October 08, 2020
4 min read

Always be prepared for departure of practice administrator

Whether your administrator is a flight risk or due for replacement, this management change should not catch a practice by surprise.

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“You don’t learn to walk by following the rules. You learn by doing, and by falling over.”
– Richard Branson

“I’m only rich because I know when I’m wrong. ... I basically have survived by recognizing my mistakes.”
– George Soros

With roughly 7,000 private ophthalmic practices in America, there are about that many private practice administrators. And because the typical administrator stays in the same job for about 5 years, in the next 12 months, about 1,400 of those 7,000 managers will be looking for a new job. Maybe one of them will be your administrator?

John Pinto
John B. Pinto

A significant majority of these leave-takers, well more than half, depart voluntarily for newer, better jobs. With enough advance notice, such departures are bittersweet. It is rewarding to see someone you have mentored move up in their career. Only a minority of administrators are terminated, commonly after years of hoping that performance will improve.

But whether your administrator’s almost inevitable departure is planned and under your control or out of the blue, you should always be ready for the day they will indeed leave.

Being prepared for the loss of your administrator is common sense but not commonly seen. Instead, practice boards are often caught flat-footed when their administrator resigns. Or worse, they can feel held hostage by an administrator who knows that they hold all the cards and that their departure would leave the company struggling.

Here are eight practical things you can do to make your practice more resilient and less exposed to key-person dependency. Most of these should be undertaken by the managing physician partner of the practice, who often must step in as the business leader when the administrator leaves unexpectedly. Keep in mind that these practical steps do not just apply when your administrator permanently exits, but they are also critically helpful should your administrator experience a temporary disability or family crisis.

Eight steps

1. As managing partner, you should deeply engage with your administrator. Proximity helps: It is best for your offices to be close together. The two of you should meet weekly and once a month; monthly meetings should run longer to go over practice financials and prepare for the monthly board meeting. As an added bonus, having a closer working relationship with your administrator will make them more accountable to your priorities. If these exchanges are pleasant (with ample praise coming from you), they will increase your manager’s career satisfaction and their tenure in your practice.

2. You should personally have a memorized command of your practice’s benchmarks and performance data. If you can memorize norms for IOPs and cup-to-disc ratios, you can remember things such as the proper percent of cash flow spent on lay staffing (±30%) and the normal limits for open accounts receivable over 90 days (<12%). Even before your administrator leaves, knowing these stats will help the two of you discuss practice performance “doctor to doctor” (because every administrator is a kind of practice “doctor”).

3. Written operating guidelines should be complete and up to date. It is easier to keep the operational standards in everyone’s heads, but it makes you far more vulnerable to the loss of your administrator.

4. Strong department heads are a critical antidote for overdependence on your administrator. When a practice’s leads for billing, reception, technical services and optical are strong, and the managing partner is engaged, a practice can go for months without an administrator in place. This allows you to approach recruitment of the new administrator with greater care and higher standards. Just as you cultivate a close working relationship with your administrator, you should do the same with each department head. But do so in a way that does not undermine or short circuit the authority of your administrator as the formal direct report for each department head; this is best accomplished with biweekly “management committee” meetings in which you, the administrator and department heads all connect at once.

5. Strong accounting, legal and consulting vendors should be on call. These are generally not a complete substitute for the abrupt loss of your administrator, although some firms are able to supply an on-site interim executive. As managing partner, both you and your administrator should cultivate relationships with these outside advisers so you can seamlessly step in and direct their services if your manager departs.

6. Consider outsourcing some critical but routine functions such as HR, bookkeeping and payroll so you do not miss a beat if the administrator leaves. As an added bonus, by taking some of these mundane tasks off of your administrator, it affords them more time to put into longer-term opportunities and projects for the practice.

7. At least annually, you and your administrator should update their written position description. You may find it helpful to make a supplemental two-column chart. In the first column put a critical function (eg, payroll prep and reporting), and in the second column enter the backup plan (eg, our bookkeeper is cross-trained to handle this).

8. Finally, this pandemic year has taught all of us the importance of liquidity. Deep capital reserves are a mind-easing antidote to the loss of a critical player on your team. Some practices become so dependent on their administrator that cash flow is significantly interrupted when they depart. How much is enough? Pre-COVID-19, our advice was to always have ready access to at least 3 months’ worth of operating expenses (in the form of recoverable accounts receivable, working bank accounts, credit lines and owner pledges). Now? The number is 6 months. If it costs you $100,000 a month to pay the rent and staff and keep the lights on, you should have ready access to not less than $600,000.

Final thoughts

No employee should be indispensable. No surgeon, and certainly no administrator. A well-run practice is never dependent upon the performance of just one individual. And no administrator should be allowed to hoard control, knowledge or resources to achieve job security at the expense of practice security. The most impressive administrators are those who have already thought through the eight points above and built in enough redundancy so their positions could go vacant for several quarters without a material drop in performance.