A continuing series of practice management columns to educate OFP's on effective financial management.
By Judy Capko
In the past few years, we've seen a surge in physicians changing their practice model in hopes of improving the practice's financial performance and family physicians are no exception. There are emerging boutique (concierge) practices, weight loss clinics and pain management centers. Some practices are adding house calls, expanding diagnostic services such as adding bone density studies, or focusing on complementary medicine. But if you are considering such a move, look before you leap.
Approach any new venture with cautious optimism. The degree of success you will experience depends on how you go about it. Here are a few pointers to get you headed in the right direction.
Family physicians are bombarded, and sometimes exploited by various people offering opportunities to replace shrinking practice revenue by investing in anything from software development to building ambulatory surgery centers or purchasing expensive diagnostic equipment. Before parting with your money to invest in something you have little history with or experience, seek opportunities to build the revenue base within the walls of your own practice and specialty.
Ask yourself the following pertinent questions.
Are you referring services outside the practice that could be performed within? If so, does it make sense to provide these services?
Are there services no one in the community is providing that causes your patients to go elsewhere?
Are competitive forces encroaching on your market share that has a broader array of services to offer?
Are non-traditional services, such as complementary (alternative) medicine capturing business you might consider offering?
If your answer to any of these questions is yes, it's time to think about the way you do business and what you might do to expand the services and products you offer. There might be a pent-up demand for these services and a void you can fill. In doing so, you increase service to your patients at the same time you increase revenue.
Do the Research
But before you jump in with both feet you need to do some basic research. Examine the potential opportunities and the potential dangers that might exist. Start by getting the answers to the following questions:
Are there any government regulations that preclude you from adding the service?
Will it offend existing referral sources and affect future
referral patterns?
Is there a potential that you will attract non-traditional patients that detract from you current patient mix?
Will there be difficulties with insurance companies with either reimbursement or a clear understanding of collecting from the patient as a non-covered service?
Can you accept the philosophical issues surrounding adapting to changing the way you
currently practice?
Will your staff support a move in a different direction?
Is there a chance the practice will grow rapidly and you will not be equipped or staffed to handle the new demand?
Is the upstart cost too steep for the potential return on investment?
Is this a fad or a
long-term opportunity?
Who will you be competing
with and are you ready to aggressively compete?
Once you have explored these questions and have what you consider to be reasonable answers you will be at an important decision point. If the decision is to move forward, you will need to develop a plan that addresses any issues uncovered via these key questions, as well as outlines the essential steps to bring the new service or product on board.
Next Steps
Now it's time to go to your entire staff and discuss your intentions, problems that have been uncovered and the solutions you have in mind to address these problems. Engage in honest and open communication about the potential of changing your practice style and adding new services. Staff support is a vital component to the success of adding a new service.
Discuss everything from the philosophy behind it to the impact on operations, from the affects it will have on existing patients to the potential to increase the patient base, and from the current practice image to the new image the practice will portray.
Whatever direction you take, you will need to develop a strategic marketing plan and a budget. Hiring a marketing specialist or a healthcare consultant is an investment worth considering. It will save you aggravation, minimize confusion and maximize the potential for success.
Approach changes in your service or product line with a sound business strategy and careful planning. It's your future and it's filled with opportunity. The key is to understand which opportunity matches the community needs, compliments your existing practice and suits you best.
Judy Capko is a healthcare consultant with more than 20 years experience. Her focus is practice operations, staffing, finance and marketing. Judy is a national lecturer and has participated in ACOFP conferences. She is based in Thousand Oaks, CA and can be reached at (805) 499-9203 or e-mail: judycapko@aol.com
