Saturday, 13 August 2016

Let's get graphical

As doctors and indeed human beings we are often flummoxed by that most imponderable of imponderables- human nature.

Human beings by their very nature are unpredictable. So, how does one plan a business model or services that caters to Human beings and more so with their health. Lot of people have made stabs at this. There is veritable treasure trove of information available on  variation in patient numbers, peak periods, seasons, the effects of charging for services etc.

Yet, I find that no one in my practice can reliably predict what will happen to the workload during school holidays, for example. Surely, given a stable demographic and years of trading in the same spot, we should be able to say that demand will go up or down and how many Drs we should need to match it. But, never happens. We can have very quiet days and then 1 day can be extremely busy.

So, I thought perhaps Drs are not the best people to be analysing this. We are, in the thick of it and may lack the objectivity or indeed even the skills to analyse this.

At this time I came across a blog by esteemed marketing guru Nirmalya Kumar. I suggest you read this before going any further - it shouldn't take more than 5 mins:
https://nirmalyakumar.com/2016/08/07/pricing-why-make-things-worse

I would urge you to ignore the buzz phrase 'make things worse'. He is talking of products in his blog whereas we are talking about services and no one is suggesting we provide medical services that are deliberately inferior.

To stop you from having to go back and forth to the blog I'll reprint the 2 relevant graphs from the blog here




So, what is the relevance to us as General Practitioners?

I'll tackle this on 2 fronts- one at an independent Dr level and second at a Practice Level from an organisational, marketing, provision of service perspective.

As a GP wherever you are working now look at graph 1. The blue box represents your workload or income. What can you do to increase it- if that's what you wanted to do? 
In my experience, most cannot look beyond graph 1. The only way on that graph to increase your income is to shift the red line to the right, i.e provide more services, work more and thereby increase the size of the blue box. This might work on pure numbers but is it the most cost effective and efficient way to do things? 

Numerous studies link burnout to overwork exist and we as Drs are always advising patients on the value of work- life balance. Costs, go up too. If you work 6 days instead of 5, commuting costs are up. The medical indemnity may increase too. There are various clinical implications too. Will you have enough time to review results, follow up on hospital letters, telephone calls etc. if you are seeing patients all day long?

So, look instead to graph 2.  No matter where you work and how good you are, there will always be consumer surplus and deadweight loss. This is true even if you bulk bill all your services, i.e services are free to the patient. 

How can there be a consumer surplus if services are free? Well, we all have patients whom we refer to specialists for things like annual skin checks to dermatologists, for heart checks to cardiologists etc. These patients can and do pay to see the specialist, so clearly the capacity to pay more, the definition of consumer surplus exists, even in deprived areas. Apart from that there is always demand for cosmetic work. Patients who demand they be bulk billed at every consultation will willingly pay for botox injections!

And deadweight loss? If everything you provide is free, how can you go any lower to attract the deadweight loss? A product can be made cheaper, but how can you make a service cheaper than free? A bit of lateral thinking and you will realise that there is unmet demand for free services, which we routinely ignore. Isn't there a demand for Home Visits or visits to Nursing Homes? For opening at weekends or early mornings/late evenings?

So, if your income is the blue box in graph 1, I suggest rather than expanding that and making it bigger, a bettter option would be to tap a little bit into the consumer surplus and a bit into the deadweight. This always requires some planning and time management. The patients in box p1q1 in graph 2 for example may require more time during their appointments. They may even expect a different, posher, quieter environment. Would you have your botox injections next to the nurse's room where screaming children are having their vaccinations? Unlikely. So, a dedicated day or slot to cater to these patients when the nurse is off would be suitable. The waiting room will be quieter and the receptionists better able to handle any queries.

Opening weekends or unsocial hrs to attract the deadweight is another option. This can be done in hours too. If you are busy and there is waiting list to see you, you could dedicate a few hours a week to a walk in clinic. Patients can see you without an appointment in this clinic for simple problems like script renewals or BP checks. This will stop them from going to another Dr. If you are privately billing consults, you could Bulk Bill this clinic to capture the deadweight. So, the bigger your p1q1 portion, the less onerous your workload will be. To me this is a continuum. You start at the right early in your career at graph p2q2 and move left. Most people unfortunately get stuck in the middle portion and rarely move to the left most portion of the graph. Towards retirement, many practice exclusively in a pattern that mimics the left most portion, but they tend to be using a thinner slice of the main pq box - seeing more complex patients, spending more time with each patient and working less. They haven't truly moved to the p1q1 portion either.

So, approaching this at a practice level. From the above, it is clear what I would suggest. Rather than concentrating on making the main pq box bigger, practices should look to moving from graph 1 to 2.
Expanding the size of graph 1 is fraught with problems. You need to either work your Drs harder- work more days, longer hours or see more patients in the allocated hours. Drs are perhaps the most difficult people to work with. The more you have, the problems you face. More Drs means more support staff required. What happens if a Dr leaves or goes off sick. You now have support staff but no one generating income to support them. What happens if another centre opens up and your deadweight patients move to them. They may do so just because of shorter waiting times for example. 

In my experience, especially in Metros and outer metros of Australia there is cut throat competition in this arena. Surgeries are opening up; chasing the same market. Universal Bulk Billing (UBB) Centres are mushrooming. When services provided are free (to the end user, not to the tax payer) this also leads to what is called over servicing. A very simple example- most UBB practices I know, do not give out blood test results on the phone. So, have a blood test and then go back to get results, even if they are all normal. This is called 'churn and burn'. Pointless medical consultations purely to meet the needs of a model of service. Wouldn't it be better to charge the patient a small premium at first consult, then text them or email them to say "all ok" if results are normal? A fee of $5-$10 can easily be offset by the savings made in not traveling to and paying for transport and parking for example. This could be sold as a value added service to patients.

What of those who can't afford it? They come to your walk in clinic- simple!
The UBB model also promotes what's been described as a bums on seats model. High throughput of patients requires all drs to be present and actively seeing patients; to keeping waiting times down and to compete with other centres in the area. Hence, no one does home visits or sees patients in Nursing Homes. Some don't even do Work Cover. Continuity of care is lost and the potential for mistakes are high. Abnormal result not acted on because the patient didn't come back for a review for example.

My recommendation to anyone owning a centre is simple. Don't expand on the square pq. Go to graph 2 and look into moving into p1q1 and p2q2 instead. Employ Drs with varying skillsets and skill levels. Why would you Bulk Bill a mirena insertion for example purely because the Dr happens to work in a UBB? This service can & should attract a premium of $50-$100 minimum. 
Consultants would charge up to $300 for this. 
Remember the consumer surplus - if you don't value it, neither will the patient.

Have some Drs doing Home visits. Encourage them to do this by reducing your management fee for this service. If the Dr is out of the surgery, not using your room, electricity, receptionist etc then they pay you less management fee and thereby earn more. You gain what you might loose on management fee by expanding your patient base as opposed to trying to overservice your existing base. The latter is always unpredictable too.  It's a win- win situation. Encourage some to acquire new skills (dare I suggest even pay for courses). Having someone with an interest in dermatology performing procedures or minor surgery etc can really move you into higher margins. Bulk Billing procedures is a loss making exercise due to the complexities of Medicare.

I have heard it said before- Drs make very poor business persons. There is a grain of truth in there.

We pride ourselves on practicing evidence based medicine (EBM). Shouldn't our business models follow evidence too?

Gaurav




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