Should you ever find yourself looking back at your medical group’s recent performance results with disappointment, first congratulate yourself. You’re self-aware enough to know you have an issue that needs attention. Now, it’s time to quickly move on to action, with a practical first step being to diagnose root cause problems.
Clinical business performance issues can often be traced back to one of five core areas. If you suspect that your group is not performing to its full financial potential, you can use the following “STEPS” framework – Strategy, Talent, Execution, Product, and Structure – to find areas of opportunity that will allow you to act purposefully in putting your organization back on track.
Strategy
Are you executing the right business strategy? In its simplest form, strategy comes down to three fundamentals. Growth in both number of patients and revenue occurs when you either:
- Apply current service line competencies to new patient markets,
- Develop new competencies that are of value to your existing patient base, or
- Tactically differentiate from competing providers to capture “in market” share.
Any relevant strategic initiative should carry a clear return on investment. In evaluating strategy, “size the prize” by defining the true profit potential, then weigh it against the required costs, including time, development, and economic investment.
Talent
Do your clinical and administrative leadership competencies and overall company talent investment align with your strategy? Even the best strategy will stall without the right capabilities in place. Look for evidence of true commitment and a demonstration of urgency, both in individuals and across the team. As your practice group grows or as the environment around you rapidly changes, it’s not uncommon to find yourself under-resourced relative to critical competencies. Invest time and resources in coaching and development while remaining objective regarding talent evaluation. When necessary, take action to top grade talent or add depth in key leadership, clinical, and functional roles.
Execution
Is your execution both effective and efficient? Ensure that tactical execution aligns with strategy. Don’t be accidental. Establish clear metrics and KPIs to ensure traction, and implement formal operating rhythms that allow for consistent inspection and monitoring. Systemize forecasting processes, and template “gap closing” initiatives and “activity sprints” to allow for purposeful course correction when necessary. Measure what matters, and make reporting of output transparent. Discuss variability in productivity and performance openly in group settings. When teams review results together, they learn and grow together.
Product
Yes, clinical enterprises have products. These products come in the form of healthcare services that must be delivered to patients (customers) with consistent quality and predictability. Likewise, payors are becoming increasingly demanding of value, which is a function of quality and cost. The alignment of service line offerings and acceptable contracting has never been more important. To ensure effectiveness, service line offerings must meet three important qualifications:
- First, the services delivered must be relevant to your market demographic. Otherwise, demand will not exist.
- Second, you must have the capability to deliver a given service based on current competency or one that can be readily developed.
- And, finally, a healthcare provider’s portfolio must be profitable to the degree cash flow needs of the enterprise are satisfied. This does not mean that all services delivered are adequately reimbursed or compensated, but it does mean that the aggregate offering within the clinical market is capable of generating adequate cash flow.
Structure
Are you organized to deliver performance results? Are structural points of accountability in alignment with organizational priorities, and is the span of control practical given what needs to be managed, refined, and inspected? Ensure that both formal and informal organizational structures align with the group’s critical business objectives and that your structure is appropriately scalable and elastic. Remember that most organizations are structured perfectly to achieve the results they are presently generating. It may take change to produce change.
As clinical business leaders, you are facing unprecedented environmental challenges. Be one who sustains success by separating yourself with a keen sense of awareness, objective application of curiosity, and a willingness to take necessary action.
Jerry L. Kelsheimer is President and CEO of Medic Management Group and MMG Healthcare Solutions. His background includes extensive work in areas including leadership development, strategic planning, process improvement, and capital markets / financial management. MMG is a national provider of advisory and consulting competencies, transaction support services, and back office administrative support to independent and system owned physician practice groups.