The Business Side of Healthcare – Why Most Doctors Are So Bad at It

The-business-side-of-healthcareLet me preface this by stating that I have many friends that are doctors that are rather good at running their own healthcare business.

But for each doctor I know that is good, there are many that do a rather poor job.

 

Do what you are good at

Most believe that doctors should only “be doctors” and provide high quality care to their patients, and while that is true for specialty groups that employ physicians, it is not the case for those that want to venture on their own and start their own private practice.

Physicians are poor business people, because they “tend to be so engrossed in the medical part,” said Dr. Jeffrey Meltzer, 47, an OB/GYN with American Health Network in Carmel, Ind. “It’s an all-encompassing job and takes a huge part of their time.”

 

Jack of all trades

To be a great doctor, you need to be able to make enough money to cover your own expenses to stay in business long enough to provide amazing care to your patients.  But unfortunately our education system is severely lacking on this front.

I went to California Polytechnic University for aerospace engineering and entrepreneur finance and while I enjoyed the atmosphere the school did not prepare me to run my own business.  I personally had to teach myself everything about technology, economics, HR, payroll, marketing, sales, software, graphic design and more to be ready for what is really required when you want to start your own business.

This is the same problem we see in today’s medical schools.

A study found “that a large majority of graduating U.S. medical students from 2003 to 2007 were satisfied with medical school training in the domains of clinical decision making and clinical care. In stark contrast, fewer than half the students felt that appropriate instructional time was devoted to the practice of medicine, especially the component of medical economics.” September 2009 issue of Academic Medicine.

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Teaching Students Medicine and Business

Most medical schools in the United States continue to follow a fairly traditional curriculum that includes core basic science courses and clinical clerkships across a set of medical specialties like internal medicine, surgery, OB/ GYN, and pediatrics.  And even when they teach business curriculum, it is not usually delivered in the correct format and the usefulness of the education is borderline useless.

Students are graduating with major gaps in their knowledge around proper networking techniques, marketing, contract negotiation, management, HR etc.

Some of the questions that students are asking after they graduate are:

  1. How do improve clinical workflow to enhance productivity?
  2. How do you critically evaluate the financial performance of a private practice to determine where to make changes that will improve the overall effectiveness of the practice?
  3. How do you promote or market your practice to patients and other primary care providers?
  4. How do I protect myself from being sued?

 

How big is the problem?

Approximately 5,000 new graduates enter primary care training each year. The problem is, we need a lot more than that.

The U.S. will face a shortage of more than 90,000 primary care physicians by 2020 and 130,000 by 2025, according to nonprofit firm the Association of American Medical Colleges (AAMC).

Students are apprehensive to become a primary care doctor due to a few factors

  1. Schools are not teaching the proper curriculum to lower the risk of running a practice.
  2. Primary care doctors make considerably less than their specialty care counterparts.
  3. Medical school debt plagues the majority of graduates. In 2012, 79% of medical school graduates reported education debt of over $100,000—no surprise considering that the median cost of medical school attendance is over $200,000 for both public and private schools.

Here is a charge on doctor compensation in America. (from nerdwallet)

Doctor Compensation for Medical Specialties

 

How do we solve the problem?

  1. The schools themselves need to develop modern age business courses that teach real world examples of what a doctor goes through when running a practice.  This entails getting out of the class room and watching the administration manage the day to day operations, not just reading it in books.
  2. Do not think you know it all, ask for help.  Hire a consultant or business manager that can provide you with support to run your operations.  Most doctors that I know hire a front desk administrator and task them with running everything (HR, Payroll, Marketing, etc..) when they do not know anything about running a business.

Example:  A doctor that I know very well moved his practice to a new location and never changed the address on the home page.  His website was sending over 50 percent of his patients to the wrong address because he did not know how to update it.  How is that for customer service?  When asked why he never changed it, he shrugged and went about his daily routine.

 

Who is doing it right?

firsthealthLeadership and management are only beginning to be taught in medical school, which is one reason FirstHealth of the Carolinas has launched what it considers to be a groundbreaking project to retain and attract physicians in a competitive environment.

“FirstHealth is ahead of the game,” said Colleen Dolgan, a consultant hired to develop the curriculum and coordinate the program. “Large health care systems have this type of program, but it’s rare for a system of this size. In a really short period of time, the -program has helped pull the beginnings of integration together.”

Program participants have work on collaboration, team management, team building and leadership development, among other things.

 

Additional marketing and technology resources:

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So how are you keeping up to speed with your education?

Leave us a comment below and let us know why your organization is better then the norm.

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Jonathan has a proven record of entrepreneurial success in the healthcare field. As the founder and CEO of ReferralMD, he is responsible for designing the framework of ReferralMD, while managing enterprise sales, marketing and channel development.

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