3 Mistakes to Avoid as You Plan, Start and Grow Your Private Healthcare Practice

Starting a private healthcare business is a giant leap for anyone to take.  It often requires leaving the familiarity and reassurance of a regular paycheque for a more uncertain financial future. 

The survival rate of business enterprises is not very favorable, with the latest trends showing 50% success rate at the five-year mark.  Understanding why private healthcare practices come up short in their life span can be a useful starting point for a future entrepreneur.

In this article, we unpack three common mistakes healthcare entrepreneurs make – and how to avoid them in your practice.

Mistake #1: Not spending enough time in the planning phase

Instead: Plan to win. Spend an inordinate amount of time, energy, and resources on this phase.

• It’s critical for an owner to invest in their own management and leadership development. Spend time learning about the EQ themes of empathy and self awareness, as well as authenticity, leading the self, and leading others.  Clinic owners have often invested significantly in the development of their PT tool belt and must acknowledge that being a great clinician does not equate to business success.  An owner needs to create personal development leadership goals to balance out their tool belt.
• Understand the ‘why’ you want to start your business. This will lead you to find greater clarity on purpose and impact.  Your business idea must have a competitive advantage/unique selling proposition and sufficient market demand.  Doing a SWOT analysis can clarify your business strategy.
• Always start with the end in mind.  Understand your end game (e.g., who you want to sell to).  Work backwards from there.

Mistake #2: Starting a practice with incoherence between your competitive advantage, world class client experience, and ability to generate 20+ EBITDA.

Instead: Start to win. Clients don’t buy what you do, they buy why you do it, so don’t treat your team members like economic units. Instead, treat them like they’re your greatest asset.

• To fully capitalize on the potential of team members as your greatest asset, you’ll need to invest in their training, development opportunities, compensation that reflects perceived value, and a positive work environment. By prioritizing your people, you can create a motivated and engaged workforce that’s committed to achieving your practice’s goals and driving success.
• When it comes to customer interaction, team members are often the face of the company. Positive interactions with customers can lead to stronger relationships, customer loyalty, and increased sales.
• A strong compnany culture that fosters team member engagement, satisfaction, and well-being can have a significant impact on productivity, team member retention, and attracting top talent.

Mistake #3: Growing your practice with an over-reliance on technology i.e. Practice Management Software (PMS). Technology has created an automation bias and automation complacency in owners.

Instead: Grow to win. Pair human judgemental capabilities with technology to guide decision making. This will avoid automation bias and complacency in owners.

• End users of a practice management software (PMS) or practice/data management system tend to forget or ignore that information from the system depends on data entered by a human.  In other words, processes that appear to be fully automated are often reliant on human input at critical points and, as a result, require the same degree of monitoring and vigilance as manual processes.
• Automation bias and complacency can lead to tactical decisions that are not based on a complete analysis of all available data, but that are strongly biased to the presumed accuracy of the technology.
• As a practice owner, you need to understand how to manually check, at a high level, the accuracy of data from a PMS or EMR.
  
  • Example #1: monthly sales (revenue)
    • Sales data generated from the system for July 2023: $91,073Owner’s calculation:
      • July intakes 117 (3-month trend: April: 133 May: 122, June 120)Mix: Private/EHB: 60, Auto: 45, Worker’s: 12 = 117Revenue/intake: Private/EHB: $680, Auto: $1,140, Worker’s $880Revenue: $112,660 (manual) v. $91,073 (system); delta of $11,587 or 13%Opportunity: missed billings.
    
    
  • Example #2: monthly cost of sales (people power) for July sales: $91,073
    • Owner’s calculation:
      • Cost of sales data generated from the system for July: $60,108 (66%)
      • Forecasted July cost of sales %: 61% or $55,554; delta = $4,554 (8%)
      • 3-month trend: April: 60%, May: 61%, June 62%
      • Opportunity: overpaid a clinician.

ELEVATE Practice Intelligence (EPI) is a value growth advisory firm. We have domain knowledge and industry successes that we put to work for practice owners, from start-up, to organic and inorganic growth, to succession/exit planning.  We are a team of clinicians and business strategists who are passionate about creating a greater sense of agency over wealth creation for practice owners.  Grow your tomorrow with EPI.