Sam Walton’s Failure Is A Lesson For Medical Groups
Sam Walton has a lesson for you. No, it’s not buy low and sell low. It’s something very different.
Before Walton founded the Wal-Mart chain, he operated variety stores. (To anyone under 50, see Wikipedia.)
His first store was wildly successful. That is, until he realized that he had signed a short-term lease with no renewal option. At the end of the few year term, the landlord not only took back the space, he took over the operation of the store.
Has your medical group made the equivalent mistake? Many have. They’ve put themselves in the position that the hospital or another medical group can take over their business as legally, easily, and cheaply as Walton’s landlord took over his store at the end of the lease.
For example, a hospital-based group, let’s call it Trusting Falls Medical Group, has a three-year exclusive contract with St. Mark’s Community Memorial Hospital. Its leaders spent scores of hours recruiting physicians to the group. They’ve developed trust with the referring physicians, with the medical staff at large, and maybe even with the local community in general.
Then, towards the end of the contract term, the hospital announces that it’s not going to renew the contract with Trusting Falls. Instead, it’s going to send out a request for proposal to four large, national groups. How will the “winning” group staff the facility? With most of Trusting Falls’ physicians.
You can do much to avoid this type of situation by taking to heart what Walton did next. He made sure that he always held very long term lease rights. I’m not saying that you can get a 99-year exclusive contract, but you can build protections into your current contracts with facilities and physicians alike that diminish the economic burden in the event of non-renewal and that make your “store” less likely to be shifted to new ownership. And, you can develop a business that’s broader than any one hospital or hospital system, a business that’s truly independent.
Note that this issue, in slightly different dress, also impacts office-based practices. For example, you wouldn’t be the first cardiac surgery group to find that the hospital has recruited more than half of your surgeons to become the “poster docs” for the hospital’s new cardiac care center. Your position in the new regime? There isn’t one.
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Wisdom. Applied. 84 - Why Let Your Competitors Control Your Future?
You, not your competitors, control your future - why would you think otherwise?
Don’t get your medical group or healthcare business lost in big data.
Bureaucratic sorts are drawn to numbers because numbers can be gathered and processed and manipulated, all with the goal of lifetime employment for those doing the counting.
I’m not saying that numbers aren’t important (like those following a dollar sign), but only that very little of what’s important for your success is capable of numerical measurement in any meaningful way.
Consider the advice of W. Edwards Deming, the man credited by the Japanese as revitalizing their manufacturing economy following World War II, and the namesake of the Deming Prize. A numbers and process man if there ever were one. Yet Deming said that over 97% of the events that affect a company’s results can’t be measured.
That leaves a mere less than 3% capable of measurement at all.
And, for those things that can be measured, what does their measurement mean?
To paraphrase H. Thomas Johnson, the professor and accounting historian, quantitative measures describes something, they do not explain anything.
Your success depends on a myriad of interpersonal relations, on hiring the right staff, on doing the right thing – the humanities side of business, not the bean counting side, not the easy side.
Why is such-and-such a measure for incentive payment? What does being in the 75% percentile mean? Does a medical staff satisfaction survey reveal what caused the satisfaction?
Don’t be seduced by numbers. The truth is that Peter Drucker never said “If you can’t measure it, you can’t manage it.” Someone else made it up.
Don’t allow your performance to be measured by meaningless measurements.
Don’t manage by meaningless measurements.
Speak truth to numbers.
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Today’s medical groups must confront multiple challenges: The impact of Obamacare. Increasing commoditization. More competition, not just from other physicians and medical professionals, but also from hospitals, investor-owned groups, and disruptive ventures. Yet at the same time, the future of healthcare offers medical groups tremendous opportunity.
This small book is a collection of essays, of thoughts as thinking tools for your success. Read. Think. Succeed. Repeat.
Some days, it seems as if everyone, from anesthesia groups to vascular surgery practices, is talking about selling their practice to a larger group, to private equity investors, or to a hospital.
The reality is that some practices can be sold, some can never be sold, and some have nothing to sell.
The reality also is that there are a number of strategic alternatives to a practice sale.
A perfect storm of factors is accelerating the market for hospital-based medical group mergers and acquisitions.
The healthcare market is changing rapidly, bringing new sets of problems.
How can you find a solution, how can you engage in the right development of strategy, and how can you to plan your, or your group’s, future without tools to help clarify your thinking?
Directions is a collection of thoughts as thinking tools, each intended to instruct, inform, and even more so, cause you to give pause to instruct and inform yourself.
If you're an independent learner or need a refresher on a current topic, click here to find out about our growing list of Knowledge Products.
Recent Interviews and Published Articles
Mark's article Impending Death of Hospitals: Will Your Anesthesia Practice Survive? was published in the winter 2016 volume of Communique. Read or download here.
Mark was quoted in the article Practice Patterns Change While Outcomes Remain Steady Among Older Anesthesiologists, published in the December 2015 issue of Anesthesiology News. Read or download here.
Mark's article Anesthesia Group Mergers, Acquisitions and (Importantly) Alternatives was published in the summer 2015 volume of Communique. Read or download here.
Mark was quoted in the article Anesthesiology Acquisition Rate Still at Fevered Pace, published in the July 2015 issue of Anesthesiology News. Read or download here.
Mark's article Seeking Certainty In Radiology: Mergers, Acquisitions and Alternatives was published in June 2015 on Imagingbiz.com. Read or download here.
Mark's article Give Disruptive Docs the Boot was published in the April 2015 issue of Outpatient Surgery. Read or download here.
Mark's article Do You Make This Mistake Concerning Customer Value? was published in the April 2015 issue of Anesthesiology News. Read or download here.
Mark's article Do You Make This Mistake Concerning Customer Value? was published in the March 2015 issue of General Surgery News. Read or download here.
Mark's article McDonald’s and Delivering Anesthesia Group Value was published on AnesthesiologyNews.com on December 30, 2014. Read or download here.
Mark was quoted in the article Top 5 financial challenges facing physicians in 2015, published in the December 2014 issue of Medical Economics. Read or download here.
Mark was quoted in the article Top 15 challenges facing physicians in 2015, published in the December 2014 issue of Medical Economics. Read or download here.
Mark's article Bundled Billing or Bungled Billing? was published in the October 2014 issue of Pain Medicine News. Read or download here.