In a small medical practice, strategy sometimes takes the backseat to survival. Many times, our activities are reactive and we base our responses upon social and political situations that are outside of our immediate control. It can be very difficult to step outside of business in order to work on the business but that ability to view the operation from a higher level can lead to new paths of thinking. By looking beyond the day-to-day practice and learning to think strategically about the business, we gain new opportunities and efficiencies.
In the book Strategy Safari: The complete guide through the wilds of management, authors Mintzberg, Ahlstrand, and Lampel take an intelligent and humorous look through how organizations select and implement different forms of strategy (2009). Of the ten ‘schools’ of strategy described, the Learning School and Environmental School fit our current business model the best. In the Learning School of strategy, trial and error play the foundation of daily activities as different methods to handle issues are selected and discarded based on the effectiveness of the results (Mintzberg et al, 2009). In this approach, people learn from their past mistakes and make the changes necessary to be more successful next time. This trial and error approach is much like being a doctor in a clinical study. Doctors test different combinations against different control groups to find a solution for an issue. The challenge with the Learning School strategy of thought is that without an overarching to guide these day-to-day activities, it becomes easy to lose focus of the bigger picture. To understand why the Learning Schools of thought most represents our practice, it is important to realize that our practice is very small and consists of four staff members and me. When I started the practice, it is because I recognized a need for more practitioners in my specialty and I opened up shop. As I needed additional support to handle clients, billing, appointments and so on, I hired people for those positions. Through trial and error, I determined the best mix of staff and responsibilities for my team, a process that continues today. Other efficiencies in my business occur through trial and error as well. The prescriptive process for my patients has this effect when different clients respond better or worse to different medications. In addition, choosing my vendors for supplies also falls in the trial and error category and I refine and select the best vendors at the best price for my business. In this way, the Learning School of strategy represents a portion of our operation today.
The Environmental School of strategy relates closely to the Learning School. In the Environmental School, various machinations in the environment surrounding the organization determine the course of action for the business (Mintzberg et al, 2009). Like the Learning School, the Environmental School is highly adaptable and adjusts daily activities and focus based on interaction with the world surrounding it. For my business, much of the environment concerns healthcare law and regulations. The medical industry is highly regulated and all medical practices are subjected to the laws and rules inherent in the medical profession. Recently, significant and noteworthy changes in the medical-legal landscape surrounding the Affordable Care Act have begun to impact medical practices and these changes will continue to affect all medical practices as the legislation takes further hold in our society.
There are many changes coming over the next decade for the healthcare industry and these changes increase the urgency small practices need to have when it comes to being prepared for the future. First, small medical practices will have to continue to improve the value chain. As medical expenses continue to increase dramatically and oversight of medical bills becomes more rigorous from insurance companies, efficiently managing the logistics chain of supplies and practices in the office will gain in importance. Many insurance companies have switched to consumer-directed health plans. In these plans, a designated amount of medically incurred expenses are paid by the consumer prior to the insurance company. In these types of plans, consumers will be driven to define the scope of services and compare the cost of different practitioners. The value of medical practices will need to be proven repeatedly to both the consumer and the government agencies that regulate the industry. Another major change in the medical practice industry is the impact of the Affordable Healthcare Act. While negative media attention and initial poor sign up response has diminished some of the sparkle from the plan, the full realization of this impact has yet to be seen and businesses will need to be nimble and responsive as changes in the plan take effect in order to capitalize on opportunity or avoid unnecessary risk. There could be a benefit in that there will be more demand for medical attention now that previously uninsured people have insurance. This could also lead to downward pricing pressure on medical practices as the market seeks to balance itself after a flood of new, competitive insurance plans enter the market.
In addition, Social Security is another bubble waiting to burst. As the aging baby boomer population moves into retirement, a smaller group of current taxpayers will be supporting Social Security and Medicare with their earnings. This deficit in tax dollars will affect medical care for the aging baby boomer population and looms as an unresolved crisis in the near future.
A fourth factor changing the landscape of modern medical practice concerns the changing demographics of American society. Obesity is a growing epidemic and its related health conditions require new treatments and areas of specialization. These conditions include high blood pressure, high blood sugar, high cholesterol, and all related heart disease. Another change in the demographics concerns the aforementioned aging baby boomer population. That particular generation will require more nursing and medical assistance than has ever been required in the history of the world. All of these upcoming changes highlight the utmost importance for a professional in the healthcare profession to proactively and strategically position a practice to be poised for a response.
By stepping out of the business and looking at it from the outside, I recognize a tremendous opportunity to apply more of a Design School thought process to our loosely structured business. In the Design School of strategy, organizations deliberately seek out opportunities to find their best fit and implement a rigid internal structure to support this mission. Just like in the book Blue Ocean Strategy, we have to find where our competitors are not and make our niche there (Kim, Mabourgne, 2005). In Blue Ocean, areas of fierce competition were called the ‘red waters’ to indicate a fight over resources by different competitors (Kim, Mabourgne, 2005). To drive a true strategy of differentiation, we will need to identify areas where our competitors are not doing business or serving a need and make that territory our own. To implement more of a Design School strategy, I need to develop a balanced scorecard to provide a strategic foundation. The scorecard should identify areas of concern like financial goals, customer goals and internal goals (Kaplan, Norton, 2004). Once we identify these goals, we can assign action items and target dates.
The first step in identifying the goals is to determine the financial return we want the business to make and then incentivize the behaviors of the team to reach those goals. Part of a Design School thought process would be to determine the level of financial profit that makes sense for this industry. It will be important to educate and involve the team in the financial direction of the company so they are empowered to make their own decisions for the good of the organization. From there, we can develop pay plans and bonus structure to reward actions that bring us closer to this financial goal.
Once a financial goal is determined and the team incentivized to reach the target, the focus turns to our customers. The financial goal will drive the number of patients we need to see a day and when that is determined, there are some logistic considerations. For example, one item to consider is the amount of time the medical team spends with each patient. There needs to be a balance struck of thoroughness and efficiency so judging the right amount of time to spend with each client will depend on the complexity of the case and confidence of the practitioner in the determination of treatment. Another customer strategy could be to identify the practice with certain regions of the city that have been underserved and orchestrate advertising, a lunchtime health clinic, or other public outreach messaging.
The internal focus for the practice will be one of the most important areas of improvement and an area that will benefit the most from the Design School of thought. The priority for the internal focus will be to streamline responsibilities and communication to ensure the practice is operating at optimum efficiency. This could include researching new technologies to help reduce labor in the administrative and billing segment of the business or using pooling resources with other small clinics to share a receptionist or agent to set appointments. Weekly, formalized meetings where I can set expectations and hold individuals accountable for completion will also add structure to the internal workings of the practice and increase efficiency. In addition to the weekly meetings, monthly one on one sessions with each employee will help develop skills and provide feedback. In these one-on-one sessions, employees will also be able to provide me feedback on the implementation of our strategies in a confidential manner. From this feedback, I will be able to adapt and adjust the strategies that are not working and provide better support for the strategies that are beginning to take hold in the office. An annual review process will be implemented as well and this will assist with the formalized feedback process. Just as I will benefit from stepping outside of the business to review strategy for the business, my team will benefit by spending time reflecting on performance over the past year and identifying successes.
Ideas for innovation and change in the business can come from anywhere and so throughout this process, the team will be involved in helping to identify these categories and create the action items. Many times the best ideas come from the people in the front line of the business and encouraging the feedback of the team will assist me in ensuring that the strategies we implement will truly move the meter and impact the business in a positive manner. In addition to providing new and innovative solutions, this will ensure ownership of the task and prevent any passive sabotaging of our strategic goals (Collins, 2001). By applying a more rigid standard to our business strategy, the long-term financial health of the business will be stronger.
The world of medical treatment is rapidly changing. The impact of legislation, changing demographics, and oversight from insurance companies and consumers help drive this change and require businesses to be poised to respond. Some elements of the Learning and Environmental school will always be a part of any successful venture. For any organization to succeed, it must be aware of its environment and adaptive to it. In addition, trial and error will always be a part of how people and businesses learn from their mistakes and make the operation better going forward. For our organization, the task is to embrace the parts of these two schools that have helped us become the successful practice we are today while adopting the rigid standards of the Design School of thought that will get us to where we want to be tomorrow.
Collins, J. C. (2001). Good to great: why some companies make the leap--and others don't. New York, NY: HarperBusiness.
Kaplan, R., Norton, D. (2004). Strategy Maps. Boston Massachusetts, Harvard Business School Press.
Kim, W. C., & Mauborgne, R. (2005). Blue ocean strategy: how to create uncontested market space and make the competition irrelevant. Boston, Mass.: Harvard Business School Press.
Mintzberg, H., Ahlstrand, B. W., & Lampel, J. (2009). Strategy safari: the complete guide through the wilds of strategic management (2nd ed.). Harlow, UK: FT Prentice Hall.