Developing And Formulating Rules In Line With Values Defines Lessons Learned From My Medical Business Mistakes – Part 1 of 3

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Lessons Learned From My Medical Business Mistakes – Part 1 of 3

The full story behind this doctor’s practice downfall isn’t unique, nothing to excite the non-fiction writers unless it can be defined as a model of what not to do in medical office management. Having absolutely no background knowledge, college courses, or medical school training about business management, office management, or marketing at the time I started my private medical practice, I never thought, let alone even considered this knowledge would be of much value to me. Unfortunately, even today, most physicians continue to consider small business office knowledge and systems like a popcorn movie-entertaining, but nothing of practical value.

Over the next 20 years in private practice I gradually came to recognize the covert signs of a doomed medical practice. I am ashamed to admit to anyone I didn’t know how to handle the quicksand of disabling factors which surrounded me in my practice. The specific events, which spelled out and magnified my business ignorance, were:

• Violating common sense budgeting for the business. By the third year in private practice I had an opportunity to purchase a small medical building with 5 medical office suites with a very small down payment and paid the mortgage with the rental paid by the physician tenants. Seemed like the right decision.

But, to add wood to the fire, my next decision was to spend about $70K to renovate and upgrade my office in that building and figured I’d pay for that over the next 15 years, never considering I might need to move elsewhere sometime, or struggle with the attrition of my practice, or my tenants might move out, or economics of medical practice might change for the worse (as they did in 1976).

Going into heavy debt just never worried me—-big mistake! Certainly relying on my overconfidence and professional status, how could I lose no matter what came along. Could sound business knowledge have prevented this-I’d like to think so. My CPA sure didn’t help me. My corporate attorney didn’t either. None of my family had any business expertise to offer me.

• My vision of my life in medical practice disappeared. I’ll never know why but one day I sat down about 5 years into my practice to try and figure out how my practice was doing and get an idea of whether it was going anywhere. I’d never even thought of keeping statistics such as the number of new patients each month, or on anything else related to my practice. So, I relied on the monthly financial statements from my CPA, which I really didn’t know how to read or make sense of in any effective manner, as a means of formulating critical decisions about my practice business-not that you have ever been there. That methodology was and is like rearranging the chairs on the deck of the Titanic.

I read the numbers, calculated amounts, categorized the results, and came up with what Winston Churchill called, “A riddle wrapped in a mystery inside and enigma.” Evidently, I had boarded the clue train. One thing was abundantly clear. It would never be possible for me to make enough money in my practice of OB-Gyn to pay for my three kid’s college education, nor ever be able to fund a retirement plan to any sufficient level.

Psychologists, spiritual leaders, self-improvement experts, and mind benders can very well look at my behavioral pattern as a true example of collective insanity, intellectual immaturity, or need for a psychic hotline. They’re probably right, within certain bounds and without knowing my personal attributes. But, when it comes to comparing myself to other physicians, then and now, I wonder how many of them are a mediocre jockey on a hell of a horse.

My thought was, “I’ve gone through the entire educational gauntlet, sacrificed years of my life to my ambition, invested thousands of imputed dollars in the process, and now I see that what I have to show for it-stinks (a replacement word for the ones I was thinking).”

How could I resolve the dilemma (or how would you)?

–Start a new career that offered more financial gain?

–Start a sideline business to supplement my income?

–Become a paid employee of a managed care group?

–Move my practice to another area?

–Work longer and harder daily till I burn-out?

–Focus my practice on high income patient procedures?

–Retrain as a plastic surgeon or anesthesiologist?

You will never convince me that you haven’t run these thoughts through your mind from time to time.

Although you can put yourself in my position and understand the unending analyzing and agonizing one must go through, perhaps you have already; a choice has to be made. The choice of taking on business education and marketing courses should have been added to the list, been a better choice than most of the others, and, unfortunately, remained unrecognized as a business tool among most physicians-even today.

Because most of the choices involved extra costs, some time away from practice, and my own rigid thoughts about what I mentally and physically could and couldn’t tolerate, I decided to do real estate investing as a sideline business. It seems to be such an outrageous synthetic experience when I look at it now. Here I couldn’t even think of a practical way to inject my practice with growth hormone, and then went ahead and involved myself in another business I didn’t know how to run. It didn’t work out as I had planned. I lost everything except my practice-back to page one. Would all of this have happened if I had been educated in the basics and principles for running a small business (involving marketing as an integral part of that) as well-maybe.

1. My complete incompetence in managing employees. Although most physicians are able to eventually, after a Sabbath journey to reach holy ground, reluctantly accept the “spontaneous” office management system that has emerged among his or her employees without any effort on their own part, it’s a permanent source of practice destruction.

I know because I used that system, never understood how to make it any better, and many times sat behind my desk after everyone had gone home and had what Joel Osteen, the pastor, calls a “pity party” for myself. Did I really do that?

But then, if you’re the decision maker, I always remembered the saying, “If you’re not ahead of the threat, you’re reacting to it.” And, boy was I reacting to it, especially when I found out certain things going on with my employees behind my back in my office such as:

My receptionist secretly using the copy machine to print up her church bulletins for the congregation weekly without my knowledge. She had been doing it for almost a year before I found out.

2. Example of my working “in” my business instead of “on” my business: My front desk employee assigned to do all the left over filing, answering the phone, and keeping the office open and running on Wednesday when I was not there, decided on her own to close up the office, put the phones on the answering service, and have a free day off to do her personal things for herself. The other employees knew it and never told me. I made the discovery when I met up with her one Wednesday moving through the shops in the mall. Did I fire her? That’s my next section of discussion below.

3. The importance of employee comradery didn’t mean to me any more than social interaction happening around the office until the truth slapped me in the face. I decided to send my top notch back office lady to an Ultrasound training course about 90 miles away so she could do the OB ultrasounds as well as me. She was not able to tolerate being without her husband for the 21/2 days and insisted he go along. I paid for everything for the venture including hotel, food, travel and the course.

A couple weeks later I found it necessary to terminate my front desk employee. Within two days the back office lady quit with no notice. The back office lady knew why I had fired the front office lady and what she had been doing unethically. I had no idea they were that closely attached, bound by their own “employee honor system,” or created a perfect window to quit that the other situation opened

for her.

Of course, the back office employee, after spending over a thousand dollars on her training, being nice enough to pay for her husband’s vacation with her, and for 7 years in my office learning medical office functions never mentioned she was thinking of quitting, yet abused my generosity without a second thought. She refused to explain why she was quitting but I suspect she had already lined up a job in another doctor’s office to do his ultrasounds for higher pay.

• Can you stomach the results when you let your medical office run itself? My blunders should be a resounding wake-up call for you to start marching to a different drummer.

Blunder #1. I wanted everyone to like me, especially my employees because I have always been a very generous person, easy to like and work with, made few demands on my employees. My very first office employee was an older lady that I shared with two other consultant physicians from the next town. She was very likable, friendly with everyone instantly, and could charm any hostile patient right out of their pull-ups. Her experience in medical office work spanned many years. Her choice of working only part time enabled me to hire a full time office manager.

She was happy doing my office billing and collections part time.

Twenty years later she was still there doing the same job. I could never let her go or replace her in spite of the poor job she was doing because she was my greatest promoter, seemed to know everyone in the medical community, had more connections with other medical offices than anyone else, and bragged to almost everyone how great a doctor I was and how wonderful I treated my patients. My office income wasn’t the best and the billing processes often came up lacking, but new patients kept coming in with her name in hand.

It’s what Michael Gerber, author, consultant and business advisor to hundreds of physicians calls a “physician employee” which he describes as a doctor who settles for a mediocre medical practice and being “good enough.”

Blunder #2: It was one of those examples of how a employee reward system over time became “expected” rewards on a regular basis without any increase in their work efforts, efficiency, and productivity. My fault. You see, my thinking was, and is commonly what many doctors still think, rewards = results. Absolutely, not true! Rewards don’t increase motivation, it comes from inside.

An example of the extremes I went to were a bit unusual and overly generous at times. My excitement about how well my medical practice was increasing, mixed with some social jujitsu, and a neck wrestling desire to treat all my employees, led me into objective amnesia concerning the event. After appropriate arrangements were made, office closed for the day, we piled into a commuter flight from San Francisco to San Diego for a joyous day of sport and entertainment. We toured “old town,” made it through Sea World OK, spent the rest of the time shopping on the waterfront, and had a great meal at a fine restaurant before flying back to the bay area. Naturally, it didn’t cost the employees a nickel.

The day became the topic of conversation in the office for the next few days, the thank you’s were plentiful, and the office work never improved. Sometimes, when you show the caveman “fire,” it triggers an increased responsibility and loyalty—but usually not.

Another similar such inspiring attempt at business smarts a couple years later resulted in a good face licking, but not much more. In another of my eureka moments I arranged for a special dinner meeting for all my employees and their spouses at one of the most expensive elegant restaurants in town. Near the end of the dinner I presented a unique shiny 14 inch wooden wall plack to each employee which included a gold plate engraved with their own name and below the name was a 4 to 6 line personal description I wrote about their expertise and value to my office team. It impressed the employee’s significant other, was a terrific way to praise my crew, and was sincerely appreciated. My mistake was not taking advantage of the follow-up and demand more from the employees.

Blunder #3: This has to do with my lousy hiring and firing incompetence. Of course, it was the first time in my life I had to do such things, and had absolutely no understanding of the process, interview process, format for extracting information from the candidate, or qualities needed for working in a medical office. Experts tell us to “hire slow” and “fire fast.” Thirty years later I finally heard that.

I had invested a considerable amount of money in an office computer system in the early 1980’s knowing that it would increase office efficiency. None of my employees were computer literate business wise and had to be trained for the process. Shortly after I hired a member of the computer company training team who lived close by and seemed well qualified for medical office work. I didn’t really interview her (bad decision), just asked her if she would like to work for me full time. Her chuckling boisterous personality along with being mentally sharp was a cover for her overly ambitious agenda.

Everyone of my employees were required to wear an office uniform, or white coat and never complained. This lady, once hired, flat refused to wear a uniform or a white coat. It angered me, but rationalized (another mistake) my acceptance of her choice not to comply because she knew computers inside and out and would be an asset to the office.

Over and over again she continued to be a problem—and I continued to rationalize each time. She knew exactly how to manipulate me and do exactly what she chose to do using her computer expertise as leverage. After tolerating her antics for a few years, feeling all along I would never be able to find a good replacement for her expertise, she had to be fired—-and I mentally could not do that procedure (what a wimp). My office manager fired her. The rest of the employees, were happy she was leaving, were well aware of her manipulation tactics she even used on them, and, remarkably, chose to never once come to me and tell me all that she had been doing that I never found out about.

The whole experience woke up my sixth sense for the first time, drove red hot spikes through my brain to keep reminding me, raised the bar on employee qualifications, established new rules of engagement with my employees, and became a permanent example of the complexities of medical office hierarchy.


I am way too ashamed to tell you about the rest of my business in-competencies. What is amazing to me is the fact that most physicians suffer with some of these disabilities, know it, contend frequently with them—-and never do anything about it—just like I did for so many years. Getting unstuck from this mindset is not difficult once you know how to go about it.

In the next newsletter I will discuss in detail each of my operational hiccups noted above and how you need to feed your mind with the right stuff, avoid these perpetual hassles, and develop a mindset appropriate for managing you office and small business entity using the tools I tell you about.

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