by AJ Riviezzo
Over the past five years I have worked with some practices that have closed their doors. It is a painful decision for the practice and the physician owner in particular. I am frequently asked why a practice may have closed. While I will not speak about a particular practice, below are some commonalities that I have seen.
Marketing. Ineffective or worse, costly and ineffective marketing, is a primary determinate in a practice closing. With the financial picture of increasing costs and lowered reimbursement, phlebology like most everything else in life, is now a volume driven profession. If you cannot direct a certain number of patients to your practice, if those patients do not meet the medical necessity criteria, you will slowly but steadily lose money. Even if your practice is doing very well, it never hurts to review where your patients are coming from. How are they hearing about you? Is it internet or physician referral or simple word of mouth? This information needs to be tracked and reviewed at least quarterly (monthly is sometimes to often and can give false positives).
Chasing the Wrong Patients. I have had a couple practices that were doing reasonably well because of the cash pay services they were offering (cosmetic sclero and other injectables). However, the physician owner was unhappy because they wanted to be a ‘real’ doctor. All of their marketing went to increasing the number of CEAP 2-6 patients rather than increasing the one segment of their business that was making money. Sometimes what we think our business model will be versus what it becomes are two different models. This happens in all industries. It is better to chase what is successful than to only chase what you want to have happen.
Staffing. Either too much or not enough is usually the issue here. I have seen practices where their staffing model made great sense if they were still at St. Elsewhere where all of the staff expenses are covered. Your staffing model needs to make sense or even feel a bit stretched for the number of cases you are performing. A model that is comfortable for October through December is likely an over-staffed model for the other nine months. While employee costs are typically considered a variable cost, in reality it tends to act like a fixed cost and usually your single largest expense. This is not to say you should not ensure your staffing and other infrastructure is sufficiently robust. The key word is sufficiently (and usually just barely sufficient).
Not enough staffing is proving to be a death sentence for a practice as well. The inability to have a competent RVT on staff, even if it is a part time position for smaller practices, can rapidly spiral a good practice into closure. I have also seen key staff changes have a deleterious impact on a practice. The office manager who was the ‘glue’ of the practice or the biller/collector who kept the financial house smoothly running suddenly quits. Even if you find someone who is as good, as competent, it will take months for them to learn what their predecessor just knew off the top of their head. In some areas there are no good answers to this conundrum. You can mitigate this somewhat by having a plan. It does not have to be comprehensive. But do have at least an outline of plan in case Person X decides to take another job, retires, or moves from the area. Be sure the staff you have is effective. The patient formulates their opinion of your care often based on staff interactions. Having an authorization person who does not obtain auths or a billing person who does not collect in an appropriate fashion is problematic.
Retirement. How to transition to retirement is an entire article in itself. With volume being essential, with rising costs particularly in labor coupled with reduced revenues, it is critical to know how your money is being spent. Are you reaching out to the enough and to the right patients. Is your staffing pattern appropriate for the volume you have (not what you hope to have). Finally, are you focused on what makes money for the practice versus what you would like to be doing? All good questions to ponder when you are awake at three in the morning worrying about everything.