Get the Most Out of Business Relationships
For physicians running a medical practice, balancing the dual role of doctor and small business owner can be challenging. Declining compensation and rising costs make it increasingly difficult to build and protect revenue, while providing patient-centered health care.
To help entrepreneurs build successful businesses, Ty Freyvogel, founder of EntrepreneursLab.com, wrote Five to Help You Thrive: The Five Critical Business Relationships Every Entrepreneur Must Nurture.
The book covers relationships with customers, employees, vendors, bankers, and mentors, and teaches physicians to focus on the critical relationships that will turn their practices into a successful business. But the goal of accumulating wealth often comes with the risk of detracting from the value of the service being provided. For physicians, this can mean seeing more patients and writing more prescriptions, all while struggling with slow, third-party reimbursement.
“Physicians are realizing that they’re working longer hours, and they're making far less money than they used to,” Freyvogel explains. “There’s more pressure economically for physicians to push volume through their office to increase income, and they only make so much in terms of cash flow based on what insurance companies are willing to pay.”
Becoming a better entrepreneur by fostering important business relationships can help physicians overcome some of the difficulties of owning their own practice. It is important to develop the following five key relationships:
1) Staff. In a society where patients are more willing to challenge physicians, continual evaluation is important for improving customer service—so is cultivating the right personnel who interact with patients before they even see a physician. Building a staff of physician assistants, nurses, receptionists, etc, gives physicians the freedom to provide value for their patients. Running an effective team of employees means creating standards of performance so they know what’s expected of them, and then developing a system of feedback and results.
2) Vendors. When it comes to relationships with vendors, pharmaceutical representatives and laboratories are important to entrepreneurial physicians, who are reliant on them for critical information. “A lot of what physicians learn about medications comes from pharmaceutical reps that are calling on them," Freyvogel says. "It's important to manage relationships with pharmaceutical reps [so] that they feel like they're important to the physician.”
3) Bankers. Medical school debt combined with the costs of running a practice makes bankers another important business relationship. Working with bankers and revising administrative procedures in-house can go a long way in terms of managing a practice more efficiently. “There are so many things physicians can do to start running their practices like small-businesspeople, right down to establishing accounting systems that give them continual feedback in terms of cash flow,” Freyvogel says.
4) Outsourcers. Taking advantage of outsourcing can help manage cash flow and make a practice more appealing than larger companies because physicians can utilize costly technologies as well as provide faster results to patients. This gives them an advantage over companies that are less able to adapt to change.
5) Mentors. Assembling an advisory board of knowledge workers contributes to the overall effectiveness of any small business as long as you learn the right questions to ask. With mentors, as with all business relationships, it's important to make your associations as valuable to those people as they are to you. Do this by showing them respect and gratitude.
As a physician running a practice, it’s important to think like a businessperson. This means developing a vision, creating a plan, and conveying this to others who share your passion for what you do.