Saturday, January 30, 2010

Game Changers - Productivity (Part 1 of 3)

The Western civilization’s enviable standard of living that we have come to take for granted is premised on improving productivity in the workplace – i.e. reliably doing more for less year after year, decade upon decade. In fact, US productivity has improved an average of 2.7% compounded annually over the last 50+ years. Productivity defines our standard of living and determines its sustainability.

Productivity is the fuel that drives prosperity. Productivity is a huge Game Changer. Prosperity follows productivity trends upward and downward! Prosperity erodes when productivity remains stagnant in an improving economy; and turns toxic in falling economic times.

Rising prosperity for rehabilitation professionals over the past half century has been leveraged largely by labor shortages, limited competition, relative affluence in matters of reimbursement, and limited financial accountability. But that is past tense.

Things began to change, first in the mid 60’s with the introduction of Medicare, and then again in the 90s with the introduction of managed care and its various derivatives. Both were Game Changers. Changing population demographics, particularly aging and obesity, along with technology costs, and administrative overhead drive the emerging national health cost crisis. It too promises to be a Game Changer.

With Medicare came increased documentation burdens that began to compete with patient care resources. Then came Intermediaries, fee schedules with ICD-9s, CPTs, RBRVUs, prospective payment with reimbursement literally by the minute, and rules – the rule of 8s, the Rule of one-on-one, and so on...

With Managed Care came more documentation demands, Gate-Keepers, preauthorization, provider networks and contracts, more fee schedules and various payment caps.

From a productivity perspective such regulatory add-ons over time also resulted in the evolution of cumbersome and inefficient practice operations. The efficiency never got built in because systems were layered rather than integrated. The result was operational fragmentation, redundancy, and gaps which are now apparent in diminished productivity that goes unrecognized because "its always been that way" and staff accept it because, "that's just the way it is".

Like an old home that has been repeatedly remodeled over the years, evolved practices just don't flow right because they were designed for compliance not efficiency.

Efficiency is compromised in practices by communication systems, paper work and documentation, work processes and flow, facility layout, construction and traffic patterns, and so much more.

Productivity has also been compromised by the going and coming of staff over the years. Each introduced new layers of operational clutter by importing old compliance forms and processes they packed along from practices where they had previously worked - not because they were efficient but because they were familiar.

With layers, clutter, and variation comes inefficiency. Routine work that needs to be performed repeatedly should be performed consistently with optimal efficiency. The criteria for performing such work should be fast, cheap, and accurate where one size fits all.

Like an archeological dig, the excavation of a practice tells a story of evolution over time. And, practices like garages benefit from periodic reorganization. In practices the reorganization is less physical than it is operationally strategic. The result when done well can transform productivity.

Together Medicare and Managed care have operated on the premise and claim of enhancing quality of care – who could possibly be against that? And to be fair, there have been benefits to the public. But also to be fair, operationally "quality of care" has primarily translated into rule based strategies that have helped assure third party payer profitability at the expense of provider productivity.

Such controls are not conducive to productivity or innovation; both of which are critically needed in the context of national health challenges inclusive of the expanding physical functional needs of the US population to remain healthy, independent, and avoid costly institutional care. Where would innovation, capacity, and culture be in emergency departments if they were operated and reimbursed like rehabilitation departments?

While those external factors have had their impact on productivity, there have also been critical internal factors at play – education and training, investment, management, infrastructure, and professional convenience. We will consider internal productivity matters and attitudes next post.

To be continued...
All The Best!


© Copyright 2010 Performance Builders
Thursday, January 28, 2010

Quotable - Truth Series

"Seek not greatness, but seek truth and you will find both." - Horace Mann
Monday, January 25, 2010

Game Changers - Restructuring (continued...)

Now, I’m not suggesting that “the sky is falling” but the imperative to re-imagine, re-structure, re-tool, and re-create health service practices should be obvious. The signs and symptoms are all around us.

Leading practices are pausing to take the time to carefully examine practice performance, to reassess purpose and priorities, to reconsider business models, to redesign operating systems. to streamline processes, to reinvent service offerings, to re-message marketing, to redistribute responsibility and accountability, to reinvigorate or replace staff, and to reap new rewards.

“To become something new we must first acquire all that we can no longer be.” – Kevin Kelly

Every practice begins with an entrepreneur’s vision and passion. Risks are taken and along hours are committed to make things work – there’s no excess baggage and focus is keen. But over time, entrepreneurs settle-in or move-on. Practice priorities shift from “make it work” to “keep it working”. There is a certain comfort, albeit a false comfort, in status-quo. Remaking a Practice requires a return to its entrepreneurial roots which may, or may not, have remained with the practice.

Restructuring for success begins with an entrepreneur’s vision and passion... something leading practices understand and something other practices will never quite get.

It’s very likely that your practice is built on a foundation of management philosophies, business models, marketing strategies, clinical techniques, and operational systems that are at least three to four decades old. It’s prudent to ask if that foundation is sustainable for another decade or more.

This year, 2010, marks the beginning of a new decade. Is it time for you to wring out the old and ring in the new? Is it time for your Extreme Practice Makeover? Will your practice value rise with its relevance or fall with its failure?

It has been said that, “Every practice is perfectly designed to get the results it gets!” What is the design of your practice?

Today there is an opportunity for you to decide. Tomorrow the market may decide for you.

In my next post, we will consider game changing productivity.

All The Best!


© Copyright 2010 Performance Builders
Saturday, January 23, 2010

Game Changers – Restructuring

Perhaps the ultimate Game Changer response to changing trends in the marketplace could be described as Extreme Practice Makeover (EPM). Market leaders have already begun.

Like the hit TV show Extreme Home Makeover, it’s “down with the old and up in the new.” It’s all about restructuring for success. While EPM occasionally involves physical facilities more often it’s about restructuring attitudes, performance standards, management controls, marketing strategies, service offerings and fees, clinical documentation, business contracts, staff compensation, and operational finance. It involves building profit into the practice rather than trying ever-harder to squeeze it out.

It’s a story that predictably begins with the gathering of help for a job too big to do alone and reliably ends with new possibilities and reward. ...”Welcome home”.

At least half of practices today are struggling against progressive financial erosion resulting from the relentless waves of increasing competition and costs amidst declining reimbursement – then there are matters of regulatory compliance, staff that expect and often deserve more, and operating systems that are part of the problem and not part of the solution. Many owners/managers privately acknowledge that, “work’s no fun anymore” and that they are, “at their wits end and need help”.

We all acknowledge the incredible rate of change that is happening in the world around us. But, we often don’t connect the dots to understand and anticipate what it likely means for our families, professions, and practices. We become comfortable and complacent inside the familiar walls and routines of our practices and fail to fully appreciate the implications and certainties that follow trends.

As in matters ranging from auto repair to obesity and global warming there are tendencies to delay, defer, and deny. With each passing day, practices and careers become either more obsolete or more relevant. It all depends on the decisions management makes and the actions it takes.

Consider a few technology changes over the past 25 years – Internet, laptop computers, Google, plasma TV, HDTV and now 3D TV, cell phones, airbags, GPS, CDs and DVDs, email and voice mail, digital cameras, ATMs, and space shuttles already being sent to museums rather than the moon. Then there is medical technology!

The current economy is a grim reminder for governments, companies, and individuals that the traveling companions of change are obsolescence and risk.

Futurists tell us that most jobs that will be performed 20 years from now have not yet been created and most have not even been imagined! Rohit Talwar, a London based futurist, suggests such jobs might include:

Body Part Maker - Due to the huge advances being made in bio-tissues, robotics and plastics, the creation of body parts - from organs to limbs - will soon be possible, requiring body part makers, body part stores and body part repair shops.

Nano-Medic - Advances in nanotechnology offer the potential for a range of sub-atomic 'nanoscale' devices, inserts and procedures that could transform personal healthcare. A new range of nano-medicine specialists will be required to administer these treatments.

Pharmer of Genetically Engineered Crops and Livestock - New-age farmers will raise crops and livestock that have been genetically engineered to improve yields and produce therapeutic proteins. Works in progress include a vaccine-carrying tomato and therapeutic milk from cows, sheep and goats.

Old Age Wellness Manager / Consultant Specialists - Drawing on a range of medical, pharmaceutical, prosthetic, psychiatric, natural and fitness solutions to help manage the various health and personal needs of the aging population. Memory Augmentation Surgeon - Surgeons that add extra memory to people who want to increase their memory capacity and to help those who have been over exposed to information in the course of their life and simply can no longer take on any more information - thus leading to sensory shutdown.”

Then of course there is the New Science Ethicist, Climate Change Reversal Specialist, Virtual Clutter Specialist, Waste Data Handler, and... Well, you get the picture.

As Dorothy said in the Wizard of Oz, “Toto, I've a feeling we're not in Kansas anymore.”

To be continued....

All The Best!


© Copyright 2010 Performance Builders
Thursday, January 21, 2010

Quotable - Truth Series

"Knowledge is power, but too much knowledge can blind you to truth." - Alan Cohen
Sunday, January 17, 2010

Game Changers - Compensation

We've discussed certain Game Changers that are testing the economic foundations of traditional health services practice models. Change begets change. With change comes uncertainty and risk - but its where the reward is. Change is required of those who are committed to stay in the game and remain competitive.

Here's what I'm telling the leading practices that I'm working with...

The first responsibility of a leader is to define reality.

Our emerging practice realities are economically driven... cost per unit of service needs to be improved, revenue sources need to expand and diversify, and risk needs to be shared. These are the same realities that have faced the automotive industry in recent years - enough said. Interestingly, a related reality is that most health services owners/managers come into the game with little economic training or passion.

In matters of economics it's aways a good discipline to begin with the big rocks. In the health services sector there is no bigger rock than compensation. Consider these realities...

1. Few practices establish adequately informed or disciplined compensation practices
2. Persistent labor shortages drive compensation packages steadily upward
3. Compensation progression is commonly tenure based rather than contribution driven
4. Staff have been conditioned to expect annual compensation adjustments - only upward
5. The value of escalating labor benefit expense goes under appreciated
6. A culture of "entitlement"has taken deep root in the industry
7. Salaried compensation models establish fixed rather than variable expense limiting management options
8. PT productivity is one of the lowest in the health services industry
9. Accountability for financial contribution and return on investment is weak
10. Practices are held hostage by fears of resignation and staff turnover
11. Financial compensation is framed by matters of experience and self-defined quality rather than financial contribution
12. Excessive labor costs threaten job security and even survival of many practices

The time for a well considered and systematic migration to variable compensation has arrived. Such a migration will produce winners and losers - both categories will be self defined. Are there risks in doing so? Certainly, but the status quo has its own risks. Is it easy to do so? No, but neither is keeping existing compensation models working!
Practices who successfully establish a sustainable variable compensation model with benchmarked performance will enjoy a decisive competitive advantage in the market as measured by clinical, operational and financial outcomes.

Professionals who step up and graduate to variable compensation will also improve their personal competitive advantage while enhancing earning capacity and earning job security. Variable compensation is all about accountability and risk sharing - its the future. Its a big rock that's worth moving.

Variable compensation based on financial contribution can be a huge Game Changer. Is everyone in that game? No, only the leaders...

The next Game Changers post will consider Start-ups, Start-overs, Turn-arounds, and Right Sizing.

All The Best!


(C) Copyright 2010
Friday, January 15, 2010

Quotable - Truth Series

“You want the Truth? ...You can’t handle the Truth!” Jack Nicholson, in the movie A Few Good Men
Wednesday, January 13, 2010

Safe Water Update - Philanthropy

For those of you who have been tracking with me over the past couple of years through the Gray Institute GIFT mentoring program or my Performance Matters Management Series (email), you are aware of my advocacy for safe water for impoverished families in developing countries.

I'm pleased to share with you some exciting news that was announced this week concerning the structural reorganization of the global HydrAid BioSand Filter safe water initiative. The HydrAid initiative has been transferred from International Aid, Inc to a new joint venture involving Cascade Engineering and The Windquest Group.

The HydrAid program was launched by International Aid, Inc in 2007. I was privileged to serve on International Aid's Board of Directors during that time and to later provide operational leadership for HydrAid during its implementation in 2008. The recent reorganization increases HydrAid reach and capacity to provide safe water and save lives throughout the developing world.

The following links provide details about the HydrAid Filter and the new Joint Venture. The HydrAid filter is being used in an innovative program involving Thirsting To Serve (a Rotary nonprofit organization) and Project Handclasp (a US Navy nonprofit organization).

I invite you to join me in making a making a tax-deductible charitable contribution to Thirsting To Serve. Your donation is a real Game Changer for families in desperate need!

Thanks !


(c) Copyright 2010
Performance Builders

Quotable - Truth Series

"The truth in you remains as radiant as a star, as pure as light, as innocent as love itself." - A Course in Miracles

Game Changers - Benchmarking

As we have discussed in resent postings, The Game is Changing!

It has been said that, "A bend in the road is not the end of the road, unless you fail to make the turn". Does your road have a bend ahead? Can you see it or is shrouded in darkness and fog? Are you prepared for it? Are your skills sufficient to negotiate it successfully?

We all travel our own unique practice path defined by education, experience, geography, facility, services, systems, resources, values, philosophy, team, etc. But it is important to remember that each person's unique path is in many ways just like everyone else's!

Thus there is opportunity and value in learning from what others are doing.

I have the distinct privilege every week to talk with many practices across the country and around the world - to understand their challenges, to learn about what they are doing, and to influence the decisions they make and the strategies they implement. Over the next several weeks I will be sharing with you what I am working on with leading practices.

Hint: There's a reason why they are leading practices!

Let's begin with BENCHMARKING.

Benchmarking is the science and discipline of objectively and quantifiable comparing the performance of one thing to another. School teachers compare student performance with grades of A - F, grade point averages - 0 - 4, and class rankings from 0-100. Athletic performance is compared by benchmarking certain performance statistics that are relevant to a particular sport - yards rushing, batting average, shots on goal, shooting average, etc). Wall Street uses benchmarking to compare the performance of various investments - stock price, return on investments, shares traded, EBITDA, PE Ratio, etc. The auto industry benchmarks its products through spec sheets - horsepower, torque, acceleration 0-60 mph, miles per gallon, etc.

Benchmarking provides a systematic methodology for ranking, evaluating, and tracking performance. Benchmarking is transparent - it makes differences obvious. Benchmarking is discriminatory - its purpose is to differentiate and stratify performance. Benchmarking identifies differences, defines priorities, demands decisions, and justifies rewards.

Like GPS, benchmarking tells you where you are, what direction you are headed, your relationship to your destination, and how fast you are traveling. Being lost can have two elements - not knowing your destination or not knowing your location! Both may be solved with accurate information.

In business there are three types of benchmarking:
1. Performance benchmarking measures and compares performance statistics. ...where are we?
2. Operational benchmarking defines and compares work processes and systems. ...what roads are we taking?
3. Prescriptive benchmarking establishes and details best practices for replication. ...who can give us directions?

Each benchmarking strategy offers opportunity to improve performance, increase competitiveness, and earn greater reward. Together the strategies enable businesses to get "un-lost", to find its way out of the woods, to get on the right road, to find Shangri la.

In the health services sector key benchmarks include operational, utilization, and financial metrics. A comprehensive benchmarking dashboard includes approximately three dozen points of comparison (metrics). Each metric provides a unique reference point although incomplete perspective on practice performance. Together benchmark metrics tell a story - a story of achievement and failure, a story of missed reward and future opportunity.

Every practice has room for improvement. Not one-time improvement but improvement that once-secured will provide enhanced reward day after day for years to come! Leading practices understand that benchmarking is a low cost investment with a guaranteed return on investment.

Make no mistake, benchmarking is all about improving profitability, competitive advantage, and building practice equity!

Benchmarking is a simple but sophisticated process. The results are transformational - a real Game Changer! Where is your road taking you?

The next post will consider variable compensation - a potent and necessary Game Changer!

All The Best!


(c) Copyright 2010
Performance Builders
Sunday, January 10, 2010

Quotable - Truth Series

"Truth is like the sun. You can shut it out for a time, but it ain't goin' away.” - Elvis Presley
Thursday, January 7, 2010

Game Changers - On Reflection...

So we have been considering Game Changers for the past few weeks. I’ve shared the trends that I am tracking. I’ve gone out on a limb and shared what I see in my “Crystal Ball”. Now I’d like to share a brief case study that comes from my personal / professional experience that is relevant to these discussions...

As I look about the industry today, I see signs that are reminiscent of 1995. At that time I was privileged to be a senior executive with an innovative, fast growing, quality oriented rehabilitation practice that operated 180+ clinical operations in 7 states with a staff of over 900 people. While the company had been growing at an average of 30% annually for over a decade with exceptional success, and the previous year had been the best on record, we sensed that significant change was imminent. Most others in the industry didn’t agree.

We followed our intuition and I accepted the challenge of taking a cross disciplinary team offline for five months to research the market, consider the situation, develop a strategy, and implement a plan of action. In our findings we concluded that within three years there would be surplus of professional staff (unheard of, in fact we were recruiting internationally to meet staffing needs) and that the company would need to reduce its expenses by 25% within 18 months without resorting to layoffs (we believed there were growth opportunities ahead for us). The goal was to enhance performance. The goal was achieved.

Then in 1997 the Federal Balanced Budget Act was enacted. It was implemented in FY 1998 for the purpose of reducing Medicare costs. Over the next three years there was indeed a surplus of physical therapy staff. Competitors laid-off staff and more than a few went out of business. Meanwhile, our company used its new competitive advantage (less overhead and greater productivity) to take on new business and lay the ground work for a major expansion.

As I said, I see signs reminiscent of 1995 in today’s market only on a greater scale. History, experience, and intuition suggest it is time for reflection, decisions and actions. It is in that context that I read my “Crystal Ball”.

In the next post I’ll discuss some of the strategies that I’m privileged to be working on with leading practices around the nation.


(c) Copyright 2009
Performance Builders
Monday, January 4, 2010

Quotable - Truth Series

“The truth is more important than the facts”. - Frank Lloyd Wright
Sunday, January 3, 2010

Get the Big Picture

Since we are on the topic of Game Changers, I would like to recommend three books that effectively frame the ongoing national health debate...

1. The Healing of America by T.R. Reid
2. The Coming Generational Storm by Kotlikoff & Burns
3. Who Killed Health Care by Herzlinger

If you are a health professional, these books are must reads.

You might also find Demanding Medical Excellence by Millenson to be a valuable read.


(c) Copyright 2010
Performance Builders

I'm Back - Leadership

As you know I've been away for a couple of months - a time for volunteer activities with SafeWaterTeam and Free2Play, participation in GIFT Gathering-3, 2010, continuing education, recreation, and memorable time with family and friends. Loved it!

Over the next few weeks, I'll share a new series of blogs on leadership. We'll take some time to consider insights into leadership and explore the nature of leadership, management, mentoring, and coaching.

The measure of leadership is not "follower-ship", but rather the creation of new and capable leaders.

I look forward to leading the way...

All The Best!


(c) copyright 2010
Performance Builders
Saturday, January 2, 2010

Game Changers - Crystal Ball Part 2

In the “Crystal Ball” Part 1 post we identified the rise of function, the erosion of reimbursement, and the increase of labor expenses as significant emerging realities in the industry. This post considers four additional emergent trends that will need to be included in the strategic plans of every practice.

4. Competition within the neuro-muscular-skeletal market will increase significantly. This will be driven by another perfect storm that involves: the aging demographics, erosion of traditional reimbursement, increasing co-pays, deductibles and out of pocket expenses, expansion in scope of practice and service offerings, expansion of unregulated providers, more sophisticated marketing and internet based services. Competitors will include physical therapists, chiropractors, personal trainers, osteopaths, and podiatrists among others. The increase in competition will be obvious within each of those professions and across them as a group. Meanwhile expect cross disciplinary alliances to form that will leverage a shared philosophy of treatment and complimentary skill sets. Applied Functional Science will become an important rallying point.

5. Tremendous professional and business opportunity will emerge out a rapidly changing market over the next five years and beyond. BUT, most of those opportunities will be what might be described as “out-of-the-box”. Practices that are trapped in traditional business models and practice patterns or who are slow to change and are late adopters of innovation will find opportunities passing them by. The market will favor practices that are “plugged into the market”, visionary, creative, open to innovation, accessible to financial resources, able to attract and hold superior talent, willing to take risks, and skilled at execution – i.e. those who are Fast Change Artists. Providers who once viewed practice acts and regulatory controls as protective walls in which they could professionally practice will likely find those same walls becoming barriers to entry into emerging out-of-the-box market opportunities.

6. Cash-based business will, out of necessity, become an important element of every practice’s financial strategy and portfolio. This not to say the insurance is going away, but rather that Cash-based out-of-pocket compensation will need to be a growing portion of every Practice Portfolio. That will require sophisticated consumer oriented marketing, more client-centric operations, a superior service experience, and a value orientation. Such business will be conducted to a large extent outside of the walls of the provider’s facility. Professionals will need to engage in financial matters in a much more hands-on-manner than they have historically been willing (comfortable) to do.

Clinical practices and financial practices will collide – there will be casualties.

7. Practices will run like businesses or fail. Excellent clinical skills will be necessary but not sufficient. Competencies in leadership, marketing, operational management, service excellence, and financial savvy will be essential. This is not a far-off situation. It is the case today, although many practice owners and most clinical professionals have not yet recognized it or are unwilling to confront the inevitable. What is needed is a new emphasis on business structure, strategy, planning, investment, business models, competitive advantage, operational performance, accountability, decision support, risk sharing, variable compensation, etc. At least a third of practices today are at high risk of failure over the next few years simply because their business model and performance is not sustainable. Another third of practices are in the balance, i.e. they could tip either way dependant on their short term business decisions. The remaining third of practices are positioned to expand by taking over new business opportunities that will result from the business failure of their competitors.

Whether they are prepared to seize those opportunities is another matter - a matter of vision, risk taking willingness, capital, and expertise.

In the Chinese alphabet the symbol for crisis is a composite of the two symbols - one represents opportunity the other threat. And so it is with any period of change – in times of change some will find or make opportunity and flourish while others will succumb or be consumed by it. There are the hunters and the hunted...

There is an old saying in the worlds of sports and business that goes like this:

“Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed.

Every morning a lion wakes up. It knows it must run faster than the slowest gazelle or it will starve to death.

So, in Africa it doesn’t matter if you are a lion or a gazelle. When the sun comes up, you had better be running. “
- Anonymous

To run the race, to compete, one must prepare and train. There has been and will continue to be a leveling of the "playing field". Practices large and small, fast and slow, credentialed and uncredentialed, well-circulated and newly-minted all share the the same unforgiving plains of competition. Make no mistake, the game is played for keeps.

Next post I’ll share a brief story from a chapter in my professional experience that is relevant in this consideration of Game Changers.


(c) Copyright 2009
Performance Builders