Risk and Reward: Negotiating Goals and Relationships on the Financial Side of Aesthetic Medicine

With the swelling rules and regulations in today's healthcare market, managing both the medical and business ends of a private practice has become an arduous task for physicians. With dwindling reimbursements, shrinking profit margins, and greater pressures on the mechanics of running a small business, private practices are continually evaporating. The few practices attempting to buckle down and withstand the turbulent and looming healthcare tsunami are finding it necessary to hire skilled managers to handle business operations. While the prospect of focusing more on clinical affairs and less on the business bothers is potentially attractive for physicians, clearly defining the role and responsibilities of the position and finding the right person for the job can be very difficult.

Defining the Position

The platform for managerial titles in medical and aesthetics practices continues to expand, and yet a universal name for these positions remains elusive. Some use the term “practice administrator,” while others favor “office/ business managers.” Some practices are also hiring Chief Financial Officers. While folks in these positions each probably have a uniquely defined job description, the sheer variety of titles perhaps speaks to endless number of capacities that a business-focused manager can have in a practice. (For the purposes of this article, I will use the term “business manager” as a generic stand-in for any one of the potential titles under discussion.)

No matter how we define the title, there are certain qualities that we are all looking for in business managers: Reliability. Honesty. Leadership. Self-Motivated. Physicians may be the symbolic CEOs of the practice, but throughout much of the workday we are busy tending to patients. Thus, the business manager actively manages all other nonclinical operations. It is the physician's responsibility to recognize exactly what the practice needs and find someone with the right skill set to fill that role, no matter who fills it.

Defining roles within your practice is an ongoing process requiring constant re-evaluation. As practices grow, so do the roles of employees. Often times, you can hire an employee who outgrows the skillset for that position. In determining a practice's needs for certain positions, one strategy I find helpful is to think of each position as it relates to generating revenue for the practice, whether that's directly or indirectly. For example, in my practice, we realized that hiring someone in a concierge-type position helped immensely with communication flow between patients, front desk, and medical staff. It wasn't a position that generated revenue on paper, necessarily, but because it improved these things it ultimately helped us treat patients better and more efficiently.

As the needs of a practice change, we always try to define a position before we hire for it.

Inherent Risk

Per our training, physicians are especially skilled at taking in a lot of what appears to be unrelated information yet finding a link and then deriving a conclusion based on that evidence; that is how we learned to diagnose illness and devise a treatment plan. The difficulty, though, is that unlike symptoms of disease, we have never been trained in how to learn the indicators of business health. We may know the difference between a fever of 100 and a fever of 106, but many of us lack an understanding of what makes a profit-todebt ratio successful for continued fiscal growth. Although physicians are not business-trained we should know how to identify the needs of our practice. This is key in finding the right candidate for a business manager position.

The welfare of any practice depends on physicians' abilities to communicate with business managers and devise a plan based on combined expertise and shared vision. The difficulty with this, however, is that a physician's primary focus may not be in sync with the best business decision for the practice, which may put us at odds with our business managers. Even if communication is great between the physicians and the business manager, the stakes for both parties may vary. While clinicians have a fiduciary responsibility to always act in the best interest of patients, often times that goes against the best business decisions for a practice. The business manager might see certain procedures or devices as costing x amount of dollars and expect it to generate a certain figure in revenue. Take, for example, laser hair removal. The business manager may establish a goal for a room to generate a certain amount of money per hour. He/ she may put pressure on a provider to see or treat so many patients per hour. However, the physician, recognizing a fiduciary responsibility to the patient, will balk at treating a person who is tan or not a good candidate. And while a business manager may accept this decision, he/she may do it begrudgingly. The concern comes more with a delegate of the business manager, for example a nurse, PA, or laser technician who may be more easily persuaded to treat someone tan because they respect the authority of the business manager. It is therefore important to frequently review the ethics and morals of the practice with staff so that if placed in such a situation they feel comfortable to always do what's in a patient's best interest.

These examples illustrate a broader philosophical divide between business managers and physicians. Whereas physicians tend to be very risk averse and always plan for worst-case scenarios, many business-oriented professionals are more willing to take greater risks, especially if it is the physician's money that's being invested, not their own. Additionally, the business manager likely is not as adept to evaluate the efficacy of a medical device. Moreover, if a judgment is made that results in a detriment to patient welfare, the physician's reputation suffers far more than that of the office manager. Whereas business managers will be on to the next job, a physician's career may suffer devastating and lasting consequences.

But perhaps the greatest risk we face in our relationships with financial managers is the threat of theft or embezzlement. As business owners, physicians cannot afford to be naïve. Thus, apart from instituting measures for dealing with theft, we must also maintain close scrutiny of our employees' activities. Many of us have been in situations where someone has tried to steal from our practices or we know someone who has. Unfortunately, medical practices present scenarios that are ripe with theft and embezzlement possibilities, which is why it has become so commonplace. Although we should strive to build trust in our relationships with business managers, we should never get too comfortable.

Patients First

For stronger and more profitable relationships with business managers, physicians must clearly convey to all members of the staff that patients always come first. This message should be clearly defined when all employees are hired. It should be stated and emphasized at every opportunity, to the extent that it becomes part of the practice's DNA. Business managers should feel encouraged to explore any opportunities to boost revenue but never at the risk of compromising the underlying medical foundation of the practice and the “patients first” objective.

In addition to re-emphasizing the clear goals of the practice and the business manager's specific responsibilities in achieving that goal, the business manager's engagement to the broader environment of medicine and aesthetics can be very helpful. In other words, it is important to bring the business manager into your world. Sometimes, allowing business managers to attend conferences with you helps them learn about the industry and consequently makes them feel more included in the practice. You can also have book club with your staff; occasionally I assign a chapter or two from a business book to my staff and we review them together and exchange our thoughts. These efforts can be both a learning opportunity for financial/business staff and a means of building morale and creating pathways to executing mutual goals.

But arguably the most pivotal aspect of a physician's relationship with a business manager is finding a balance between being a discerning business owner and a risk-taking entrepreneur. The art of aesthetics and medical practice in general requires constant reinventing and creative muscle. Certainly, an important part of that is being receptive to the ideas of our business managers, the best of whom come with fresh perspectives. Despite some fundamental differences between us, new ideas come through collaboration, and we should remain open to new ways of innovating our practices and improving bottom lines. However, it is critical to still proceed with caution, recognizing our inherent business naivety, and most importantly a primary Hippocratic responsibility to never compromise patient care.

As the medical landscape rapidly changes, for the progressive physician wanting to thrive it is incumbent to adapt to the new environment. And as Charles Darwin so distinctly defined, “It is not strongest of the species that survives nor the most intelligent that survives. It is the one that is most adaptable to change.”