Physician Compensation – Value-Based Care Initiatives Bring Disruption

“This article originally appeared on www.stout.com.”

Physician compensation arrangements have changed under constant and fluctuating pressure from the dynamism of the healthcare landscape.

Physician compensation arrangements have evolved during the last two-plus decades. Not only have they changed, but they’ve done so under constant and fluctuating pressure brought on by the dynamism of the healthcare landscape.

In the 1990s, as hospitals gobbled up physician practices with an eye toward managed care, the hospitals generally offered robust salary guarantees. As might be expected, broadly speaking, the health systems began bleeding money from their employed ventures. Health system employment transitioned many of the headaches of private practice management from the physicians to the hospitals and, in many cases, offered providers rich deals with limited downside. (Of course, trading day-to-day management of a practice for employment is a give/get proposition.)

Where once physicians managed their practices to ensure “below the line” profitability (which ostensibly passed through to the shareholders), employment models mitigated the need for physicians to run their practices in a cost-effective manner. Concurrently, these employment models removed worries about things, such as HIPAA, information technology (IT), staffing, medical malpractice costs, rent expense, and revenue cycle (RC) management. Those management headaches were transferred to the hospitals. In many cases, provider production was static or declined theoretically because the physicians were guaranteed incomes regardless of cost drivers.

In the examples below we take a high-level look at compensation shifts for the last two decades.

Figure 1.

1990s Physician Compensation

First, the caveat to this article is that it is, by design, overly simplistic (but directionally accurate). It is built to use bite-sized graphics to display mathematical machinations and convey those to the reader. Actual compensation plan design is complicated with many moving parts.

Preamble aside, as evidenced in Figure 1, let’s assume that Dr. X’s private practice generated $250,000 in revenue (cash accounting). Expenses for the same period were $100,000. That left $150,000 in gross revenue. In the private practice setting, money not spent running the practice drops to the bottom line and the shareholders. In this case, Dr. X, as noted in the Private Practice column above, had gross revenues of $150,000, so he paid himself a salary of $150,000. (If he had shaved $50,000 in expenses, he otherwise may have paid himself an additional $50,000 or a salary of $200,000.)

Now let's say that Dr. X has grown disenchanted with day-to-day management of running a medical practice. He simply wants to practice medicine. Fast forward to when Dr. X becomes employed by Hospital Y. We’ll suggest that Dr. X is an internal medicine provider and Hospital Y is growing its internal medicine base. The hospital guarantees that Dr. X will make $300,000 per year. However, as indicated under the Employment column in Figure 1, Dr. X generates no more revenue and his expenses are static. Removing his guaranteed compensation leaves the system $150,000 in the red for Dr. X (otherwise known as “subsidizing” the physician).

After rivers of red ink, in the late '90s, many systems divested medical clinics, creating a period of detente. However, in the 2000s, the acquisition game began anew. Medicare’s reimbursement cuts to many specialties on in-office procedures (such as imaging) essentially flipped the economics of the medical practices. For those practices that were greatly impacted (with high Medicare populations) and that may have been poorly managed (e.g. inflated expenses), the loss of revenue shrinking the delta of profitability drove many providers to the relative protection of the health systems.

2000s and the wRVU model

In the 2000s, systems that acquired physicians took a decidedly different tack toward the compensation conundrum. In lieu of a big guarantee, health systems began to reward physicians for the work performed. While not perfect, the work relative value unit (wRVU) compensation models provided a means of objectively rewarding providers for “working.” That simply translated into more work, more pay; less work, less pay. This offered systems some downside protection for reduced physician productivity. (Concomitant with the wRVU productivity model are inherent downsides.)

Many newly crafted compensation plans, whether stepped/tiered threshold models or cash/wRVU payments, were deployed.

Figure 2

2000s Physician Compensation

Physician plans began compensating, either in whole or part, based on the individual provider’s productivity to stimulate providers with financial upside, should they hit productivity goals. It should be noted that these models generally do not account for revenues collected per wRVU, purely the production side. For instance, in Figure 2, if we pay Dr. X $25/wRVU and we only collect $20/wRVU, we are decidedly underwater from the get-go exclusive of our cost structure within the health system. It is incumbent on the system to tactically manage its revenue cycle to ensure maximum collections of money due the system.

Figure 3

2000s Physician Compensation

In Figure 3, Dr. X is generating $750,000. The cost to run his practice is $250,000. (Exclude accrual accounting from the equation – for example’s sake, this is collected money.) Dr. X is guaranteed a small base ($75,000) and is paid $25/wRVU. Generating 10,000 wRVUs, Dr. X has added another $250,000 to his compensation for total physician compensation of $325,000. Reducing the gross revenue by the provider compensation leaves a profit of $175,000 (most systems “subsidize” employed providers).

Many of these models, in some form or another, exist today, holdovers that are fairly easy to understand and implement. Some private practices have even deployed these models in an attempt to motivate providers and enable them to choose their workload while clearly understanding how that might impact them.

Enter the Value Era

Many health systems and hospitals are contemplating changing their compensation structures, disrupting current paradigms regarding physician pay by embedding components addressing rules from Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and its associated component pieces of the new Merit Based Incentive Payments System (MIPS) and alternative payment models (APMs) into compensation plan design.

Systems with employed physicians who are not knee-deep in MIPS or APMs begin with one foot in hole. However, forward-thinking systems are beginning to evaluate how to incent physicians, marrying behavior with quality and efficiency as well as production.

As “pay for value” continues to evolve, compensation models must necessarily change to consider the value of care delivery. This creates a fine balance of quality care delivery while understanding that patient volume loads (and compensating for the same) may not soon recede. As these compensation plans evolve, systems must make sure that plans pass fair market value (FMV) review to ensure that the system is not overpaying the provider, which may draw the ire of the federal government.

We stipulate that this is not a cut-and-dried situation. This is a hypothetical example delineating the modus of compensation plan design, in broad strokes. Of course, systems will continue to reward for volume but also place a measurable value on quality and efficiency, driving the compensation to realize the value care models. That is, physicians will receive a component piece of their compensation based on care delivery, as evidenced in Figure 4.

Figure 4

Physician Compensation Incentive Package

As noted, this exercise isn’t intended to indicate how the system is making less money in Figure 4 than Figure 2 (as the data are fictive). It is simply a graphic to offer an examination of how physician compensation is being contemplated and evolving.

Using our Dr. X example, Hospital Y is deep into MIPS and has determined that its efforts require physician input into quality improvement. In Figure 4, Dr. X retains his nominal base pay and his wRVU production compensation that he had established in Figure 2. Additionally, the system crafted an “efficiency goal” defined as aiding in the reduction of 5% of controllable costs, which would add $25,000 to Dr. X’s compensation if he meets all of the requirements. The system also created a “quality” component of four disease states (ostensibly all valued at $10,000 each) for another $40,000 in potential compensation. These pieces must be measurable and “valued” and cannot be subjective in nature. As an aside, we advocate for a strong physician advisory committee (PAC). A PAC can advise and consent on the development of compensation programs and can assist the health system in determining clinical aspects of care delivery that can be managed and measured to improve quality and value outcomes.

Combining Dr. X’s incentives, we see that he generated $315,000 in incentives to tie in to his base of $75,000. Presuming that his gross revenue (the system is collecting $75/wRVU) is $750,000, removing expenses and MD compensation, the system realizes a $110,000 profit on Dr. X. (Again, as noted in the “2000s” example, most systems subsidize their physician practices/clinics.) The key, too, is ensuring that the “at risk” money (e.g. incentives) is priced at FMV rates and is robust enough to positively impact the physician’s behavior (e.g. production, an eye toward quality and efficiency, etc.)

Realizing the established efficiency and quality goals divined by the health system (with physician executive input) assists the system in moving forward with its goals to meet (or exceed) MIPS goals. The system correlates its efficiency and quality components by specialty to align with MIPS, ensuring that it receives the increased reimbursements two years hence (e.g. 2017 data impacts reimbursements for 2019, 2018 data impacts reimbursements for 2020, and so on).

As evidenced in Figure 5, most of Dr. X’s compensation is currently driven by his production. But that may shift as care value is measured, monitored, reported, and reimbursements are more closely aligned with quality of care. The crux of evolving compensation models revolves around the idea that compensation and quality will be woven into a tight tapestry where, at some point, there may exist a shift of a greater level of compensation from production to quality.

Figure 5

Compensation Percentage Allocation

Compensation plans must be carefully built with diligence then tested for FMV considerations. The models within a health system should be as consistent as possible so that there is little variation among system employees. This also renders compensation plans easier to manage.

As with most things in healthcare, there is no one right answer. Even in provider compensation, some things are local.

* To read more about Stout’s experience and how we provided a 15 to 1 return on a client’s initial investment by helping them improve on their revenuecycle, download our case study now.

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Spender or Maker. Which kind of healthcare marketer are you?

I was recently speaking with a hospital CEO about his views on marketing, and he said “You know, there are two types of marketers – those that spend money and those that make money. I prefer the latter.” Good point, of course. We should all fall into the “maker” category. How can you make sure you do?

Four ways to avoid being categorized as a “spender”:

  • Make data-driven decisions. There’s no better way to position yourself as a maker than using data to determine where and how to best utilize your marketing resources. Data can make the difference between doing what the “loudest voice in the room” blindly dictates and truly pinpointing the way you as a marketer can bring in volume and the best payer mix. Also, use data to set attainable goals—how much volume is realistic to anticipate, and in what timeframe? If stealing market share is necessary, where will it come from and how much? Which leads to my next point.
  • Track everything against goal. Once you’ve used data to identify your best course of action and set goals for your marketing effort, track everything. Everything. In addition to volume and market share (which can take a good bit of time to actually gather), key performance indicators (KPIs) can quickly tell you how well your conversion funnel is performing. Calls, clicks, form fills, online appointments, and other KPIs are absolutely essential to watch closely during the course of your campaign. This also allows you to adjust as needed if the funnel is not converting as well as anticipated.
  • Use a CRM platform. If you’re one of the last marketing leaders out there without a CRM platform, get one. Now. I’m not recommending one over the others; there are several really good CRMs out there. It all comes down to the quality of your account team, in my experience, so demand the best. It can really make a difference in how well you and your team use the technology behind CRM to create vey effective, very efficient campaigns. And, you can show your results from a data-driven perspective. Which again leads to my next point.
  • Report your results. How will others know you’re a maker—not a spender—if you don’t share your results? The key is to make your reporting format as easy to understand as possible. Infographics are always king, but also have the hard data available for those who prefer it. And do this on a regular basis. Share it more frequently with senior leaders and don’t forget to let other levels of the organization know how well their marketing dollars are working for them. Because you’re a maker.
  • I hope these tips are helpful to you in either affirming what you’re already doing or giving you some things to consider working into your marketing program. It can be easy for marketing to be left out of C-suite discussions, and it’s so critical that we’re there so we can provide our best service to the organization. Spenders don’t get a seat at the table. Makers do.

    Read other posts by Janice:

    Process Transformation: a Way to Reduce Cost, Improve Quality, etc. etc. etc.

    Your Healthcare Marketing Plan: What’s Missing?

    Connect with us on LinkedIn, join our Active Network Program and look at the other areas of connection we offer.

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    Your Healthcare Marketing Plan: What’s Missing?

    Everyone knows that the foundation of a good healthcare marketing plan is a focus on where an organization is trying to maintain and grow market share, and where the opportunities lie for expanding reach and volume. And, hopefully, it is based on a solid strategic plan with immediate and long-term goals. But often, there are a number of key sections that are left out—overlooked elements that can move a good marketing plan to excellence, taking advantage of all the layers of outreach in a healthcare marketer’s virtual toolkit. I offer six to consider below.

    Six Sections Often Left Out of a Healthcare Marketing Plan

    1. Internal Communications. First off, internal audiences can help reinforce your key messages and themes. But only if you take the time to engage them. Employees, physicians, and volunteers want to “get it” and be included. Include a section that focuses on doing just that.
    2. Media Relations. Why not strategically incorporate earned media into your plan to help reinforce your key themes in an instantly credible way? Take control of your media outreach so that it supports what you’re working to achieve through paid channels.
    3. Community Outreach and Sponsorships. Your organization probably does a lot to give back to the community and support important local initiatives. Some of this can be incorporated into your plan to support service line and program messaging. Think about how to promote your outreach while promoting your key marketing goals, without being too self-serving. It can be very powerful.
    4. Payer Strategy. Healthcare marketers don’t often think about payers, but we should. As the major conduit for reimbursement, you want payers to know your organization has a positive reputation and strong consumer demand. This can be leveraged during contract negotiations. Consider how to target payers with your messaging in ways that are relevant and memorable.
    5. Niche Targeting. Depending on your market, you may have the opportunity to message to a number of cultural niche audiences—Hispanic, African American, Asian, etc. Where appropriate, in-language marketing can be very favorably received. Experiential marketing can be incorporated to engage these audiences in ways that are meaningful to them, bringing them closer to your brand.
    6. Consumer Engagement. Lastly, think of how you can engage consumers when they aren’t in need of your services. Done well, these efforts can actually build your brand much more effectively than a multi-media service line or image campaign. Think of how you can interact with consumers in ways that support your brand and provide value—outside the typical provider-patient relationship.

    Take out your marketing plan and reflect on whether any of these sections are missing, and how you might incorporate them to bring greater value to your organization. As marketers, that’s our responsibility. I’d love to hear from you on how you utilize these ideas, as well as any additional thoughts you might have.

    Read other posts by Janice:

    Process Transformation: a Way to Reduce Cost, Improve Quality, etc. etc. etc.

    Your Healthcare Marketing Plan: What’s Missing?

    Connect with us on LinkedIn, join our Active Network Program and look at the other areas of connection we offer.

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    Process Transformation – A Way to Reduce Cost, Improve Quality, Etc., Etc., Etc.

    “Gary Skarke is an expert in the area of transformation. His company’s success, for the most part, has been outside of healthcare but has touched healthcare on a small scale. As we all know, healthcare is going through a significant transformation and most of what he will share in the article below aligns well with what is happening in the healthcare industry today."

    This is the third article in a series of articles focusing on the many types of transformation his company has helped other organizations navigate successfully and how these same situations are occurring within healthcare today.” – Jim Wiederhold

    Click here to read the first and second article.

    Process transformation focuses on making major changes to the activities and tasks (the how) by which the organization delivers its products and/or services. A core process (i.e., one that adds value to the customer) might be inquiry to order, order to cash, or product line development. Tools used to transform processes frequently includes business process reengineering, process redesign, Six Sigma, Lean or other quality related tools.

    A global software manufacturer reduced the cost to process a customer order from $800 to $125. Sales reps saved an average of two hours a week (7% improvement) contacting customers by phone. The CEO said, “Sales reps tell me the time they used to spend putting together sales forecasts now spend that time on strategies to make that forecast a reality.” Initially, the client was frustrated because they spent several months analyzing the “as is” order process and the team was totally unmotivated. Their over analysis was paralyzing them. They quickly re-energized when they shifted to redesigning the “to be” process.

    In healthcare, organizations are compelled to improve their treatments, eliminate non, value-added tasks, reduce wait time and cost, treat more patients -- while improving quality and patient outcomes. Such dramatic improvements can generally only be achieved and sustained with a rigorous and aggressive process improvement effort.

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    Three Reasons Why Healthcare Marketing is Different

    In this time of ever-intensified focus on consumerism in marketing and the comparative lack of it in healthcare, hiring managers sometimes think of recruiting marketing executives outside of the industry to fill healthcare marketing roles. They want to bring learnings in from other industries, like hospitality, financial institutions, and retail – which is a great idea. However, I would suggest hiring an excellent healthcare marketing leader who understands this notion and can reach out to SMEs in other industries for insights and advice, then bring that intel back to the healthcare system and incorporate it strategically.

    Why? Because healthcare marketing is different. How? Read on.

    1. Physicians. While the marketing programs for most industries focus on either B2B or B2C, and others a combination of both, healthcare includes those plus a couple more: B2P (P=physicians) and P2P. Physicians are the actual conduit for the work. Without them, hospitals, ERs, surgery centers, and even other physicians can’t survive. While healthcare marketers must focus attention on consumers and employers, they must also be savvy in understanding how and when to promote physicians (within regulatory guidelines – which are tangled), as well as how and when to market to them for referral purposes. There are a lot of audiences, layers, and regulations.
    2. Payers. While physicians are the conduits for the work, payers are the conduit for reimbursement, in most cases – not the consumer or the employer. This adds another audience to consider from a reputation and consumer demand perspective. And there are different types of payers – governmental and commercial – with different outlooks and expectations, to some degree. So while we’re targeting consumers, employers, and physicians we must keep in mind that one of our goals is to be on the top of the heap in terms of positive reputation and consumer preference – from a payer’s perspective. There’s a lot more than marketing that makes that happen, but marketers need to message around this – very strategically.
    3. Long tail sales cycle. Patience is a virtue, and it’s absolutely essential in healthcare marketing. While retail marketers know immediately if their latest marketing effort is working, healthcare marketers usually don’t. We can watch KPIs like click throughs, calls, form fills and the like, but the actual medical procedure typically takes weeks or even months to occur. This would frustrate marketers who don’t understand the healthcare sales cycle. It’s important to understand this on the front end of a marketing effort so that appropriate expectations can be set, and accurate forecasting can be done.

    For those reasons, leaders should focus on finding healthcare marketing experts who understand the importance of looking at other industries for ideas, and also deeply understand the nuances of the industry. It is possible to find a marketer who can bridge the gap, but it is rare. More often it becomes a costly experiment that can set the organization back. And no one wants that! Be smart. There are some very talented healthcare marketing leaders out there who get it.

    Connect with us on LinkedIn, join our Active Network Program and look at the other areas of connection we offer.

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    The recipe for creating value

    When I was in college, the church that I attended had a booth every year at the local fair. We made a pastry called an elephant ear. I have seen at fairs funnel cakes which are made by pouring a liquid batter into hot oil and frying it. The elephant ear dough was mixed in a huge mixer. It had eggs in it. The dough was allowed to rise. It was then punched down, weighed out into balls and set on large cookie sheets to rise again. Volunteers sitting at tables would pat the balls into flat disks. These were fried in hot peanut oil and then covered with cinnamon sugar or powdered sugar. In the mid-1980s we sold these for two dollars apiece. They sold like, well, hotcakes. Many people would pay to get in the fair solely to buy elephant ears. There was always a line. If people saw that the line had gotten short, they would run to get in the line. We could sell as many as we could make.

    I was in the booth one Saturday morning patting out elephant ears when I noticed Brother “Jones” handling sales. He was a very kind and pleasant man but age was upon him, and he was absolutely overwhelmed with the task. He had before him a line of people who were eager to get elephant ears and behind him stacks of elephant ears growing cold. I spoke to the team leader and asked him if he could arrange for Brother “Jones” and I to exchange positions, of course, handling it in a way that was not hurtful to Brother “Jones’s” feelings. The team leader declined to have us exchange positions but asked me to assist Brother “Jones” with sales.

    We began to quickly make sales, and the stacks of unsold elephant ears got much shorter. Soon Brother “Jones” was at one of the tables patting out elephant ears. This was not a terrible place to be. There was always lively and pleasant conversation at the tables, and the task was ideally suited to his capabilities. I now had helping me another brother who was young, like I was, and energetic. We found ourselves waiting for elephant ears to be produced so we could sell them.

    A new problem became apparent. The elephant ears were coming out of the vat and were stacking up waiting to have cinnamon sugar or powdered sugar applied. I spoke to the team leader who moved someone to assist with this task. Each time product piled up at a certain point in the process, I would ask the team leader to add or exchange human resources to speed the flow of product through the production chain.

    The following day was Sunday. It was announced in church that the elephant ear booth averaged about $11,000 per year in sales, yet the day before we had sold $4000 in elephant ears. The fair would run each year for 11 days. We were not open on Sundays so we would run our booth for nine days each year. This gives us a daily average just over $1200. While Saturdays had more people at the fair than weekdays, demand always exceeded supply even on weekdays. We had tripled our sales that day by simply using our available resources more efficiently.

    Several years later while in college, I read The Goal by Eliyahu M. Goldratt and Jeff Cox. This book is a business novel that describes the same process I did in the elephant ear booth but done in an air conditioner manufacturing plant. The protagonist identifies bottlenecks in the production stream by where product in process piles up and then eliminates the bottleneck by moving resources to that step. I highly recommend this book for business leaders.

    The ideal value strategy requires no additional investment of resources but uses the current resources more efficiently to deliver quantity and quality, such as: a faster moving line delivering more and hotter elephant ears. We must not be afraid to make small investments when we know that there will be substantial return on investment. Large investments may be necessary and wise, but the larger the investment, the greater we risk, and the higher returns that are necessary to create a value result.

    Read previous articles related to this topic:

    Article 1: Your business’ future lies in an abundant strategy – not in scarcity

    Article 2: Maximum Wow Strategies Lead to Scarcity

    Article 3: Fat cutting from an organization can be taken too far – Are you starving your organization?

    Connect with us on LinkedIn, join our Active Network Program and look at the other areas of connection we offer.

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    Fat cutting from an organization can be taken too far – Are you starving your organization?

    A maximum value strategy may involve cutting the fat from an organization, but a maximum economy strategy will cut the meat and bone. A maximum economy strategy has an excessive emphasis on cost-cutting so that it starves the organization of the resources it needs to sustain and thrive.

    I will tell you the true story of the only hospital in a town of less than 100,000 people. I will not tell you the name of the hospital or the town to protect the innocent and the guilty. This hospital was sold to a national, for-profit hospital chain. Their emphasis was to pull out as much of the hospital’s gross income for corporate profits as possible. This left very little operating capital to run the hospital. They underpaid their doctors and treated them with contempt. They did not buy necessary equipment and supplies. Deferred maintenance on the building piled up. Many of the doctors moved away including surgeons who were very important to the hospital’s revenue. People in the community began driving to other towns to use the hospitals there. The average number of patients in the hospital each day fell from 75 to less than 10. They wanted it all and slowly they killed the goose that was laying the golden eggs. They wanted everything and ended up with a little bit higher percentage of much, much less.

    They saw their market as static and limited. They saw increasing profit opportunities in decreasing their investments in people, operations and infrastructure. They took on a scarcity mindset. They starved the hospital of the resources it needed to thrive or even sustain itself. The hospital wasted away under this neglect and abuse.

    Stephen Covey told a similar story in The Seven Habits of Highly Successful People. A restaurant sold a delicious clam chowder that people lined up to buy. The restaurant was sold. The new owners were given all the recipes. They decided that they could make more money if they used cheaper ingredients. Over time people realized that the clam chowder was no longer as good. The lines got shorter and shorter. When the new owners realized their mistake, they tried to go back to the original recipe, but it was too late. The restaurant closed. They bought a maximum value organization and tried to convert it into a maximum economy organization. They shifted from abundance to scarcity and failed.

    I am not saying that cost savings and efficiency are bad. If the restaurant owners were paying $3/pound for butter and found the same quality butter for $2/pound from a supplier who was just as reliable, that would be value neutral for the customers and value positive for the owners. But if they instead bought margarine for $1.50/pound, that would be value negative for the customers who are still paying the same price for a bowl of clam chowder. Now the question is, “How would buying cheaper margarine affect the value equation for the owners?” The new owners thought it would be value positive. They figured that they would pay less for margarine and get the same price for a bowl of clam chowder. But the customers stopped buying the clam chowder. The little bit extra profit they made buying cheaper ingredients was small compared to the income they lost from reduced sales. It was also value negative from the owners.

    Here is an important take away. Be very careful about changes that you suppose will increase your value results while reducing the value results for your customers and other stakeholders. That is seeing your customers and important stakeholders as members of the opposing team instead of being on your team. And when they realize that you are not on their team, they will abandon you as soon as a viable alternative presents itself. Where the value equation really counts is in what you deliver to your customers and other important stakeholders.

    A maximum economy strategy is a scarcity strategy. It is driven by pessimism and lacks vision. It is excessively focused on cost reduction without weighing the impact on quality. It will fail to deliver value (quality divided by cost) and will likely lead to weakness and failure.

    Read previous articles related to this topic:

    Article #1: Maximum Wow Strategies Lead to Scarcity

    Article #2: Your business’ future lies in an abundant strategy – not in scarcity

    Connect with us on LinkedIn, join our Active Network Program and look at the other areas of connection we offer.

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    How to find 3-7% more Net Revenue at your Hospital

    A recent survey of 146 CEOs by the Advisory Board (1), the CEOs voted that “sustainable cost control” was the number one priority. This is an imperative that every hospital in America must be doing in the current health care environment. Net revenue is tightening up. Smaller and smaller increases from government programs are the trend and health plans are taking the position that any new net revenue be tied to improving quality or costs. The routine annual increases are not routine anymore.

    What CEOs should be focusing on is collecting all net revenue. What is the best that can be expected in net revenue collections from the revenue cycle area? Is it 90% of expected? 93%? 96%? What is preventing your organization from collecting closer to 100% of expected revenue?

    We know that nothing ever happens at 100% in any field, endeavor or undertaking. Asking the question of “why not 100%” is the start of reviewing what is preventing your organization from improving on net collections. If your organization is at 91% net collections (including vendor fees, etc. from handing off old accounts), that’s pretty good. But can your organization get to 95%? Or 97%? Or 98%? What steps can be taken internally to earn an extra 3-7% of net revenue? That extra money could be the difference in meeting budget or bond market targets.

    How to find your 3-7% extra net revenue:

    1. Adoption of a new attitude. Policies and procedures have been adopted over time that balance the effort and expense of collecting versus the return. Making policies that allow for write offs of cases under $500 or $300 creates the mindset that it is ok to “just write it off.” If $500 is ok to write off, then why not the $15 co-pay? The concept is to reinforce the attitude that NOTHING is written off without a “good” reason. Hospital revenue cycle leaders get under pressure to lower A/R and it is too easy to compromise on small amounts that can add up. But when its ok to write off $15 it becomes easier to write off larger amounts. Additionally, reinforcing the attitude of no write off without a good reason helps support collection efforts of the front offices as well as in the back end
    2. Trend analysis needs to be refined and acted upon more quickly. The new analysis is one plus one equals a trend. Reporting in revenue cycle often trends towards financial statistics and contractuals. Reporting needs to get more granular and specific to highlight trends in more real time. The best way to get real time information is to educate and empower your skilled staff.
    3. The staff need to understand that when they see something happen twice – sound the alarm. Getting a denial or a rejection you don’t understand once happens. But twice is a trend. You do not need to wait until 10 or 50 or 100 examples occur to request an investigation, create a report and send to a payer. Health plan payment systems are very precise and anything unusual needs to be acted upon immediately.
    4. Get better at reporting and documentation – fast. To support the staff, create rigor in the documentation of issues with plans. Nothing helps contract discussions for the managed care lead than starting off with how difficult the health plan is administratively. Reporting also needs to be detailed and refined in new ways to spot trends and support the managed care staff.
    5. Establish new interactions with payers – set expectations and standards. Monthly meetings with payers need to reframed. The managed care lead needs to get agreement on performance and service expectations of the health plan. Simple expectations of responsiveness, service turnaround, etc. is imperative and needs to be enforced with the health plans.
    6. Use process improvement techniques – be rigorous. Collecting the last few percentage points of revenue requires focus and discipline. Using process improvement techniques and their rigor is a must to gain and sustain results.

    Hospitals need to ask the question: what more can be done to gain net revenue? Re-evaluating the revenue cycle and creating a “need attitude” is key. Adding a new focus and training for staff will create the ability to approach payers in a new way for new results.

    (1) 2018 Advisory Board Research Annual Health Care CEO Survey conducted between December 2017 and March 2018.

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    Maximum Wow Strategies Lead to Scarcity

    See Previous post.

    A maximum wow strategy is when a lot of money is spent on something grand, splashy and showy that delivers little or no value to the company or its customers.

    A prime example of this is when a company builds an expensive and extravagant off-site corporate headquarters. When I was a young man, my father told me, “Son, beware of your ego. A man’s ego can get him into a lot of trouble and cost him a lot of money. Ego trips are very costly.” Many a company has been severely weakened by a CEOs ego trip of building a lavish corporate headquarters that often was not even needed. The offices they already had were serving the company just fine.

    For a counter example I would offer Walmart. Walmart is the largest brick-and-mortar retail establishment in the world by a very large margin. Its corporate offices have for many years been in the top of its warehouses in Bentonville, Arkansas. Top corporate officers are in plain offices with cheap wood paneling and utilitarian steel desks. This proximity to its distribution centers gave corporate officers a profound and intimate understanding of the needs of its supply chain. Walmart developed the most sophisticated automated distribution centers of any brick-and-mortar retailer. These sophisticated automated distribution centers are credited with a large part of Walmart’s competitive advantage over other brick-and-mortar retailers. This is Sam Walton’s legacy. As wealthy as he was, he was a man without an ego. He was a form follows function kind of man. Good enough was good enough. We will save excellence for our customers.

    If a competitor had wanted to destroy Walmart, instead of building a gleaming corporate headquarters in the downtown of a major American city for themselves, they would have built and paid for one for Walmart on the condition that they must house their corporate officers there. This would have isolated Walmart’s leadership from the needs of its supply chain and decreased the likelihood that they would have ever built their automated distribution centers costing them their current competitive advantage.

    Value is defined as quality divided by cost. So how do we define quality? Is it a large towering building built of the finest materials and sitting on a piece of prime real estate? Or is it proximity, awareness, humility and engagement? I would argue that Walmart’s choice of its corporate offices was the value decision not just because it delivered at a lower cost but also because it delivered a higher-quality leadership engagement for the company.

    A maximum wow strategy is company leadership writing big checks and taking on heavy debt to be paid for by the company for ego-driven projects that deliver low value to the organization.

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    A Case of Stinking Thinking?

    Are you or anyone you know suffering from an advanced case of “stinking thinking”, as Zig Ziglar would call it? Quick, you must do something about it! Do not get stuck in the vicious cycle of misery motivation as misery loves company. Here are some simple tactics that can help:

    • Research supports that the first significant encounter of the day impacts the rest of the day, more than 4 encounters combined in the rest of the day. Start your day with positive, relaxing or energizing activities and stay away from experiences or people that are negative triggers. You cannot avoid them, but knowing that they sap your energy, you need to ensure that they are not at the beginning of your day.
    • Self-talk is proven to lead to a winning attitude. May feel a little weird but it works! Your brain needs positive stimulation in terms of encouragement and who better to do it than you. The Pygmalion Effect or self-fulfilling prophecy is equally true when applied to yourself.
    • If you do not enjoy self-talk, have a wish box. Write down notes or desires or wishes that you want to come true. Every night or morning take a quick look at them, so you are reiterating them to yourself. The power of repetition cannot be underestimated.
    • Eyes are a window to your soul! You cannot consistently perform in a manner that is inconsistent with how you see yourself. So, work on your self-image. You must be your biggest advocate and promote yourself. Be aware of your strengths, leverage them and work on your areas for improvement. Set simple goals for yourself so you view progress and that enhances your self-confidence.
    • Attitude is a discipline - it teaches you obedience and enhances your leadership abilities. We all look up to role models that inspire us with their attitude as well as actions. Positive thinking has its limitations I agree. You cannot do everything just with an attitude perhaps, but you can surely do everything better than you can with a negative attitude.
    • Change your lens. Do not be a fault finder. Find the good in things or people. Use appreciative inquiry when you interact with others. You cannot control what others do or say but you can choose how to react or be proactive and choose how you let other people in.
    • Get your neurotransmitters to do the work! Dopamine, serotonin, epinephrine and endorphins are known to physiologically boost your “emotions”. Learn more about how you can help yourself release these and build that into your routine. Physical exercise is one easy way, but everyone’s body and life circumstances are different so find what works for you.
    • Attitude of gratitude. The healthiest of all emotions is gratitude. It is very easy to let one negative encounter or one aspect of our life or work that is not working in our favor to influence everything else. Make a gratitude list and look at it often. On better still, think of one thing that you are grateful for at the start of each day. For every reason that you find to be miserable, I guarantee you can find at least 2-3 to celebrate, you just need to look!
    • Give it all you got! I tell students that I mentor, don’t have too many options. Although prudence suggests having a backup plan, it dilutes your efforts and attention. Data supports that immigrants are 4 times more likely to become millionaires in America. Why is that? As an immigrant, it is the unwavering persistence and the commitment to excel and not having many options that has driven me consistently. Now your goal doesn’t have to become a millionaire but regardless push yourself to your limits and see how your destiny unfolds!

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    Your business’ future lies in an abundant strategy – not in scarcity

    In Abundance: The Future is Better Than You Think by Peter H. Diamandis and Steven Kotler, the authors make the point that technological developments and continuing innovation will bring to the world a future of abundance rather than scarcity, of increasing prosperity rather than increasing poverty. I believe that they are right so long as we can maintain freedom in general, free markets in particular, reasonable levels of taxation and relative peace throughout the world. As I pondered on the ideas they presented, it occurred to me that a business leader needs to have an abundance mindset in strategic development. An overall scarcity strategy cannot bring a strong and bright future to an organization. We cannot simply cut and slash our way into growth and prosperity. Nor can we simply spend our way into growth and prosperity. An abundance strategy is one of tremendous value generation.

    My wife and I built a home using a general contractor who builds custom, luxury homes. I commented to him one day that it had occurred to me that there are three types of people who buy a custom home:

    1. Maximum WOW! These buyers do not care how much it cost. They want to upstage everyone else at any cost.
    2. Maximum value. Value is defined as quality divided by cost. These buyers are willing to spend more money if they get a good return on their investment relative to their experience living in the home and to their resale value.
    3. Maximum value. Value is defined as quality divided by cost. These buyers are willing to spend more money if they get a good return on their investment relative to their experience living in the home and to their resale value.

    I told him that I thought that he could build homes for wow buyers and value buyers, but he could not build a home for an economy buyer to which he agreed.

    At first glance we may be tempted to see a maximum wow strategy as an abundance strategy, but maximum wow and maximum economy are both scarcity strategies. Both strategies are low value generation strategies, and low value generation will sooner or later lead to scarcity. In maximum wow the cost is too high relative to the quality generated. In maximum economy the cost is low, but the quality generated is too low relative to that cost. The abundance future is in high value generation that comes in a maximum value strategy.

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    Lessons I Learned at Wiederhold & Associates

    Before I joined Wiederhold & Associates, I had heard of executive coaching but never really understood what it entailed. I knew of generic outplacement firms that provided services to aid in job transition but did not know of transition coaching. The past four years have been an invaluable experience, exploring and learning about both these niches from one of the best in the industry! Above all, the talented and inspiring leaders that I have had the opportunity to meet, the lasting relationships built, the experienced and dedicated coaches that give it all to help leaders uncover strengths and hidden potential, and the team that makes all this happen behind the scenes, have made an indelible impression on me.

    I’ve been fortunate to have good mentors and great teams that I have worked with and learned from throughout my career. Some of the lessons that life experiences taught me, I got to validate in my experience working with over 100 executives through Wiederhold & Associates. As I look back, I’d like to share some of the key lessons I will carry on with me in my career.

    ✔ Relationships trump performance
    ✔ Preparation is the key to success
    ✔ Passion is a key differentiator
    ✔ You get to define your own success
    ✔ Accomplishments must speak of your value or impact on the organization
    ✔ Maintain a business log, before exiting a role gather relevant data and metrics
    ✔ Keep your resume updated always
    ✔ Attitude can make or break you
    ✔ You cannot let your network “go cold”, relationships are a continuous work in progress
    ✔ Choosing the path less travelled may be riskier but also opens doors you never knew existed
    ✔ Opportunities are most often created, they don’t always exist
    ✔ Coaching is not punitive, it is a reward!
    ✔ Interviewing and being interviewed require completely different set of skills
    ✔ Even the most accomplished leaders have insecurities
    ✔ Dealing with emotions head-on is the best way to move forward, especially negative ones
    ✔ Always be aware of how you “show up” to others, not what you think of yourself. Perception is reality.
    ✔ Being vulnerable is human, not a sign of weakness
    ✔ Self-awareness is critical to emotional intelligence
    ✔ When you stop learning, you stop growing and you stagnate
    ✔ Take responsibility for your actions, but blaming yourself will get you nowhere
    ✔ Focus on what you can control, don’t waste your energy on external factors
    ✔ Be intentional, be mindful, be present
    ✔ Transition is hard, even if the choice was yours. It takes a village!
    ✔ Don’t burn bridges, it’s a small world!
    ✔Healthcare has and will always be a very dynamic and demanding industry
    ✔ You always come out a stronger and better leader, when you go through transition!

    Mitali

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    Changes to the Wiederhold & Associates Team

    We wanted to make you aware of some changes to the Wiederhold & Associates team. Please see our announcement below.

    Mitali Paul, MHA, MBA, FACHE, who has been with Wiederhold & Associates almost four years, recently accepted an opportunity to step back into a hospital executive role. As of August 1st, she will be the CEO of a brand new inpatient rehabilitation hospital scheduled to open in Fall 2018. While we will miss her and her contributions to Wiederhold, we are sure you join us in wishing her much success in her new role. Mitali will continue as a trusted advisor to our organization moving forward.

    Chris Ekrem, MBA, FACHE, has come on-board as Vice President of Business Development and Operations for Wiederhold & Associates. Chris brings two decades of hospital administration experience in healthcare operations, management and financial leadership. He led highly successful business development projects during his tenure in operations and administrative leadership roles at community hospitals, academic medical centers and Critical Access Hospitals in Texas and Kansas. Chris began his career as a financial analyst at Florida Hospital in Orlando, Florida, and expanded his skill set through project manager and decision-support positions before advancing to the C-suite in roles as a Chief Operating Officer (Kansas) and a Chief Executive Officer (Texas). Most recently, he was Vice President at Tyler and Company; a retained healthcare executive search firm in Atlanta, Georgia.

    Chris earned his Bachelor of Business Administration in Finance from Baylor University in Waco, Texas and his Master of Business Administration from the University of Redlands in Redlands, California. He holds a board certification in healthcare management as a Fellow of the American College of Healthcare Executives (FACHE). In addition to his long-standing membership in ACHE, Chris also has been active in state healthcare leadership as a Texas Hospital Association Leadership Fellows graduate and as a Kansas Hospital Association Leadership Institute graduate.

    Chris is very passionate about helping people in transition, delivering excellent customer service, and mentoring healthcare executives throughout their journey. In his free time, Chris enjoys teaching high school students about personal finance for Junior Achievement and mentoring early careerists through ACHE in Tennessee/ Georgia. Chris is married to Lindsey, his best friend, a busy mother of two, and a highly skilled nurse. He also tries to keep up with his enthusiastic two-year-old son, Grayson and six-year-old daughter, Brianna.

    Thank you,

    Jim Wiederhold

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    Confidence

    With confidence, you have won before you have started - Marcus Garvey

    As we continue to explore successful attributes, another imperative soft skill is confidence. Confidence is having faith in your own skills and abilities. It is an attribute difficult to measure, but its absence hardly goes unnoticed. Why is confidence so important? Confidence is attractive. Charismatic people tend to exude confidence. Confidence can help you harness your inner potential. Research supports that confident people accomplish more. It has the power to help you overcome challenging situations, take risks, and handle curveballs thrown at you. Confidence helps you establish trust with people and engage them. It makes you appear more competent and helps you win the respect of others. Dr. Ivan Joseph, a professional soccer coach admits that throughout his career he recruited his players not based on their talent – how high they could kick the ball, or how fast they could run or the team spirit they displayed, but on their self-confidence. He believes that everything else is a coachable skill or trait. Tedx Ryerson University

    You can display self-assuredness or lack thereof it in more ways than most people are aware of. How you present yourself, your gait, tone of voice, the words you use, non-verbal cues, interpersonal skills, relationships, even your online or social media presence can paint an image of your confidence level. All these aspects create your “presence”. A limp handshake, lack of eye contact, shifty movements, slouched posture, and excessive use of “I think”, “ums” and “ahs” are some common faux pas to watch for. Non-verbal cues are important expressions of power dominance. It governs how other people think and feel about you. You can influence other people’s reactions by exhibiting confidence. People tend to focus more on the delivery than the message itself. Hence, this can be a powerful tool in controlling how people view and react to you.

    Have you met someone and wondered how they landed that deal or got the job they have? I know I have many times. If it wasn’t relationships or networking that got them that far, it was their confidence and most likely their confidence played a very significant role in their relationships.

    Charisma is not the same as confidence but we all gravitate towards charismatic leaders. Another reason confidence is important is that appearing confident augments your charisma. Have you ever been in a room where one person’s presence dominated the room? They seemed to captivate their audience and drew people in with such ease. John Antonakis, an organizational behavior expert, suggests that charisma can be practiced as a skill utilizing verbal and non-verbal tactic. And once you grow your charisma and connect with more people, your confidence will inevitably be boosted. How to Read and Predict People

    Confidence is like a bank account - you must make deposits to have a balance available for withdrawals. You must draw from various sources so not to deplete your funds. Just like a diverse investment portfolio that minimizes risk, you need to have different buckets that you gain confidence from. Identify your buckets and keep them replenished. Recharge your batteries…success is just around the corner!

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    Strategy Transformation – A New Business Model for a Rapidly Changing Industry

    ‘Gary Skarke is an expert in the area of transformation. His company’s success, for the most part, has been outside of healthcare but has touched healthcare on a small scale. As we all know, healthcare is going through a significant transformation and most of what he will share in the article below aligns well with what is happening in the healthcare industry today.

    This is the second article in a series of articles focusing on the many types of transformation his company has helped other organizations navigate successfully and how these same situations are occurring within healthcare today.” – Jim Wiederhold

    Click here to read the first article.

    Strategy transformation focuses on developing and implementing a new strategy to respond to competitive pressures. One global company needed to grow revenue and profitability and their strategy was to expand their business model to sell not just products but also services. Previously, they sold software products and relied on customers to implement – but customers could not always implement successfully. So, the company made a strategic decision to get into the services business. The company realized they did not have the processes, skills, behaviors, metrics or culture to be successful in that new business model. “We don’t ever interact with the customer and our people do not have the skillsets to successfully interact with customers either.” Typically, such changes require five years. Given the urgency of the situation, the company went on a fast track implementation program. Based on the strategy Playbook for the first year and then three years, the company had a roadmap for making the significant transitions required. At the end of year three, our audit determined the company achieved the business results as well as operational results of doubling revenues and increasing profitability by 30%.

    In the U.S healthcare industry, organizations similarly must have dynamic strategies to determine how to maneuver the changing regulatory and legislative landscape and then quickly and successfully implement that strategy, while ensuring a focus on patient centered care and value. Legislation is changing the way healthcare providers do business but cannot negatively impact delivery of healthcare services to patients. As a result, organizations are trying to merge or acquire other providers in the healthcare chain, such as CVS acquiring a health insurance company, pharmacies (both stand alone and grocery-store based) provide clinic services, and healthcare systems are formed to take advantage of economies of scale and increased market share. Given the short time horizon, it is even more critical to have flexible strategies with expedited implementation to ensure results are achieved before the next wave of changes occur.

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    Grit = Passion + Persistence

    When we talk about attributes or “soft” skills that play an important role in determining success, grit is somewhat of an unknown. Recently I was introduced to Angela Lee Duckworth’s TED talk about her research on “grit” as a predictor of success in work and life. The dictionary defines grit as “courage and resolve; strength of character”. When you think about successful leaders – having a values-based character, a strong passion for and commitment towards a vision, and the resilience to achieve it, is what stands out. Your professional journey is a marathon and not a race. To be in it for the long haul is success (not just achieving the milestones along the way), and it takes more than just talent or intelligence. Passion can drive you to graduate school or to innovate and start a company, but it is perseverance that will help you succeed and thrive. Can grit alone get you there? Probably not, but lack of grit surely will not!

    It involves staying steadfast on your path, overcoming failures and viewing challenges as opportunities to grow, regardless of the effort involved. It involves risk, sacrifice, sincerity and self-control. It takes deliberate practice and intentional strategy. As Lincoln said “If I had 8 hours to chop down a tree, I would spend 6 of those hours sharpening my axe. “

    Grit is a fascinating word for me personally. I have always appreciated passion and perseverance but to find a word that can articulate both of those significant qualities together is delivering a power packed punch! So, as you take on that next challenge in your personal or professional life, ask yourself if you have the grit to see it through. If you don’t, work on changing your mindset first. And if you do, success should follow…

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    What is transformation…and why should we care?

    “I’d like to introduce Gary Skarke. He is an expert in the area of transformation. His company’s success, for the most part, has been outside of healthcare but has touched healthcare on a small scale. As we all know, healthcare is going through a significant transformation and most of what he will share in the article below aligns well with what is happening in the healthcare industry today.

    This is the first in a series of articles focusing on the many types of transformation his company has helped other organizations navigate successfully and how these same situations are occurring within healthcare today.” – Jim Wiederhold

    * * * * * * * * * *

    In today’s environment, organizations must change – and change dramatically – to survive and thrive. Who remembers what happened to RCA televisions, Motorola cell phones, or Myspace (competitor with Facebook) or how they lost their market leadership? They did not make the dramatic innovations and changes (typically called transformations) to stay ahead of the competition. Businesses have made transformations for a number of years although they were previously called under the headings of quality, reengineering, Lean Six Sigma, and others. Such transformations were made to cut costs, grow, increase customer satisfaction or simply stay in business. United States healthcare similarly has and is undergoing transformations, many of which are mandated by the U.S. government, like electronic medical records. We wanted to share what transformations are happening with businesses so that they can be applied more readily to healthcare.

    Organizations are appropriately cautious about transformations. A 2015 survey by McKinsey* found that only 26% have been “very” or “completely” successful at both improving performance and equipping the organization to sustain improvements over time. Transformation is an overused term. It is not a tweek, but an overhaul – a complete change in the way business is done. IBM was at one time only a provider of hardware such as computers but transformed successfully into a provider of consulting services. The amount of effort that goes into the change is proportional to the impact on the organization. The bigger the change, the bigger the effort, and the bigger the potential results. Transformations can be around any or all of the following: strategy, process, systems, metrics and culture. We will cover each of these areas in a series of brief articles.

    * McKinsey & Co., 2015, “How to Beat the Transformation Odds”

    TBO International LLC provides transformation services to help clients beat the odds for successful outcomes.

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    The Importance of Mentorship in Our Lives

    We all need guidance. Even the most seasoned professional needs a sounding board from time to time. I am a firm believer that as professionals we can choose to never stop growing, learning, and evolving into the best version of ourselves. Part of this growth is directly influenced by the people we seek out for support.

    One of the things my mother said to me as a young adult was, “You are the company you keep.” I didn’t realize it at the time, but she was talking about mentorship and being mentored in the most basic sense. To affect another in a positive way and to have them do the same in return, all while growing as a person.

    Three ways a mentor/mentee relationship adds value to your life:

    1. Lends you a new perspective. Being a mentor or mentee puts you in the mindset of the other person, even if just for a moment. It can be invaluable to get the perspective of another professional on situations that are occurring in your world in which you feel you have little to no control over. This type of discussion could lead to possible action items or solutions. At the very least, you will leave the conversation feeling like someone actually understands.
    2. Growth opportunity. Often your mentor has been in the profession longer than you and can offer additional insight into a lot of different scenarios. Soak this type of information up and learn from it. Take the gift of hindsight they offer you and make improvements and grow because of it. Conversely, a mentor can grow equally from the vision a younger professional may bring to the table.
    3. Expand your network and give back. Share connections with one another. Start building relationships with the professionals that your mentor/mentee connect you with. This is how genuine professional friendships are created. It’s interesting how things work. While you might be the mentee in one relationship, you will become the mentor in the next. In each instance though you will grow as a professional and as an individual. It’s a win-win.

    At Wiederhold & Associates we are launching a mentor program offering our large network of professionals the chance to create deep and meaningful professional relationships with one another. With over 25 years in the healthcare industry, Wiederhold and Associates has one of the largest and most effective networks in the United States. Our Mentor Program takes this network connection one step deeper. It gives the mentor and the mentee the opportunity to use common experiences to glean further insight into life and career situations. There is no stronger bond than those created through shared experience.

    Interested in joining our Mentor Program? Click here for more information.

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    Leadership's Necessary Ingredients

    By definition the term Leadership implies that one has followers, but in real life how does one obtain followers? Often individuals are in positions where the job description states very explicitly they will have authority over the activities, schedules, performance, etc., etc., of others. This is a big responsibility but does being in a position of authority make you a leader? If not, does authority require leadership? Conversely, does leadership require authority?

    Is leadership essential for positions of authority, or is it just a human trait that would be nice if available? If a person in authority - aka ‘boss’ - does not have to be a leader, then should we say that leadership is not a prerequisite for being a boss? If not, then if the boss doesn’t formally lead then who does? In my experience, I have found that often the greatest leaders in an organization are not individuals who are in positions of authority but nevertheless have followers and influence the organizational team and culture in very significant ways whereupon often the implementation and execution of organizational goals and objectives are directly determined by them - our informal leaders. Some examples of leaders without formal title and authority were Gandhi, Martin Luther King, Nelson Mandela and Joan of Arc to name a few.

    I have found that it is optimal if bosses are also leaders, but unfortunately the former does not always entail the latter. Often an organization has people in positions of formal authority and responsibility who are not leaders and consequently have very little influence and leverage over team productivity and goal execution but yet have all the responsibility. Although it must be noted that frequently when a boss is not a leader it is due to no fault of his or her own. Maybe they are new to the organization or possibly young and lack experience, maybe a bad hire and put in the wrong position or maybe they are experts in a vital area but truly possess little ability in areas of communication and or interaction with people. There can be numerous reasons why a boss is not a leader.

    These formal bosses may make decisions and create and finalize numerous policies, but still are not able to actually achieve progress towards the organization’s goals and objectives because they have few if any followers. Often, they will experience frustration and or anger and may be tempted to implement and execute policy and protocols with force, fear and intimidation to make up for their shortfall in leadership. Unfortunately, this usually has a disastrous affect, fostering anger, resentment, resistance and or anxiety and paralysis. Ultimately the results show up on the P&L in the form of higher labor cost caused by excessive turnover, unwarranted overtime and lower revenue caused by poor patient experience and lower quality of care i.e., angry or afraid staff just are not capable of giving compassionate, attentive, high quality care.

    I have found there are two essential ingredients necessary for genuine leadership; respect and like. Respect means people believe you know where you are going and you know how to get there. Like means they believe you care about them and that you want them to succeed and enjoy the journey. If they respect you but do not like you then they will follow you but they will not stay with you. If they like you but do not respect you then they will stay with you but they will not follow you. To be a true leader and to achieve real success you must have both; competency and compassion, intelligence and heart, respect and like. This will result in followers who voluntarily follow and stay with you long enough to accomplish something meaningful.

    There are three key questions then presented:

    1. How do we assure that people in positions of formal authority and responsibility become true leaders?
    2. How do we assure organizational success during their leadership educational journey?
    3. How do we assure utilization of people not in positions of authority and responsibility but who are genuine leaders?

    First, to accomplish the aforementioned, we as senior leaders must create through our actions and our hiring process a culture of caring and respect. Simply said, “The Golden Rule must be part of our key criteria for hiring, it should be emphasized in orientation and clearly and strongly stated in our code of conduct and be the center of our continuing education. But most importantly it must be ‘shown’ in our daily walk and talk, emphasized in our interaction with direct reports and leaders of tomorrow and exemplified in our decision making and prioritization of goals and objectives.

    Second, we must truly believe that our staff are assets and not liabilities and invest our time, effort and resources accordingly. Everything we want to achieve in healthcare involves people. Nothing can get done successfully without them. If we want competent leaders, then we must invest in them as such. We must invest on a continuous basis in their education and training and mentoring and coaching if we expect them to develop the competency required for leadership. Wisdom and prudence demands that we do this so that our most valuable assets – our staff – are leading with up to date knowledge, skills and know-how rather than being ill equipped for the future and getting left behind.

    Third, we must create a culture of inclusion which means everyone is part of the same big team. Our culture and belief system must entail the core belief that everyone has equal intrinsic value as human beings i.e, different roles with different responsibilities but all of equal value. This would then be exhibited in our team dynamics where every person in authority, every boss, would value and listen to input and not only allow feedback on ideas and decisions but highly encourage it from everyone. A culture that recruits, hires and trains its individuals of authority to listen and serve rather than direct and dictate i.e, humility. Individuals who intimately understand they do not know everything and are not expected to know everything and have true humility, will identify, value and listen to their informal leaders and use them as champions in a positive way for the betterment of the team, patients, community and organization.

    An organization that creates a culture of leadership that exemplifies the Golden Rule; cares for and respects all staff; sees staff as assets and invests in them accordingly; values all individuals equally; is inclusive and listens; and where humility is an expectation of all positions of authority will best be able to assure there is consistent genuine leadership which has followers who both Trust and Like them, because they exhibit Competency and Compassion, Treat their staff as Assets and utilize both Formal and Informal leaders consistently for the good of all.

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    DON'T GET AMAZONED

    The company that puts you out of business will not look like you!

    The job of an entrepreneur/CEO is to look around the corner to see what is coming in the future. It is hard to know what a competitor looks like when they may not look like me (see: Amazon vs. Sears, Uber vs. Yellow Cab).

    When I peek into the future, how do I know what I am looking for? What will my competitor or my business model look like tomorrow? The risk of missing a change in the business model is great. My role is to work on new processes that can help my clients get more value and make Medic Management Group more competitive. Many CEOs are concerned that disruptive companies may enter their business segment and change the business model. Amazon may not enter my business space - health care management - but I have to worry about companies like Apple and Google.

    In my world, I cannot be lulled into thinking that patients will continue to seek health care in brick-and-mortar buildings. The technology explosion in health care does not just relate to genomics, new medications and surgical treatments. Every day new technology is being developed to enable patients to be seen from remote location s through monitoring devices that communicate with the providers. The telemedicine advertisements that we see on TV are just the beginning.

    Many entrepreneurs and CEOs are too busy working on the day-to-day issues of their companies to explore new opportunities. We are so entrenched in day-to-day that we do not think like the generation of entrepreneurs that is looking for the new way. In the past, we attended annual trade shows, or we would study our competition to see what they were doing. Today, by the time you see what the competition is doing or hear the ideas that are discussed at trade shows, it may be too late.

    How do we keep from being 'Amazoned?'

    1. Get new ideas from businesses not in your industry. When you meet friends or talk with colleagues, do not just ask ' how's business?' Ask what new ideas and technologies they are seeing in their field and consider how they can be adapted to your business.
    2. Perform a critical analysis of the current business by your team or an outside entity. How can we do it better?
    3. Learn about bots, artificial intelligence and new technology, and find out how they relate to your products and offerings.

    As the CEO, owner, entrepreneur, you are the chief visionary. You cannot delegate something as important as understanding the future of your company. A 22nd century vision is critical. Those of us that "skate to where the puck is going, not where it is has been" have an advantage over our competitors, current and future.

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