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Consultant's Case FilesTuning Up a High-Performance PracticeThis practice was humming along on all cylinders. Or was it? Alan Cleinman and Laurie ZimniewiczOneonta, N.Y. Sidebar:
3 Steps to Rebuilding the Team Editor’s Note: This is the fourth and last in a series from the case files of the authors, principals in Cleinman Performance Partners Inc., an ophthalmic consultancy. Our first impression of Bob Black, O.D., was that of an energetic entrepreneur who enjoyed optometric practice. Over the years he had built a large practice in Bremerton, Wash. He took risks and kept ahead of the trends. It wasn’t readily apparent why he needed our help. As we talked with Dr. Black, we gathered that he had benefited from ophthalmic consultants in the past and had confidence in the process. He said the practice was due for a professional assessment, along with some new ideas to keep it growing. “Every seven years or so, I get antsy,” he told us. “I have to build a new building, remodel extensively or try something we’ve never done before. Right now we’re doing well, but I’m wondering if there’s anything that needs attention.” He came to us for “observations and recommendations.” This was refreshing to hear. Many practitioners won’t bring in a consultant until they have big problems or are in the clutches of a crisis. Working from the relative calm of a practice that’s busy but has no impending catastrophe sounded good to us. A Closer Look As we took a closer look at the practice, we found much to admire. Back in the mid-1980s, Dr. Black had invested in a 6,000-square-foot office building, of which his practice occupied 3,600 square feet. This attractive, well-appointed building reflected Dr. Black’s professional image well and was large enough to accommodate his growth needs. The practice had enjoyed steady growth since Dr. Black purchased it in 1971. However, as we analyzed operations and the books, we saw signs that growth had slowed. There had been relatively high turnover in the 12-person staff. The optical seemed to be underperforming, perhaps due to an inefficient layout in two rooms. And the practice gross, while more than three times the national average for a solo doctor, was stagnant. In our analysis, we surveyed employees and patients. Among the former, we found some problems common to optometric practices. There were no clear career paths, and employees didn’t feel committed to the practice’s growth. On the positive side, they admired their boss and respected his abilities as a health-care provider. His patients liked this practice, too. They gave high scores in thoroughness of exams, doctor communication and staff interaction. However, there were several patients who were unhappy with the waiting. We traced some of that to certain days of the week. Dr. Black feared that this dissatisfaction could have an impact on the practice’s future. Optimize Optical The information we’d gathered helped us to focus our analysis. Our primary concern was the underperformance of the optical because that has a big impact on practice revenue. We thought that if we could improve that, Dr. Black would see more vigorous growth. The optical carried around 1,350 frames, displayed in two different rooms. The layout was inefficient and, frankly, there were too many frames for anyone to look at. The dispensing staff, although pleasant to patients, seemed disorganized and not well versed in the benefits of products or in how to communicate them to patients. “Years ago, I could keep my thumb on every part of the practice,” Dr. Black now admits. “But we’ve grown so big that I just cannot give my best attention to the optical. I need to have additional managerial capabilities there.” We agreed, and launched a search for a qualified optical manager. At the same time, we noted another component that was diminishing: practice revenue. Back in the 1980s, Dr. Black had been “ahead of the curve” when he installed a surfacing lab. At that time, it seemed to be the best way to guarantee great service to patients and keep some practice expenses under control, as well as bring in some revenue that would otherwise have gone to an outside lab. However, in 2000, the practice faced an altogether different situation. Lab equipment had become computerized and was now quite costly. It’s expensive for a single practice to keep up with this technology. Trained lab technicians are in short supply and can demand ever-increasing salaries. “In some ways, the practice is held hostage by the lab technician,” Dr. Black says. “Without that person, you can’t fill the eyeglass orders, and that means you can’t service patients.” We suggested that Dr. Black quit the surfacing business. He could invest in a single piece of automated finishing equipment, which an individual with lesser skill than a lab tech could operate. He could then add the space that was devoted to surfacing onto the optical. He agreed, and the results have been positive. The practice has been able to reduce its cost of goods by 4%—a significant amount in a large practice. If you subtract the salary of a trained lab technician, the practice reduced this cost by closer to 8%. Find a Manager Meanwhile, our search for a qualified optical manager hit pay dirt. Through our network in the ophthalmic business, we found Ric Sands, an optician with 22 years experience. Dr. Black felt that Mr. Sands offered skills that complemented his. “Ric is an entrepreneur, and he fits well with my style,” Dr. Black says. “He’s dedicated to the highest level of patient service, and he has wonderful people skills with the staff, too.” Mr. Sands had once owned several optical shops in another region, but was employed by a large optical chain when we met him. He was happy to get back into a professional environment. “I wanted to come here because the practice needed me,” Mr. Sands says. “It was a good challenge. The practice was put together well, but the optical had not been maintained.” He did find some downsides, though. “There were too many frames, outdated frames, and [the optical] suffered from staff turnover.” In 14 months Mr. Sands has led the optical team to make these changes that we recommended:
“We needed to bring in more frames that patients wanted and get rid of the ones that didn’t move,” Mr. Sands says. “You must do your homework on this, and decide whether to join the bandwagon or be a leader. Being a leader is a harder road, but your patients will appreciate it.” All these efforts have paid off. Since 1998 average revenue per refraction has grown 18%, from $294 to $346. Revenue per eyewear unit has gone from $210 to $259, up 23%. These ratios are well above the national benchmarks of $277 for average revenue per refraction and $233 for average revenue per eyewear unit, as measured against our own national database of financial performance. Please Patients, Motivate Staff Mr. Sands’ management skills extend beyond dispensing to teambuilding and motivation of the entire staff. He does a great job keeping everyone focused on the practice mission, which is to satisfy the needs of the patient. “Even here in the optical, we don’t sell glasses—we find solutions to visual needs,” he says. “This is what the whole practice does. We find that if we focus on the needs of the patient, the practice growth will follow.” Mr. Sands expresses some simple tips on staff motivation that worked well in the practice: “You have to be honest with people, tell them when they do great work, and tell them when something’s wrong. I don’t dwell on mistakes, or harp on them—I move on. You also have to empower people so they can act more like partners in the growth of the practice. That alone motivates people, and they feel motivated to make good decisions.” (See “3 Steps to Rebuilding the Team,” below.) Now, Dr. Black feels that his team is working well together, and they are happy on the job. Wait Loss That left the problem of patients waiting too long. Closer study revealed that this happened on days when both Dr. Black and his associate O.D. were seeing patients. Even though each had two exam rooms, they seemed to be crowding each other, and often had to wait for patients to get through the single pre-test area. We came up with two changes in scheduling. First, we bundled all medical exams (including contact lens checks and glaucoma visits) into a single hour at the beginning of the day. These were short visits, and patients moved quickly through the exam rooms. We also placed medical exams at the end of the day so the practice could finish on time. The second change was probably the most significant. We observed that patients only had long waits when both doctors were in. When just one doctor was seeing patients, everything moved smoothly. We devised a schedule in which the doctors only practice together one day a week. All other days, just one doctor is in the office. “When I have all four exam rooms, I can move at a faster pace,” Dr. Black says. “The staff likes it, and we’ve eliminated those long patient waits.” Building for the Future Now Dr. Black’s practice is back on the growth track. The staff is motivated and productive, and he’s planning to expand the optical. “I have merchandising ideas for our new, larger space,” Mr. Sands says. “We won’t have frames on frame boards. They will be presented more like fine jewelry, which patients like.” Dr. Black, who had cut back his office hours, just recently increased them when his associate left the practice. His long-term goal is to bring in another associate, although he is concerned about finding just the right individual. “I don’t see many young doctors who are entrepreneurs,” he says. “They seem more interested in how much time they will have off. They seem interested in their profession, but not willing to put time into building the practice.” Putting that time in demands that you know where you’re going. “You have to get direction on this, and focus your energies,” Dr. Black says. He also believes that risk-taking is necessary to succeed, and that taking stock every so often helps you to take those necessary risks. “In all my years in practice, I’ve never been reticent to try to do better, offer a new service to patients, or offer a service in a new way,” he says. u |
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3 Steps to Rebuilding the TeamDr. Bob Black’s staff was at odds with itself. Employees admired the doctor, but they didn’t have direction or feel committed to the future of the practice. When optical manager Ric Sands came on board, we put his people skills to work to address the problem of staff turnover in three ways:
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