There’s an old maxim that’s still taught in business classes today: Poor planning equals poor performance. Running a successful multimillion-dollar business requires that company leadership carry out a shared vision, research and plan market initiatives, and provide for a smooth and seamless transition of power when the time comes.
Unfortunately, even though many radiology practices qualify as multimillion-dollar businesses, most of them are run less as a single entity than as a collection of conflicting interests.
"The majority will be governed haphazardly, will act unpredictably, and if successful will do it in spite of what they do, not because of what they do. The elite groups will ensure their success with good governance, a proactive approach to problems, and a clear sense of direction provided by a group-developed and approved mission statement and business plan," according to Dr. Lawrence Muroff, clinical professor of radiology at the University of Florida and University of South Florida Colleges of Medicine in Tampa.
At the 2002 Radiology Business Management Association conference in Las Vegas, Muroff shared his observations on the importance of radiology groups committing themselves to strategic planning. Having spent more than 20 years in private group practice, and in leadership roles in radiology-based companies, Muroff said that inaction is responsible for most group-practice failures.
"Inaction is bad enough, but action taken after the opportunity window has passed is worthless and may even be counterproductive," he said.
Imaging practices are "pathologically addicted to democracy," Muroff said. Decision-making is often based on insufficient information or emotion. Financial and personnel implications may not be considered proactively. Interests of individuals may impede the progress of the group. And, he said, there is an innate distrust of partners and associates.
Muroff listed three elements radiology groups should incorporate into a strategic plan.
Implementation
Strategic planning begins with the drafting of a mission statement and business plan. The documents define who and what the practice is, and will list specific goals that fit with the stated aims. They should be used to periodically measure progress and to reject business that doesn’t fit with the plan, Muroff said.
A small committee should be brought together to create these documents. The board of directors of the group should then review and modify the statement and plan prior to its distribution to the group.
A group retreat is one way for partners and senior partner-track radiologists to discuss the statement. The session should be moderated by a facilitator or consultant who is knowledgeable about radiology practices and the culture of radiology. This will help to keep the inevitable clash of egos in check. Finally, every partner should agree to the plan or at least have all his objections thoroughly discussed, Muroff said.
"It’s critical to review the statement and the plan on a periodic basis, because as the size of the practice increases linearly, problems will tend to increase exponentially," he said.
Governance
A physician CEO should be elected by the practice’s shareholders. This individual should be empowered to act on behalf of the group according to the mission statement and business plan, and should serve a finite term. According to Muroff, the expected workload for a physician CEO is two days per week.
A board of directors, which should be a small group that is relative to the practice’s size, should be elected by the shareholders. This board may or may not serve a finite term, at the discretion of the shareholders in their business plan, and is also empowered to act on behalf of the group.
"An important thing to remember when electing a CEO physician and the board of directors is that everyone in a radiology practice is not suited to a leadership position," Muroff noted.
Practice committees
There are three key committees that Muroff recommends for every practice: a finance and fees committee, an operations committee, and a marketing and new business committee. The committees are composed of shareholders in the practice and report to the CEO and board of directors.
The finance and fees committee sets and reviews fees, reviews coding, assesses financial implications of current and new business, and sets and reviews physician and nonphysician compensation. This committee will be the one that takes the most heat from other members of the practice.
"No matter what issue a practice member is talking about, chances are that it’s always about money," Muroff said.
The operations committee handles physician and nonphysician personnel needs and scheduling as well as practice credentialing, quality measurements, and utilization management. One of its most important tasks is dealing with call duty.
"The most problematic issue in groups today is call. Equalizing, minimizing, and possibly eliminating call should be the three-step goal of every group," Muroff said.
Eliminating call for partial-retirement shareholders can be disruptive. Muroff said it is preferable to assign call in proportion to time worked. Call duty can be bought or sold by shareholders, but should not be used as a coercive option by a partner forcing a nonpartner to accept more call, he said. All call duty, including transactions between shareholders, should be handled via the operations committee.
Finally, the new business and marketing committee will handle practice marketing and physician education; new business opportunities; and merger, network, and physician practice management. As such, the committee’s responsibility is to perform exacting due diligence on any opportunities that the group is considering.
"However, before you diversify practice income, make absolutely sure your group has optimized its traditional income source, such as clean billing, prompt collections, clear coding, and streamlined report throughput," Muroff advised.
By Jonathan S. BatchelorAuntMinnie.com staff writer
January 10, 2003
Related Reading
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Building a successful new imaging center program, October 8, 2002
Clinical IS audits tune performance, productivity, October 3, 2002
Revenue optimization, compliance assurance provide practice Rx, July 15, 2002
Capitation caveats yield contract creativity, November 26, 2001
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