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.


Bob


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Performance Builders