Health and Life Best Practice Indicators and Superclinics

HEALTH AND LIFE’S BEST PRACTICE INDICATORS The 12 Key Elements for Building a Successful Investment Grade & Socially

Responsible Practice Overall Objective - To leave a legacy and not a liability.

© Health and Life, 2007

Practice Foundations Must Offer Certainty

Reward for Investment & Performance

Built to Last Vision

Positive

Self-Empowered Leadership

Giving Back

Patient Happiness

Staff Happiness

Solid Practice Infrastructure

Accountability & Transparency

Financial Stability

Ownership Stability

Inter-Generational Appeal

‘Recognize that there is a need for change’

3 yrs

“We”

Investment Model 0 yrs

“Me”

Liability Model

Sub-Optimum

Optimum



*Essential Criteria © Health and Life, 2007

Health and Life’s Best Practice Index – Will it attract tomorrow’s doctors? This is a quick self evaluation test for practice owners. Practice’s that successfully recruit and retain doctors, the right attitude is single and most important factor that sets them apart. Why? The Medical Observer article “On my Own Terms” reports interest in practice ownership is up. Our client who was featured in this article successfully recruited and sold a practice interest to a young doctor. People are surprised to learn we can on average sell a10-15% interest in a general practice for $300,000 with no golden hand cuffs. This debunks a traditional myth “general practice is worth nothing”. To find out how our clients did it read on …… As a practice owner your ultimate goal is to eat well and sleep well. If you own a practice you must be able to: 1. sell your practice for a fair value without golden hand cuffs 2. make it work for you and not the other way around 3. choose to come to work and you do not need to come to work Your overall objective should be to leave a legacy and not a liability to the community you serve in. How? In our Best Practice Series we rank and certify practices into 3 categories from highest to lowest. By achieving an investment grade status or higher you should be able to achieve the above goals. We use the matrix below called Health and Life’s Best Practice Index – 12 Key Factors for establishing a successful investment grade practice. The 3 rankings are: Rankings Blue Chip = exceed 11 out of 12 items.




Investment Grade = > 9 out of12 Investment Grade Potential = less than 8 out of12 A practice restructure maybe required to achieve these results - it is a process and not an event. Normally it takes 2-3 years to see the final result although immediate benefits arise by embarking on this journey. Where to From Here? To test whether your practice is an investment grade practice ask yourself do you confidently pass the key objectives in the matrix below? If you cannot then a practice restructuring process may be what is required. All of the stated objectives can be achieved by a change in attitude in the owners attitude towards their own practice. The right attitude is the number one factor we have noted about successful practices in Australia. Contact us on 1800 077 222 or email [email protected] if you want to be certified by us or for practice sale purposes. Alternatively decisions about whether to amalgamate, retire or corporatise are some other options worth considering. After all there is no point in throwing good money after bad.




Status

Objectives

(Order of Priority)

Best Practice

Pass Needs Improvement

1. Positive Self Empowered Leadership

Practitioner Owner Attitudes – • Can do attitude • We not Me and Committed

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2. Built to Last Vision* • What is your purpose? • Owners agree on what they want

to achieve in the next 5 years (One page bullet point strategic plan).

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3. Inter-Generational Appeal* • Mentoring and Peer Support • Work life balance • Can it be sold to the next

generation? • Investment v Liability model – will

you be better off becoming an owner? Is it clear?

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4. Reward for Investment & Performance*

• Clear business case - Passive v Personal Exertion Income.

• Profit sharing model rewards owners for risk and effort.

• Balance required between “Eat what you kill” v “Earn while you sleep.”

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5. Practice Foundations Must Offer Certainty*

• People pay a price for certainty. • Implement optimum legal and

business structure. • Simple and easy to understand

structure. • All necessary legal

documentation signed. • Sound asset protection. • Easily sold for a pre-determined

and fair value. • Tax friendly.

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6. Ownership Stability* • >4 owner practitioners – 60%

under 55 y.o. • or “Friendly Lock In” key provider

recruitment and retention strategy.

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7. Financial Sustainability* • Operating Profit Margin >25%. • Return On Investment >30% p.a. • Exceed industry averages. • Ability to service and repay loans. • No unstructured debt or debt free.

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8. Accountability* & Transparency

• Strong clinical and accounting systems and procedures.

• Meeting statutory & quality assurance compliance obligations.

• Easy to understand monthly and annual reporting of financial and non-financial key performance indicators.

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9. Solid Practice Infrastructure* • Excellent systems (including intellectual property), modern and reliable IT system.

• Infrastructure well appointed plant and equipment and premises.

• Regular major re-investment every 5 years.

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10. Staff Happiness* • “We” not “Me” culture – good staff morale.

• Formal organisational structure – encourages delegation.

• Regular principal and staff meetings.

• Minimum annual 360 degree staff surveys where staff assess management.

• Min. bi-monthly external and internal staff training.

• Rewards and recognizes high productivity and initiative

• Staff turnover < 10% p.a. • Promote work/life balance.

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11. Patient Happiness • Quarterly surveys and implement

changes • Patient Fee Growth > 16% p.a. • Embraces community health

programs • Ensure access to an affordable

high quality range of services

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12. Giving Back • Activities that embrace and reinvest in the local community beyond clinical responsibilities

Remember a plumber only gets paid when the problem is fixed. Medicine is a unique profession, it is an honour, privilege and a responsibility and not a right – there is a time to say thank you if your local community has made you successful. It is important to leave a legacy and not a liability for your community

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Health and Life Best Practice Indicators and Superclinics