But, that still leaves 75,000 or so eager young men and women idling in your waiting room, if you choose to see drug representatives. (About one in four doctors do not see reps.) What should you do?

There are plenty of reasons to simply say no to drug reps. First, they can take up your clinical time and drive your office staff a bit crazy, even if they are willing to cart in donuts, sandwiches and chef salads to grease the wheels. But perhaps more importantly and insidiously, drug reps are master sales people, shined up with a veneer of useful clinical information. Rest assured that before any drug representative sets foot in your office, she or he has studied an enormous amount of data about your prescribing patterns, including how much influence sample acceptance has on your willingness to favor their company’s drugs. The drug rep knows exactly what you may need to hear to be persuaded to increase your use of their preferred products, based on both prescribing data and field testing. Plus, the rep has been meticulously trained in how to maximize the utility of their drugs and downplay any potentially negative issues surrounding them as well.

In the face of this roundly negative information, why anyone would entertain the notion of dealing with drug reps? Because they also bring some positives to your practice. The samples they supply can make a real difference in some practices. You can try out a medication without asking the patient to invest in a prescription. You can box up a prescription’s worth of the medication for that patient who simply can’t afford it otherwise or who will probably not get around to getting the prescription filled but may be willing to take medication that you place in their hands.

Although drug reps are trained to shine the best light on their products, they can also provide useful information that saves you time learning about the products. They keep you apprised of what’s in the pipeline, why their drug is better than a competitor and how doctors are using and evaluating effectiveness.

Should you or shouldn’t you make yourself available to drug reps?

Here are some suggestions for structuring the relationship to your benefit.
1. See representatives by appointment only. Frankly, you are doing them a favor. It’s a terrible waste of time to hang around hoping to get a few minutes of your time. Everybody wins if you guarantee five minutes at a time that’s convenient for you.
2. Recognize that some of what they say to you is crafted by their knowledge of your prescribing patterns. Ask them to share that knowledge with you; you’ll at least learn something about yourself.
3. Listen to the spiel and the info with the awareness that their first job is to persuade you to use their product. Use their information as a stepping stone to gathering your own information.
4. Accept samples if they will help your patients but be aware that the drug company is trying to make you feel obligated to favor their products. Don’t think of samples as gifts that must somehow be reciprocated; they’re sales tools, pure and simple.
5. Don’t accept the lunches and other freebies; it appears inappropriate even if you are not actually swayed by these tactics.

Above all, pay attention to your own prescribing habits. Are they in fact habits or are you keeping up with the literature and adapting based on clinical evidence and patient need? Be sure you know more than the drug rep knows about how and why you prescribe.

Susan Brissette
SB Cass Associates
East Nassau, New York

1. O’Reilly, Kevin, “Doctors increasingly close doors to drug reps while pharma cuts ranks”, March 23, 2009, American Medical News, http://www.ama-assn.org/amednews/2009/03/23/prl10323.htm
2. Ibid.

Writing a Medical Practice Business Plan

If you need to write a business plan, you are probably:
• Planning to open a private practice
• Planning to expand your practice significantly
• Planning a major investment in space or equipment
• Planning one of the above related to an ancillary business

And…you need money from a bank or an investor or support from a partner such as a hospital. If you’re not involved in one of these activities, you may need a strategic planning process but you probably don’t need a formal business plan. (Strategic planning is a topic we’ll cover in a later article.)

Okay, so what if you do need a business plan? First, check with whoever is requesting the plan to be sure you understand what they really want. If your bank is looking for financial statements and a projection, you and your accountant or controller or practice manager can probably produce the information internally. If, on the other hand, the request is for a bona fide business plan, you will have to plan and execute differently. It’s very typical for banks that are working with the SBA (small business administration) to require a business plan; it’s pretty much a given if you’re working with any kind of investor.

A business plan needs to include:

• Description of your current practice or business if you are expanding or proposing to build on current revenue or experience
• Description of the market you are going to serve, why they care about your product or service and what your competitive advantage is over others offering the same or similar products or services.
• Description of exactly what you propose to do, how much money you need and how you will use it
• Description of how you are going to operate the business including facilities, personnel, equipment, advisors
• Description of how you are going to market and sell your product and service including pricing and sales projections.
• Complete financials, i.e., sales projections, profit and loss statement, cash flow statement, balance sheet

Do not turn the business plan writing project over to your CPA or your lawyer. They are not the right people to do this work but they do need to be members of the team that it takes to put together the information. Chances are, you are not the right person either, unless you have taken some higher level business training and you have the time and mindset to pull everything together. Your practice manager is the most likely person to write the business plan but frankly, unless he or she has done it before and is very comfortable with the process, you will be better served by bringing in a writer who develops business plans as part of their consulting work.

You need a professional with healthcare experience who can help you work through all of the issues related to your project such as the ownership structure (along with your attorney), the market demographics, operations planning (along with your administrator), target market identification and competitive analysis, marketing approach and revenue projections, costs and uses of funds (along with your financial advisor). That professional can turn your project into a compelling story that sells your financial partner on the merits of the project, the market need and competitive edge, the mitigation of risks, the financial solvency and returns and the ability to execute successfully.

While it is very difficult to know how much a business plan should cost to have written, there are some parameters you can use. A simple plan to start a practice should be at the low end of any range. Practice expansion takes more time because you have to start by assimilating all of the existing information and building on it in a fashion that makes sense with the historical pattern. If you are creating a new kind of business where the market is less defined or there is unusual reimbursement issues involved, expect to pay more. The same holds true if you are planning to create some sort of “roll up” business where you create multiple sites and manage them in some central way because the plan will require several sets of financials.

Avoid using Internet business plan writing mills. They are cheap but you get what you pay for. It is possible, however, to work with someone in an online relationship and that is frequently less expensive because the consultant may be located in a lower cost area with prices to reflect that and they don’t have bricks and mortar overhead costs. You might also get a recommendation from your attorney, your accountant, through your local Chamber of Commerce, Rotary or county Medical Society. You don’t necessarily need the services of a major healthcare consulting or accounting group; you will pay too much money and may be relegated to third level associates.

When you find a potential consultant, negotiation is fair. If your practice manager will do some of the work or your accountant will prepare the financials, ask for a fee reduction.

Final piece of advice, don’t hire someone and walk away. You will be sitting in front of the funder to make the case for your project. You need to know how the plan was put together, be a party to the assumptions and be comfortable with financial projections.

Susan Brissette
SB Cass Associates
East Nassau, New York

So, then, how do you go about selecting the right person for the job? One good approach is to look for three “Cs”, chemistry, competence and craftsmanship (managerial craftsmanship that is).

Chemistry

Whether you like it or not, you will spend a lot of time with your practice manager. You will need to help her understand the goals of your practice, the financial structure you are using, how you (and your partners if you have them) need the practice’s operation to support your work and how you would like your patients’ issues (clinical, administrative, financial) to be handled. She needs to “get in sync” with you quickly and effectively so that you can let go of the day to day administration, feeling confident that your practice is operating the way that works for you.

You and your administrator don’t need to be best buddies but you need to like each other and respect each other enough to be stunningly frank about important issues. She may need to tell you that your favorite nurse is not salvageable or that unless you change your work schedule, the money that you expect to have is not going to be there. You need to be able to challenge each other’s thinking and work out solutions while remaining colleagues.

Chemistry is a hard concept to evaluate but here are some ways to get at it when you’re looking for a practice manager:

• Do you like the person? Does she seem like someone you’d be willing to spend time around?
• Talk about values with manager candidates. If your values are in sync, you have a very good start on a relationship of trust and respect.
• Ask her to describe her previous physician employer’s strengths and weaknesses. Are you comfortable with the way she discusses that relationship?

Competence

There’s no point in hiring a practice manager if she’s not competent. Competence can be judged in several ways. Look for someone who has a bachelor’s or master’s degree in healthcare administration. You’ll know that she’s made a commitment to the field and has been trained in the basics. Look for experience in another healthcare setting. A person who has been second in command in a larger or same size practice or manager of a smaller practice often makes a good fit in terms of experience and career move. Look for someone who belongs to a practice management association and/or has earned a practice management credential. (There are several available.) That connection shows that she recognizes the need to keep learning.

Don’t worry about matching your specialty to the person’s experience. While it would be terrific to find someone who worked in an orthopedic practice to run your orthopedic practice, you’re better off selecting someone with the general experience and/or educational background; she will learn the nuances of your specialty quickly because she has the background to do so.

Managerial Craftsmanship

Nothing destroys an office’s productivity faster than personnel problems. If your staff or your partners aren’t happy, you and your patients and your bank balance will suffer. Your practice administrator needs to be deft in handling personnel issues. She must be able to adjust her managerial style to help each person in the practice do the best possible job while demonstrating a consistency and even handedness that allows everyone to feel confident that they are in a stable and fair working environment.

This skill is also difficult to “test for” in an interview process. However, one way to learn about managerial style is to ask questions such as: “Tell me about one of the most challenging personnel issues you have handled and how you handled it.” Don’t ask hypotheticals. Inevitably, you can’t really give someone enough information to get a reasonable answer. Instead, spend time listening to candidates describe their experiences and decide if you feel comfortable with their approaches.

Bottom Line
If you can find a competent practice manager with a managerial style you like and values you can respect, you’ve probably got the right person.

Susan Brissette
President of SB Cass Associates
East Nassau, New York

1. For simplicity’s sake, we’ll plan on a female administrator so that we can dispense with “he or she” and “him or her”.