Tuesday, September 28, 2010


Levitt's classic paper, "Marketing Myopia" (Harvard Business Review), opens our eyes to the critical importance of knowing the business we're in, and who our customers are. His example of an incorrect approach is so often quoted that it's become part of the marketing lexicon like Kleenex became for tissues. He cites the railroad companies as failing to see that they were in the transportation business, not the railroad business, in the mid 20th century. Think about that for a few minutes. They made their living transporting people and products via rail. Did it not occur to them that other modes of transport could supplant or reduce their business's prosperity?

Levitt implores the reader to understand the business they are in, and who their customers are, what those customers want, and for us to think about how to find and satisfy those customers and make a positive impact to our bottom lines. This has become classic marketing wisdom - provide what the customer is asking for either more cheaply, with better quality and/or with better service. It's clear that marketing is pretty closely tied to strategy. Do what you do, do it uniquely to gain a competitive advantage, and do it in a way that customers will want to buy from you.

In The Innovator's Dilemma, Clayton Christenesn raises a somewhat different approach. Perhaps one way to effectively engage your customer base is to create something that they didn't know they wanted or needed. An example might be Apple's products, such as the iPhone and iPad.

OK, we have a mission, a vision, core values, a product/service to provide, a pretty good idea of how we want to do business and gain competitive advantage, lots of potential customers/patients. How do we put this all together, make our organizations run properly to support our vision? More on that next time.

Tuesday, September 21, 2010

What is a Business Strategy?

Harvard's Michael Porter says that the purpose of strategy is "alignment within the organization". Theodore Levitt's teachings on marketing are clear about the link between marketing and strategy. And Peter Drucker offers that we should "know the future that has already happened" as we reflect on the correctness or folly of our previous assumptions about what we thought was right, thus possibly requiring a shift in our thinking, especially as a lesson for preparing for what lies ahead. Preparation does not require clairvoyance.

So, what is strategy, and why/how is it relevant to business owners, including those of medical practices? Strategy is what one uses to differentiate oneself from one's competitors. It is the thinking that formalizes the style and tools we will use to gain an advantage in the marketplace. It is both thinking and execution. It requires an understanding of the market, our customers, what products and/or services we are selling, how we plan to deliver them, and how we can become the preferred provider of those goods and services. Once a strategy is well-articulated, it becomes a guide for all who work for a company/practice to best deliver the desired product/service. This is the alignment referred to by Porter. If everyone knows why the company exists (mission), and how the company will differentiate itself from it's competitors (strategy), by also incorporating the firm's values into their day to day behavior, they can help deliver the product/service in a manner consistent with the firm's goals. Managers are free to use their resourcefulness for the benefit of the organization. Physican partners can more confidently interact with potential referring physicians and their patients. This is who we are and this is how we aim to work with you.

The usual ways to differentiate are based upon quality, service and/or price. In medical practices, while each of us thinks of ourselves as being of higher quality than our competitors, that goes largely unsupported. And as price tends to be something out of our control (see the Medicare Fee Schedule), this leaves service as the available differentiator.

We thus most often need to focus on the service we provide, to many if not all of our stakeholders, including referring physicians, patients, hospitals, insurance companies, etc. How this ties to the concept of marketing is quite interesting.

More on Levitt and marketing next time.

Wednesday, September 15, 2010

Define yourself

All companies have a mission, a reason for existing. So too, medical practices benefit when their mission is clearly identified, well-defined and enunciated in a mission statement. Thus the answer to the question, "why do we exist?" as an organization, is clarified for all who work within and all who interact from outside the practice. Yes, it's fairly straightforward and simple for most of us -- "our mission is to take really good care of patients". In what manner? What subgroup of patients (e.g. Pediatric, Obstetric, etc.)? Putting some effort into this relatively simple exercise forces deeper thought about what the practice wants to accomplish and how it wants to do it.

This naturally leads to the next step in forming a successful organization, identifying the firm's goals, vision for the future, core values and ultimately its strategy for accomplishing those goals.

More on that later...

Saturday, September 11, 2010

Thrive or just survive - we didn't learn about this in Med school

It's about more than just taking care of patients, isn't it? Our chosen profession. We devote many years after college to obtaining the requisite knowledge and skills so that our patients can be assured of our competency and that we will provide the very best care on their behalf. Yet we want the same things that most people want. Professional and personal satisfaction, security, a reasonable standard of living, and the ability to save a few dollars for retirement, our kids' education, outside interests, travel, philanthropy - whatever. No different from others persuing "the American Dream".

Most physicians provide care in a private practice setting, their own businesses. Entrapreneurs. Really just the vehicle for providing care to patients in need. Here are my office hours, I'm good at what I do. I have all of these credentials, the initials after my name mean something special. Look: academic honors in college and maybe in Med School too, years at a top-notch hospital training program or 2 for post-grad training. My partners are just like me. We're here 24/7/365.

And then the reality of running an office, signing contracts with insurers so we can get paid for our work, billing and collecting, meeting payroll, establishing a line of credit with the bank, getting on the medical staff of the local hospital(s), learning and following the local, state and federal rules and regs - the business side of what we do, hits home.

This blog will be devoted to the business of medical practice. Management. Navigating the challenging terrain, the uncertainties of our healthcare delivery system.

Let me know your thoughts. I'll be sharing mine here about how to successfully manage our medical practices.