10 Tips For Running A Successful Group Practice
If you're fortunate enough to invest in a consultant to help you set up your group in a scale-able, please do so! This can save you lots of time and believe it or not, money! Unfortunately, I learned my tips and tricks the hard way; through trial and error. I wouldn't wish that on many people. If you are new to the Group Practice business or if you're considering transitioning from a solo practice to a group practice, these ten tips are a MUST READ!
TIP #1 | Structuring Your Group for Scale-ability
In the beginning most people are just trying to survive the legal process for registering their business, deciding on what type of entity to become, whether to use an attorney or not, etc. Most of the time we are not thinking in terms of scalability when we start our practices. We don't consider what's best for the company when we have not one, but ten locations until it's too late! You will most definitely want to consult with a CPA and attorney in your state to determine the best way to get the most bang for your buck based on your state's tax laws and business restrictions. Personally, I chose to be a PLLC taxed as an SCORP, mostly for the tax benefits based on my projected income and growth.
When you're structuring your group think about the ramifications and incentives for having a business partner(s). Simple questions like, "What are your long term goals for this group?" is a good place to start the conversation. If you are going to contribute blood, sweat and tears to make your group successful and your business partner is just looking for a supplemental income you will definitely have some problems down the road. The more people you have involved in the ownership component of your company the more challenging decisions become, internal allies can form, manipulation and greed can emerge and resentment can fester. On the flip side, having more owners can mean more minds in the mix to generate innovative ideas, progressive growth strategies and more hands on deck to help in the time of need.
TIP #2 | Choose the Right Electronic Medical Records System
If you plan to stay small, then choose an affordable EMR that is easy to use and offers the features you are looking for. Think about documentation, accepting payments, metrics, etc. If you plan to scale you'll want to make special considerations when choosing an EMR to meet those needs. If you are an insurance-based practice, specifically Medicaid and/or Medicare, you will need an EMR that allows you to customize your templates for documentation. As many know, insurance companies are always adding new requirements to their standards of care which providers are expected to meet. The only way to do this is to have an EMR that allows you to make changes to templates such as progress notes, treatment plans, needs assessments, discharge summaries, etc. If you want a referral for a comprehensive and customizable EMR that I use in my own practice, email me!
TIP #3 | Determine a Pay-Scale that You're Comfortable With
In my eBook, Million Dollar Practice: Five Steps to Make Sure Your Group is on Track, I discuss profitability and pay scales in more depth, however determining what type of pay scale you feel is in line with your company's purpose and culture is very important. Whether you are using an incentive based pay scale (what I use), a percentage split, a flat hourly rate, a salary or a different option, getting it right the first time is critical. This is not to say that you can't make changes as you grow because you can, and you should, but it does bring along more challenges if you wait until your group is already established.
TIP #4 | Be Selective in the Hiring Process
New businesses tend to make a lot of mistakes during the start-up phase. You have great ideas, lots of energy and drive, but no applicants. People don't want to leave their "safe" job with benefits to come work for your start-up because of the associated risks. Applicants love your ideas, your passion and purpose but they're experiencing some doubt just because you're company is new to the field. For these reasons many group owners are unable to be as selective as they would like so they end up hiring clinicians that aren't their ideal provider. The could mean lots of compromise for the group owner; often times compromising the culture of your company. Despite all of the barriers, you must hold out and expect that you may not get as many applicants as you would like in your first year. Just know that bringing on the right people who are have a fire burning to spread your vision will catch on and before you know it you'll have more applicants than you'll ever be able to hire!
TIP #5 | Start with a Detailed Accounting Service
I remember my first year of group practice, the single component that drove my practice was total dollar amount sitting in my bank account. An accounting service like Quickbooks, what I use now, was not even used. I look back three years later and actually cringe at the thought of basically driving my business blindfolded! You must have an accounting service at your fingertips that can quickly run one very important report, the Profit & Loss Statement. This is a report that has been super helpful in determining when to grow, when to hold back and when to re-evaluate the budget. In my eBook, I talk about using Percentages to make important business decisions and your P&L Statement will allow you to run those reports in a matter of seconds. Hear more about this in the Profits section of the Million Dollar Practice Series podcast!
TIP #6 | Know Your Numbers
My favorite part!!!! You must know your numbers if you are looking at scaling your business. This does not have to be a complicated process. Just determine what you want your Top Line Revenue to be and work backwards. If your goal is to gross one million dollars and your average reimbursement rate is 100.00, that's 10,000 sessions per year, 192 sessions per week, 38 sessions per day, which could equate to 5 therapists seeing approximately 7.7 clients per day. You can change any variable in this equation to get an adjusted number. If you have 10 clinicians and your goal is one million dollars, that's just 20 hours per week per clinician. Perfectly doable! You'll also want to know your gross and net profit margin per session as well as what the average profit margin on a clinician per year is. For more detailed formulas or examples, check out my eBook! There is also a Planning Podcast that outlines easy ways to financially plan and know your numbers!
TIP #7 | Start with Great Branding
It's so hard to change your branding once you start. Spend the time, give it enough thought and consideration and do it right the first time. Ask your colleagues, friends, or even strangers to get as much feedback as possible. You'll want something that's easily recognizable, that is in line with your desired culture and that you can capture your ideal audience. Think about all of the ways you might use your branding and make sure that what you have meets that criteria.
TIP #8 | Get Your Systems & Processes Right Immediately
Often times when you start a practice your main concern is surviving! You think about what is going to work for you now and not what would work for you now and as you grow. When you start developing your processes, keeping the end goal in mind is key. If your plan is to scale a million dollar practice, go into the planning process creating ways to make what works for you at 100K also work for you at 1M with minimal modifications.
Think about Key Performance Indicators to track throughout your scaling process, and implement those into each system you create. If something is taking too much time, you have a process issue that needs to be corrected. Look at your most time consuming tasks and think of how to streamline them down to where they almost become automatic and easy to duplicate. There are several paperwork packages that will help you quickly implement processes that are vital to a group's growth. Check them out here.
This tip will absolutely be your most time consuming but most important step in the scaling process. To hear a little more about implementing the right processes to scale, check out a recent podcast I did with Joe Sanok with Practice of the Practice.
TIP #9 | Know Your Long-Term Goal
If you know where you're headed, you'll be able to choose the right roads to get you there. If your long term goals is to have a million dollar practice then chooses systems and processes that will get you there fast. Use this long-term goal when planning for hiring needs. You'll want to make sure you have the number of staff needed to produce the volume to meet your goal. Use your long term goal to establish your marketing metrics. If you know you'll need approximately 1000 clients annually to meet your goal, develop KPIs that will get you there effectively. Use your long-term goal to project your gross revenue and profit. Knowing these number will help you have a tangible perception of where you need to be on the year, quarter, month and week. If you need help with determining your long term goals and building a quick financial plan, I can help with that!
TIP #10 | Know What You're Up Against
Doing market research can help you understand what's out there and what makes your group "different". Think about the services, programs, and environment that your company offers that other don't. What is lacking in your community? How can you use that in your branding to attract your ideal clients? You don't want to have the mindset of competing with other business, use each others' strengths to work collaboratively in your communities for the greater good.
If you know you're in a community with an average household income of $22,000 annually, you're up against some financial obstacles in terms of payment. This is an example of when you have to make a choice. Do you charge a higher cash premium and produce lower volume or do you open your practice up to Medicaid and other forms of insurance. This option would have you bringing in a much lower rate per service but a much higher volume.
Many of these are personal decisions that you must make based on your lifestyle and your conclusions after doing market research. If you know what you're up against, you can concur anything; even insurance!
Looking for ways to scale your practice?
Check out my eBook, Million Dollar Practice: Five Steps to Make Sure Your Group is on Track! →