like to get some time off, but never figuring out how to get their practice to run without them.
"Most doctors don't think of themselves as businesspeople, and that's the problem."—Michael Gerber
Many medical practices today are failing—not necessarily going out of business (though many are doing that every day) but failing to fulfill the potential the physician envisioned in those halcyon days of medical school.
Most doctors who own their own practice don't own a true business but a job—doing it, doing it, doing it—hoping like to get some time off, but never figuring out how to get their practice to run without them.
The more you examine what is true about your medical practice, the better you will be at prioritizing the areas that demand your attention. Here is a series of questions you can use as a starting point for identifying potential problem areas in your practice.
This is not intended to be a full analysis, but rather a tool you can use to focus your attention. It may be helpful to print this page, and actually write down your responses. Take one question at a time and really think about your answers. This is not a test. There are no right or wrong answers. There are only responses that reflect your truthful objectivity about the state of your medical practice.
1) List three key issues or challenges facing your medical practice.
2) What do you want from your practice? (Circle all that apply.) a) sell it, b) franchise it, c) leave it as a legacy, d) expand it to other geographic markets, e) use it as an income source, f) stay involved doing the strategic work, or g) stay involved in the daily tactical work?
3) What are your Key Strategic Indicators? (Sales, profit margins, growth rates, practice value, productivity, patient satisfaction, employee morale, industry leadership, reputation in the market, product/service quality?)
1) How many locations do you have?
2) How many employees do you have? How many employee doctors are in your practice?
3) How many people directly report to you and what are the results you hold them accountable for?
4) Have you created an organizational chart defining the various positions in your practice?
5) Do you have a recruiting and hiring system ?
6) Do you have a documented training system? What percentage of your entire operation do you think it covers?
7) Are you getting the results you want from your people?
8) Do you have written standards and expectations for your people? Are their accountabilities in written form? Do they know them? Have they agreed to be accountable?
9) Do your employees receive documented, on-going training and support?
10) Can you calculate the dollar cost for unproductive staff? Consider the impact of lack of clarity and agreement about accountabilities, lack of training, or loss of training time, etc.
11) How are your people compensated? Hourly? Salary? Per job / per unit?
12) Do your people understand their pay structure and benefits? Are there clearly defined criteria for regular increases and advancement opportunities?
13) Look at the other work you've done evaluating your practice (either other Business Needs Analyses you've completed, or other business development work you've done). What's missing in the structure of the business?
14) What are you accountable for and what results are dependent on you?
15) What is the maximum number of people reporting to any one manager at any one time?
16) How do you manage results? How do you address violations or missed accountabilities?
17) Have you ever encountered a situation in which you have committed to more work than you can effectively handle?
18) Do you have a documented, up-to-date safety manual?
Marketing & Sales1) Who are your patients?
2) Describe your typical patient. What is their age, occupation, household income, employment status, education, marital status, family status, race, ethnicity?
3) What is your central psychographic model? In other words, what are your patients' self-perceptions and external perceptions? What motivates them? What unconscious associations do they make? What is the dominant way they get gratification in their lives? How do they justify their purchasing decisions?
4) Where are your patients located? Are they local, national, or international? What is your actual trading area? What is your maximum trading area? (How far from your "base" can you go for a visit before you lose money?
5) Do your patients come to you, or do you go to them?
6) Does your facility present the image of your practice you want to project?
7) Does the "look and feel" of your practice positively impact the unconscious minds of your target market? Do your employees wear a "uniform" that identifies your practice?
8) Is your service a "unique" service--one of a kind with little competition, or is it a service where patients perceive it as just like all the rest? Do you have a "brand" where there is substantial competition but your service is differentiated from the rest?
9) Do you know how you attract the majority of your patients?
10) What marketing efforts have you tried? Referrals, direct mail, reputation, media advertising, telemarketing, yellow pages, print, display/outdoor, events, promotions, publicity, public relations, other?
11) What kind of results did you experience? Have you been able to quantify each of your marketing efforts?
12) Who are your key competitors? What is your standing among them?
13) Do you have a system for measuring and monitoring your target market's size, growth, and potential? What is your market share?
14) Do you have a marketing budget?
15) Do you have a marketing strategy in place for future growth?
16) Do you know how many people you reach with each lead generation method? How many of those people are part of your target market?
17) Do you know what percentage of your market you reach with each lead generation method?
18) Do you know how many of those people you reached became leads?
19) Can you calculate the cost-per-person reached?
20) Do you know your total lead generation cost?
21) Are your lead generation channels a "fit" with your target market, and your practice's image?
22) Does your lead generation message include an attention-getter, information your target market needs, persuasion, and a call-to-action?
23) Is your lead generation message creating the right impression?
24) Do you provide a convenient way for the patient to respond to your lead generation message?
25) How do you qualify your leads?
Finances1) Is your practice operating at a net profit or at a net loss?
2) Have your gross annual revenues been increasing, decreasing, erratic, flat? Why do you think that is?
3) How is your cash flow? (Circle one) Excellent, good, fair, poor, inconsistent?
4) How often do you pay your bills on time? (Circle one) Always, most of the time, not very often, almost never?
5) Are you able to make payroll? How do you pay yourself?
6) Are you comfortable with the amount of debt you have? Is it short-term or long-term debt? Are you on a structured payback schedule?
7) How is your revenue base distributed among your patients?
8) What payment terms do you require of your patients? Due on receipt, 15 days, 30 days, 60 days?
9) How old are your Accounts Receivable collections? Under 20 days, between 30 and 40 days, between 60 and 90 days, over 90 days, don't know?
10) What kinds of financial reports do you generate on a regular basis? Profit and loss, balance sheet, statement of cash flow, budget, projections, none?
11) How often do you generate these financial reports? Weekly, monthly, quarterly, annually?
12) For the reports you produce, how much of the information do you understand and use? (Circle one) All of it, at least 75%, between 50% and 75%, between 25% and 50%, less than 25%?
13) How do you manage and control on-site expenses? Do you have a system to collect, track and reconcile on-site or employee-incurred expenses?
14) If applicable, can your on-site supervisors sign for materials? Do they have a signing limit?
15) Have you allocated funds for care and upkeep of equipment, etc.?
16) Who writes checks, makes deposits and reconciles bank statements? Is it all the same person? Do you trust them? Do you review your bank statements?
Now review your answers. Are you uncomfortable with any of the answers you gave? If so, then you've identified the primary areas of focus for your business development efforts. Begin today!
Michael Gerber is the author of The E-Myth Physician. Drawing on over 25 years of experience working with small business owners, including many physicians, he provides revolutionary, practical, and enlightening insights on how to produce the best real-world results not only in the physician's practice, but even more important, in a physician's life. He welcomes comments at www.e-myth.com/physician or 800-221-0266.