"How an Administrator Reformed My Practice"
By Jerry Helzner, Associate Editor

In early 1998, Larry Patterson, M.D., was searching for some help. The ophthalmologist had been practicing in the east Tennessee town of Crossville for a decade and was holding his own. But his plans to grow Eye Centers of Tennessee from a one-doctor practice to a regional operation with satellite offices were stalled, as he found himself devoting at least 25% of his time to administrative tasks he would have preferred to delegate.

In this article, we'll tell you how Dr. Patterson found an effective practice administrator in a former Marine officer. And how the pair quickly turned an ordinary practice into a dynamic one that's operated according to sound business principles. We'll also describe how the practice has been rapidly -- but carefully -- expanding to provide a full range of eyecare services to a nine-county, semi-rural area with a population base of 350,000.

"Back then, I found myself bogged down in things like scheduling employees' vacations," recalls Dr. Patterson. "I needed someone who could handle all aspects of the practice that didn't require a physician's input. I also wanted someone with the business knowledge, leadership skills and vision to help us grow."

The making of an administrator

Enter Ray Mays, a former Marine major who had settled his family in Crossville because he liked the area.

"I had put the word out that I was looking for a first-rate practice administrator," says Dr. Patterson. "Three people had mentioned Ray's name to me as a good candidate even before I talked to him about the position. I knew Ray through our local community theatre group, but these people told me he had gotten a great deal of administrative experience in the military and that he was having difficulty finding a challenging job in Crossville. Ray had managed a base in Saudi Arabia that employed 300 people from about 10 different countries. I figured if he could run that, he certainly could handle the business end of my practice."

Both men approached their initial meeting with caution. Dr. Patterson wasn't sure if an imposing ex-Marine officer could adjust to the quiet, but complex work of managing a medical practice. Mays knew nothing about ophthalmology.

"As we got to know each other over the course of three interviews, I learned a lot about Ray and realized that he had the education, business background, supervisory experience and leadership skills that I was looking for in an administrator," says Dr. Patterson. "I'm very outgoing. He was more of a listener, with a very analytical mind. I realized he would be an unconventional choice, but Ray had no preconceived ideas of how a medical practice should be run and I actually wanted someone who would come in with a fresh approach."

"Managing a doctor's office wasn't high on my list of career choices," laughs Mays. "But I liked the fact that Larry really wanted to grow the practice. I decided to give it a year."

After Mays joined the practice in June of 1998, he met with Dr. Patterson daily for 6 months.

"At first, I was mainly learning and observing," says Mays. "I also went to an American Academy of Ophthalmology meeting to make contacts with other administrators and get more of a feel for the current trends in the profession."

"Ray's an amazingly fast learner and he already possessed excellent business skills," notes Dr. Patterson. "He studied constantly. It didn't take him very long to learn about ophthalmology and practice administration."

Finding a better way

When Mays was ready to take charge, he acted quickly to initiate significant changes.

"I told Larry that I'd be the CEO and he'd be the board of directors," says Mays. "I had to free Larry from routine tasks, because what the patients really want is to have face-to-face contact with the doctor, and the time to ask him their questions. And to grow our income, it was important that Larry spend more time seeing patients.

Mays told the staff that "we've always done it this way" was no longer acceptable. He held weekly one-on-one meetings with key employees and delegated major responsibilities. He also made experienced employees into "coaches" who could train newer staff members.

"My basic message to our supervisors was: 'Here are your responsibilities. Tell me what you need. I'll support you and give you a budget. And don't be afraid to try new things. If we make a change and it doesn't work, we'll try something else.' "

One idea that worked out well for everyone was rearranging the work week so that each staff member could take every other Friday off.

Another change was instituting a "The 20 Minute Guarantee." If any patient has to wait longer than 20 minutes to be seen, the visit is free.

"Every employee is eligible to earn a performance bonus," says Mays. "We must function smoothly as a team to maximize everyone's income. The '20 Minute Guarantee' is a reminder to work efficiently. So far, we haven't had to give any patient a free visit."

"From the beginning, Ray made it clear to the staff that he wasn't here to be their friend," says Dr. Patterson. "He has that military background and quickly established a chain of command. We've only had one employee leave our main office in 2 1/2 years. Ray and the staff have things so organized that there's very little tension or stress in the offices."

Growing through planning

In addition to supervising the staff, Mays creates detailed budgets for all elements of the practice, oversees a community-oriented marketing effort and has instituted strategic planning to guide future growth.

"Larry and I meet regularly," says Mays. "We now have a 1-year plan, a 5-year plan, and even the broad outline of a 10-year plan. We know exactly where we are and where we want to be in 5 years."

By purchasing three satellite optometric offices in the past 2 years, Eye Centers of Tennessee has diversified its revenue mix and significantly increased its patient base. The practice is now ready to construct a new Crossville facility, which will contain offices, examining rooms and a surgery center. Currently, Dr. Patterson performs cataract surgery in a privately owned center in which he has a minority interest.

"Refractive surgery isn't a real big part of our practice because this a retirement area and most of our patients are older," notes Dr. Patterson. "Laser Vision Centers brings a laser to us about once a month and that arrangement has worked out well. We also have two retinal specialists who come to Crossville every other week."

The anatomy of an initiative

The process that led to the recent decision to build the new facility illustrates the close working relationship that Dr. Patterson and Mays have developed.

"After a year, I wrote my assessment of where I believed the practice was, and asked Larry what he wanted the practice to become," says Mays. "We spent a weekend discussing the history of the practice, the potential of our market area, and the demographics of the region. We also briefly discussed the idea of building an ambulatory surgery center (ASC)."

A few months later, Dr. Patterson became firm in his opinion that the practice needed more space.

"I explored ways to expand or remodel our existing office, but the space just wasn't there, says Mays. "I then built a spreadsheet model for a new facility, taking every conceivable variable into account. The only unknown was the future of Medicare reimbursement. I concluded that it made financial sense to build a new facility with an ASC and use the cash flow generated by the surgery center to pay off the note."

As preliminary planning for the new building continued, Mays and Dr. Patterson gained additional insights by talking to consultants and ophthalmologists who had experience in operating surgery centers. They also asked their senior employees for their input.

Site selection was a joint effort, with both Dr. Patterson and Mays rejecting the available locations in Crossville. They eventually decided on a site near a wooded area with easy access to a major highway.

"Being near the woods opened up some very attractive design ideas that we've been able to use," notes Mays.

With everything pointing toward a "go" on the new facility, Mays and Dr. Patterson hired an architect to prepare a design and obtain a certificate of need (CON).

"We needed a CON and a project cost before we could make a final decision to proceed," says Mays.

Teamwork stems from trust

While Dr. Patterson worked closely with the architect to create an office layout designed for efficient operation and smooth patient flow, Mays focused on obtaining financing, preparing the CON package and coordinating the activities of everyone involved in planning the new facility.

"I also monitored Larry's schedule to make sure that he was only involved in the meetings that directly concerned him," notes Mays.

When it came to making the final decision on the new facility, Mays presented the proposal to Dr. Patterson, recommending that they proceed with the project. The doctor then addressed the areas that still concerned him. After further discussion and minor modifications to the plans, Dr. Patterson gave his approval.

Groundbreaking is scheduled for this spring.

"The way we've worked together on the new building shows the trust Larry and I have developed over the past few years," says Mays. "I can ask his advice on any issue without him thinking that I'm less capable as a manager, and he asks my advice on issues that he has. We're always trying new ideas. We're both convinced that if we try enough combinations, eventually we'll find the right solution.

"How have we done so far? We've gone from one office and 12 employees to four offices and 36 staff members. Our gross income has doubled in a 2-year period. We manage our cash flow through budgeting, forecasting and prioritizing our major equipment expenditures so that we're able to continue expanding in a controlled manner. And we've substantially increased the value of the business."

"Once the new facility is built, I'll be spending less than 5% of my time on administrative issues," concludes Dr. Patterson. "That's important because ophthalmology practices today must find ways to generate income in what's become a difficult, competitive marketplace. I feel that a big reason we're making it is because we're so well managed."

Seven Steps to a Well-Managed Practice

Practice Administrator Ray Mays and Dr. Larry Patterson of the Eye Centers of Tennessee offer the following seven suggestions for running a profitable, efficient practice without compromising on patient care: 1. Though the physician should be involved in deciding how the practice should be run, he or she shouldn't be personally handling tasks that could be delegated to the practice administrator or a senior staff member. The more time the doctor can spend seeing patients, the higher the level of patient satisfaction and the more income the practice can earn. 2. All key staff members should be charged with specific responsibilities --and given the resources and support to successfully handle those responsibilities. 3. All staff members should have financial incentives that they (or their team) can earn as a reward for outstanding job performance. 4. The practice administrator should meet with key staff members weekly to discuss issues affecting the staff members' specific areas of responsibility. Any issue having a negative affect on patient satisfaction must be immediately addressed and corrected. 5. Every practice should have a 1-year plan and a 5-year strategic plan developed by the owner(s) of the practice and the practice administrator. Progress toward achieving the strategic plan should be discussed at quarterly and annual meetings. 6. Managing the practice's cash flow is of paramount importance. A practice must rest on a firm financial foundation, with an emphasis on ensuring liquidity and financial flexibility. Mays suggests: A preparing 1-month, 3-month and 6-month cash flow projections based on the financial history of the practice A budgeting based on these cash flow projections A having an adequate reserve to cover "slow cash times," such as the period after the doctor's vacation A prioritizing major equipment purchases to avoid incurring excessive debt. 7. A practice should only make a major equipment purchase if a reasonable payback period for the investment can be projected. This evaluation can be made by modeling several realistic scenarios that assess the technology's potential for producing incremental income.

Checklist

• delegate more tasks

• give staff specific responsibilities

• provide staff with financial incentives

• hold regular staff meetings

• develop a strategic plan for the practice

• prepare cash flow projections

• evaluate major purchases carefully