A Southeastern orthopedic group of five physicians hired a new practice administrator who had been a CFO in an industry outside of healthcare. As the administrator evaluated the practice, he quickly observed that — while the group was well respected in the medical field and within their market for their care – the business side of the practice needed attention to be positioned to compete in its market. A physician in the group had previously worked with members of the Healthcare Team at Elliott Davis Decosimo. The doctor recommended that the administrator meet with Elliott Davis Decosimo’s Shareholder Ira Bedenbaugh, a consultant specializing in physicians and physician practices. The meeting with Ira confirmed to the administrator that the practice was facing significant issues as it looked toward the future. Along with finding the time to explore options for a new electronic medical records and billing system as well as upgrading the phone system, the practice needed to fully discuss how to best compete for market share in the long and short term. The physicians and the administrator believed that engaging in a strategic planning exercise would be the best course of action to address both current and upcoming needs. The administrator and Ira planned a weekend retreat which would allow the practice’s physicians to delve into the short-term and long-term issues facing the practice and begin the process of developing a strategic plan.
Plan of Action:
The weekend retreat afforded the physicians the opportunity to actually step back from the daily practice of medicine in the office and consider their roles as the owners of a business. Ira and his team had developed a highly successful process to discern the key issues facing a practice. Prior to the retreat, the Elliott Davis Decosimo team conducted individual interviews with the physicians. The one-on-one interviews were essential to the strategic planning process. Within a group dynamic, some voices and personalities can become more dominant than others, often preventing worthy ideas and valid points from entering the critical discussions that will determine the direction of the business. By conducting individual interviews prior to the retreat, this approach ensured that everyone in the group had an opportunity to voice their own perspective. With those observations in hand, the practice met as a group within the retreat setting and participated in a discussion during which long-term issues were placed on a list on one wall and short-term issues were placed on another wall. Instead of whittling the list down through a ranking exercise, the doctors were directed to determine which of the issues from both lists would become a “Top-10 Priority.”
Following a day of analysis and discussion, the practice had dinner together giving the physicians a relaxed environment to get to know each other better outside of work. While discussion of the day’s activities was not allowed, it did offer the opportunity for the physicians to better understand the perspectives from their partners. Before the first day concluded, the physicians reconvened for general discussions about the issues. While no action items were formalized, it was an opportunity for the physicians to let each other know where they stood on the items they had all identified.
The second day began with the physicians discussing the short- and long-term benefits and consequences of the practice taking (or not taking) action on the top ten action items. The list was prioritized and each physician was assigned at least one of the issues with the responsibility for overseeing that the objective would be achieved. Most importantly, a realistic timeline was established for developing, vetting and implementing a solution for each issue. The practice also put an accountability process in place to ensure that all items were properly addressed.
Within the short-term list, the doctors realized that their antiquated phone system needed to be updated and the billing system needed to be replaced with one that could accommodate a new electronic health records system.
On the long-term list, they needed to strategically consider the practice’s position in the local market and examine how it matched up against larger orthopedic practices in their market. Strategically, they began to ask the following: How could they grow their market share? How could they protect the practice from losing patients to the larger competitors?
The update to the phone system paid immediate dividends as patient satisfaction improved in that calls could easily be routed to the correct person without a patient having to call another number. The new billing system greatly improved the practice revenue cycle resulting in improved profitability of the practice.
On the long-term front, the practice identified an opportunity to participate in a joint venture with one of its larger competitors on an initiative that provided an additional revenue stream for the practice. Through the process of working with the larger orthopedic group, the physicians discovered two realities. The first was they could not have added the new revenue stream without the involvement of the larger group. Secondly, they discovered they had more in common with the larger group than they first thought.
As the physicians looked at the market trends and the economic environment, they realized the practice would best be positioned as part of a larger group than continuing to move forward as a smaller operation with limited growth potential. Ultimately, the practice forged a favorable deal to be merged and become part of the larger orthopedic group.
Without the strategic planning process, the practice would not have been in a position of strength when the merger opportunity presented itself. By engaging in the strategic planning process, the practice was not only able to address the short-term issues that added immediate value to the organization, but they were also able to examine the practice’s position in the market.
We Can Help
Businesses benefit from a clear plan and having their ownership team being intentional about working toward common goals and defined outcomes. If your practice is in need of a strategic plan, contact the Healthcare Team at Elliott Davis Decosimo.