Best Practices

Steering Your Practice to Fulfill Its Purpose

By Derek Preece

In the months since this column began, thought leaders of BSM Consulting have challenged readers to contemplate the decisions they need to make in many critical areas of practice management. These areas have been as specific as the use of femtosecond lasers in cataract surgery and as broad as accountable care organizations.

These issues and many others require a thoughtful, disciplined decision-making process if a practice is to achieve long-term success.

Naturally, this raises questions about how a practice goes about making good long-term decisions. For example, what governance structure results in the best strategic decisions? The word governance comes from an ancient Greek word that means “to steer,” and indeed, the governance structure of a practice “steers” the business towards its ultimate goals and objectives.

Governance Stages

Every practice goes through stages during its development, and the governance structure at each stage must fit the decision-making needs of that time:

Stage 1: When a practice is founded, it generally has one doctor and one or two staff members. At this stage, the doctor makes all major decisions as he or she represents the entire governance structure.

Stage 2: When the practice grows and employees are added, the doctor assigns someone to a manager role. Major decisions still rest on the solo physician's shoulders, but now he or she has significant input from someone who has a major oversight role within the practice. Ideally, good managers will find time to communicate with colleagues and peers in similar positions, to think about the future of the practice, and to gather pertinent data so they can be a helpful resource to their doctors in the decision-making process.

Stage 3: Once a second doctor has been added to the practice, and especially when that person becomes an owner, the governance dynamic changes dramatically as the practice now must take into account a second provider's needs and ideas. Adding another voice to the decision-making process can be awkward without appropriate advance planning. In this scenario, most successful practices schedule regular meetings with the doctors and manager to allow time to analyze information and choose the preferred course of action from multiple strategic options.

Stage 4: As additional doctors are added, the decision process is subject to continual but subtle changes. When physician headcount reaches five or six (and sometimes sooner) many clinics opt for a more formal “board of directors” that may include all owner-physicians. This board sets the tone for the practice and makes major decisions that the administrator and management team implement. Often, one doctor will be assigned to work closely with practice administration to ensure that the board's directives are carried out.

Stage 5: As the practice continues to add owners, the board of directors eventually finds it unwieldy to gain consensus on the many issues facing the practice and often appoints a subcommittee to focus on all but the most important decisions. These “executive” committees are typically much nimbler in their decision-making speed and more able to move quickly on questions that demand immediate action. In some cases, board membership may be restricted to a specific number — usually less than 10 — and the other owners rotate through the board by turn or via elections. A merger with another practice always forces a reevaluation of governance issues and often results in significant changes in structure, as well.

New Challenges

Ophthalmologists now face new challenges that will force them to rethink governance issues. For example, what structure will be needed in the future if practices become integrated into accountable care organizations or are acquired by a hospital or large multispecialty clinic? The prescriptions for governance stability and success will undoubtedly be varied, but key considerations must include choosing a structure that provides the best chance of making sound, disciplined business decisions that enable the practice to fulfill its purpose and reach its goals. OM

Derek Preece is a principal and senior consultant with BSM Consulting, an internationally recognized health care consulting firm. For more information and resources, please visit the BSM Café at www.BSMCafe.com.