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| Dear Friend,
UFO "weather" balloons as models for business strategy?
Chinese "weather" balloons, lighter than air craft, and pies.
I guaranty you that it’s about more than hot, or lighter-than, air.
It's often bemoaned that industry leaders suffer from being in an echo chamber.
For example, most healthcare industry leaders know a lot about the way that other healthcare deals, or other ASCs, or other medical groups, and so on, are organized. But what do they know about deals, and ways of doing business, in other spheres?
That's a shame, because there are many valuable lessons from other industries that can be borrowed for great benefit.
That sort of borrowing is one of the things that I've drawn on over a career that started with working in stores, restaurants, and factories, and in being an industrial salesman, doing real estate deals, and so on, plus the probably 100 industries that I’ve been involved in as a lawyer.
But, even if you haven't done any of that, there are some tools you can use to imagine different ways of structuring your business, whether your business is an anesthesia group, a hospital, or a whatever.
Much of what I’m going to mention is inspired by a book by Mark Fox called Da Vinci and the 40 Answers. In the book, Fox interprets concepts developed in the former Soviet Union by Genrich Altshuller. At one point in his career, Altshuller was an employee in the Soviet equivalent of the patent office. He realized over the course of assessing patent applications that ideas could be put into a number of categories. Fox identified 40. I'm not sure if Altshuller identified 40 or 36 or 62; it doesn't make any difference.
The acronym for Altshuller's thinking is known as TRIZ from the Russian Teoriya Resheniya Izobreatatelskikh Zadach, the “Theory of Inventive Problem Solving”. The notion is that there are models or basic formulae to follow to guide your thinking in inventing or in making improvements.
So, for example, the concept of the "weather" balloon, a lighter than air craft, is something that floats above an existing structure and the notion of the pie is something that's cut up into pieces, that is, into constituent parts.
Think about this in the context of healthcare. An ambulatory surgery center is simply the O.R. cut out of a hospital. A free-standing emergency room is a similar example: It's the ER cut out of a hospital and then made into a free-standing entity.
The concept of a management entity, an “MSO”, could be conceived of multiple ways. It’s a balloon floating above an existing structure. Or, it’s something (management) that’s been removed in “a piece of the pie” fashion from the entire “pie”, say by the sponsoring medical group, that the group uses to manage itself, and then subsequently expands its function by bringing in other customers, that is, other medical groups to which the MSO provides services.
Think about how other structures, other concepts can be used as models for your current business or for a new business, whether they come from other industries or from thinking guided by tools such as TRIZ.
What’s in a franchise model that might be applied to medical groups? What referral structures are used in the travel business that might grow your facility? How can what a charity accomplishes with a zero budget be applied to acquiring a competitor?
Stuck? Let’s talk.
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| | | Tuesday - Another Medical Group Governance Failure - Success in Motion
Watch the video here, or just keep reading below for a slightly polished transcript:
I want to talk to you about a topic that I speak about often, but the problem is so freakin’ pervasive, I ought to be talking about it even more. That problem is medical group governance on a completely consensus or fully participatory basis, which in my estimation isn’t governance at all. Instead, it’s simply a recipe for your group’s failure.
Consider this poster child: Sixty-some shareholders in a group, a decision having to do with expanding to a new practice area, a practice administrator who can’t exercise any authority unless it’s approved by the board, and a board that won’t exercise authority unless everyone in the group has input.
With that sort of "governance", it could take months to come to a decision. In fact, it could take months to come to no decision at all, while, in the meantime, your competitors are running circles around you.
Full consensus can lead to passing up on completely valid and highly profitable new business, simply because some handful of the group's members are too afraid of their own shadows and won’t take any risk.
Full participation and consensus is no way to run a business, especially no way to run a medical group of more than 2 or 3 members in today’s healthcare economy.
Clean up your governance structure, or the rest is just left to chance. Actually, it’s left to what somebody else is going to decide to do, or not do, to you.
That’s no way to succeed. It's a way to fail.
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| | Wednesday - Are All Hospitals Really Price Buyers? - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript: I see that you're driving a Chevy Spark, getting 119 combined city/highway miles per gallon-equivalent. And, at around $25,000, it’s got to be the most efficient car currently being sold in the U.S.
What? You’re not?
Oh, then you’re driving a Nissan Versa 1.6 S, right? At $11,990, it’s the least expensive car sold in the country.
What? You’re not?
You mean that you’re not a price buyer; you’re a value buyer?
Certainly, there are price buyers out there. In the car market, they are buying those Versas and their close competitors.
But most people don’t buy on price alone; rather, they buy on value.
Value is what a buyer receives for the price paid. If value is more than the price, it’s a good deal. The devil though, is in the details: what’s value to you isn’t value to everyone. And, value is determined by the buyer.
I once represented a guy who could, and did, move $50 million into an account to show good faith within a day of being asked to do so. Yet he drove a ten year old Buick station wagon. He apparently saw no value in a Mercedes. Another client, similarly well off, took a weekend trip to Palm Springs and came back with not one, but two, Rolls Royces.
So, then, why do so many simply assume that all hospitals are price buyers? That they only want they cheapest price?
You can compete on price. Go ahead, try. But then your competition might simply cut their price, forcing you to cut yours even more. Your competitor doesn’t care if you are profitable.
Instead, compete on value, the value that you provide to your customer. Yes, creating value in the eyes of your customer is harder than simply saying “we’re the lowest cost provider,” but you’re selling professional services, not mass produced pickup trucks.
Sure, some or even many hospitals may be price buyers. If they are, consider that they may be the wrong customer for you. Either that, or you need to develop a more sophisticated business model in which you provide different value options to different customers.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Growth. There's lots of talk about it.
"We're the fastest growing fill-in-the-blank in the Tri-County Area!"
But growth for growth's sake isn't a strategy. It's just a tactic, the tactic of getting bigger.
Growing your business doesn't always make it more profitable. If it did, General Motors would never have gone into bankruptcy.
So what is your strategy?
For example, if part of your strategy is weaning your group from dependence on a single facility, something that I always recommend, then the tactic of expanding to one or several other sites makes sense. But growth to a facility that results in an endless stream of patients whose care is subsidized by your other locations' profit is probably not the right move.
Or, in some instances, your strategy might be expanding to a size that makes your group attractive as a partner when compared with other groups. That's excellent if it's a part of a larger strategy.
In business, especially large business, there are sometimes perverse incentives for growth. Like the CEO's bonus. But unless your business horizon is the next quarter, it's best to take a long term view of where your business should be.
And that means that it all boils down to strategy. Where is it that your business is now? Where do you want to take it -- what is your ideal future?
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| | | Calibrate Your Compass
Read our exclusive RedPaper to guide you through this evolving situation.
The coronavirus crisis caused a short-term economic crisis for many medical groups. Our RedPaper shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
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| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this
time? How can we focus on solutions to your most pressing strategic concerns?
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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