Ten Reasons Plans Fail

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So many strategic plans end up collecting dust because group practices are not properly primed to act, Richard Townley, MBA, president and CEO of AGI Healthcare Group, San Ramon, Calif, believes. He shared his philosophy at the RBMA-sponsored Managing a Radiology Business from the Top: Physicians & Administrators meeting on February 23, 2008, in San Francisco. 

He identified 10 stumbling blocks that commonly derail strategic planning. If the practice cannot achieve consensus around these basic issues, then it is best advised to clean up its immediate internal business and not waste time and money on a plan that ultimately will fail.

Compensation: To retain and recruit the caliber of physicians desired, practices need to arrive at a realistic compensation level for partners. “If you have generation-x partners who are comfortable with $350,000 to $400,000 and senior partners whose comfort level lies with a much higher salary, then tensions will arise,” Townley says.

Quality of life: Townley consults with groups that work 184 to 238 days a year—a vast range. Before determining an acceptable compensation level, it is important to determine how much each partner is willing to work (including nights and weekends), as opposed to paying for night-coverage services, locum tenens, and employed physicians.

Services offered: Townley reveals that the most divisive issue in practices today is whether to be highly subspecialized or to be more of a group of generalists. This decision has a tremendous impact on call requirements, work RVUs, productivity, and collections per work RVU.

Governance: Groups need to decide whether they will become more businesslike and rely on their executive committees or remain collegial in governance. Townley recommends a consensus of 75% to 80% on this issue.

The windshield factor: As groups consolidate, they are faced with the question of geographical boundaries. Townley has found that a one-hour drive is the limit for most groups, and he calls it the windshield factor. As they acquire new hospital accounts and new clinics, it is very important for the group to be prepared to staff them.

Group behavior expectations: “Nothing is more frustrating to members than to have outliers who put the group’s reputation at risk, make the business meetings less productive, or just drain energy out of the organization,” Townley notes. He recommends setting clear boundaries for behavior toward critical customers, including hospitals, physicians, payors, patients, and vendors.

Assessment of threats: It is important for groups to have a realistic assessment of the competition (including local and remote groups, as well as self-referring physicians). For some of his clients, the biggest threat is internal, Townley says, because they are unable to deal with their own issues in order to develop and execute a plan. 

Opportunities: The group needs to identify the potential opportunities that make sense from a risk-and-reward standpoint.

Risk tolerance: Every action/opportunity comes with risk, so it is important for the group to be cohesive in what it is willing to risk to diversify the revenue stream with, for instance, an outpatient imaging center or a joint venture with a hospital.

Willingness to tend the business: Townley marvels at the number of retreats he facilitates where attendance by the shareholders is a mere 60%, and practice leadership has difficulty finding volunteers to serve on ad hoc committees and in hospitals’ management positions.