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Why do doctors fail to act when it comes to redirecting their no longer functional medical practice business model?

“We’re the consultants; we have a 10 am appointment with the doctor.”

“She’ll be here shortly, do you mind waiting in the kitchen?”

As we waited I tried to recall the last time I had seen a kitchen in a sole practitioners office, most have already opted to convert the room and leverage it for a sessional rental.

Our meeting was with an Obstetrician/Gynecologist that has been in private practice for the last thirty years. We had hoped she would be interesting dynamic, intelligent, and kind; and happy to see she did not disappoint.
The doctor and her office manager sat with us to talk about the state of the practice as they saw it, we listened and wondered how did they fail to make any changes over the last ten years as billing rates continued to deteriorate to what we now know as “Obama Care reimbursements ”.

The doctor explained that she leads a simple life but like many senior doctors, her retirement investments failed her and so did the many fancy advisors that she put her faith in over the years. In the current environment it has simply become impossible to pay the bills.

“The only wonderful thing I did was to purchase this medical suite years ago and it is currently debt free” the doctor notes.

Challenging the economics of a private practice further is the doctors need, and overwhelming want, to perform surgery. We have seen this time and time again; doctor’s describe the adrenaline that comes from surgery and the satisfaction that comes from improving a patient’s life as too rewarding to even consider giving up. The issue is that a complex surgery keeps the doctor in the operating room all day with reimbursements for surgery less than half of what would be billed during a typical day at the office seeing patients.

Her only desire is to make a modest salary and deliver medical services in a way she believes is humane; unfortunately this is a luxury most doctors abandoned some time ago.

We talked about the few models left that would allow her to continue on in a self-employed way:

a. Turn the wholly owned medical space into shared medical space, seven days a week with three shifts daily utilizing every square inch of her space (removing the kitchen) and use the rental offsets as well as the shared receptionist to create some efficiencies within the practice. We set up systems for doctors to do this that they can manage on their own after we complete our consultation.

b. Reinvent themselves into “Cosmetogynecology”. Or, in other words, a creative way to say cosmetic gynecology. We have seen many Obstetrician / Gynecologist successfully navigate this route. As patients sit and wait to see the doctor they watch a video looping on vaginoplasty , liposuction ,laser hair removal, g-spot injections and even toys for stimulation. All of this is of course done in a very tasteful way and tends to be widely accepted by the patients though some doctors that worked so hard to become traditional healers clearly would not view this as an acceptable option.

c. Cash only services. I have seen fancy names for this but very few doctors have the courage to make the leap believing that they would not get enough patients willing to pay for this concierge medicine. Moreover, it’s called “practicing medicine” for a reason, doctors not only find medicine rewarding but believe, rightfully so, that practicing makes them better at their craft. Less patients leaves less room for growth and improvement.

d. Alignment with other sole practitioners for efficiency. We have seen significant savings happen by eliminating the redundancies. The only trick here is to keep searching until you have a fit. Done right the energy from a new dynamic will propel the practice to significantly better margins.

Why do doctors fail to act? Chiefly and amongst many reasons, we believe it’s largely due to lost confidence in consultants. Many consultants claim to have the experience to work efficiently and quickly when in reality they are simply taking their monthly retainers and seeing how far they can stretch the engagement out before it becomes apparent that they are not adding value.

How do you find an exceptional consultant that will deliver results in a way that is palatable and won’t break the bank?

a. Interview many; have them explain in detail what their experience has been and how it will help in the current environment.

b. Have them prepare a consulting to management understanding inclusive of budgetary milestones.

c. Have them work on a budget that is comfortable for your practice, discussing time and efforts made weekly. Discuss tabling fees that are not budget friendly but reasonable to be collected only if the milestones are reached.

d. Make a portion of their fees contingent on results giving them “skin in the game” where additional payments are only made should the new business efforts work out.

Additional Advice:
Once you accept a consultants plan and work to implement it, any recommendations in office systems, software, web domains created and purchased and new personnel hired must all be in your control. Make sure you have all the passwords and contacts created as you rework your practice. This way jettisoning the consultant at any time will not impact your day to day in any way.
Remember the best way to get a fresh look at your business can be through the right outsider’s eyes. Take the time to interview potential consultants; it can change your business and ultimately your life for the better.
Respectfully;

Perry D’Alessio, CPA
D’Alessio Tocci & Pell, LLP

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