By the Numbers

The biology of practice business

Biology and business have a lot in common, and combining the two can help you run a better practice.

“Biology is the study of complicated things that have the appearance of having been designed with a purpose.”
– Richard Dawkins

“Until we recognize the essential role of biology, our attempts to truly unify the universe will remain a train to nowhere.”
– Robert Lanza

John Pinto
John B. Pinto

Aside from the few outlier philosophy, Chinese literature and electrical engineering undergraduates who find their way to medical school, most people who study and go on to practice medicine started their college freshman year as biology majors, which means that most ophthalmologists are biologists at heart.

That is helpful because business and biology have a lot in common, and the most difficult things about being an ophthalmologist today are not the clinical or surgical challenges of the profession. It is the business of ophthalmology that has become so challenging:

  • Higher regulatory hurdles
  • Tighter profit margins
  • The growing difficulty of finding and nurturing staff
  • Competition from all directions
  • Resource limitations

As a fellow biologist (UC San Diego, Class of ’76) and a practice business consultant for the last 40 years, I really appreciate the mash-up between these two seemingly dissimilar spheres.

Let’s explore together eight things that biology and business have in common, and how you can use your original grounding as a biologist to better run your practice.

1. Your practice business is alive. What does that mean? It can grow or shrink. It functions on an input of energy and an output of waste products. In between, the energy gets things done — building facilities, accumulating equipment and workers, seeing patients, performing surgery, fending off threats. Your practice reproduces (the doctors and staff who leave take the skills they have learned elsewhere to be combined with others). It can change and adapt to its environment. The most briskly adapting practices are the most resilient. As a practice owner, you can use this fact to cultivate resilience: awareness of predatory threats; being a team that can work harder as per-unit fees decline; developing an aversion to nonessential debt.

2. Living things are born. They then grow and reach maturity. Eventually, they senesce. And of course, most practices are mortal, although the life of your practice can be extended by grafting it onto a hospital system or folding it in with a larger, regional eye care delivery system. The recent emergence of private equity in ophthalmology may represent a kind of “Methuselah gene” for small practices that would otherwise slip away as their owners retire.

3. Practices operate within a dynamic, ecologic system. Even the most remote solo practice in rural America is part of the local ecology. Your environment is composed of friends (referring doctors, helpful venders), neutrals (noncompetitive hospitals, unencroaching colleagues) and adversaries (competing practices, unhelpful payers.) And of course, the most important component of your environment is the fauna of patients you must secure to stay corporately alive. As a practice owner, part of your time should be spent thinking like a field biologist. What are the helpful or harmful elements in our little niche of medicine? Can I control a more diverse or more predictable access to patients by reaching out to optometrists? Can I stand up to competitors if I build a satellite office in their service area?

4. Genes, cells, organs and fellow organisms must communicate effectively. The smallest genetic flaw or neurotransmitter malfunction can damage or kill. The same is true of facts, data and communication in your practice. Step back for a moment. Consider the thousands of messages passing back and forth in your practice on a single day. Between staff, doctors, patients, cell phones and computer systems. As a practice owner, you succeed or fail based on the fidelity of all this communication.

5. Successful practice businesses mutate and change. Such evolution does not take place haphazardly, through Mendelian genetics, over many generations. It takes place every time you and your team revise a failing protocol or hire a physician with subspecialty skills to augment patient care. Charles Darwin could not hold a candle to the power you have to improve the survival fitness of your practice.

6. Businesses that cannot evolve and change die out; the extinction rate rises when the environment changes for the worse. Scientists currently believe that the collective biome of the planet is going extinct at a pace 100 times faster than the preindustrial background rate. That sounds like ophthalmology today, in which the environment has become decidedly harsh in the last generation. In our consulting work, we are getting more calls than ever before from practices that are economically faltering and from surgeons ready to throw in the towel. You can avoid their fate by limbering up your ability to change. The most important thing you can do in the boardroom is simply acknowledge that the business climate for medicine is less benign and that forward planning is essential.

7. Hybrid strength is a key survive-and-thrive trait. Some practices, like some dog varieties, are highly inbred. As a result, they are prone to weaknesses and ill health. Such practices only look inward for answers. They inhibit dissent and fresh thinking. Other practices — perhaps the “mutts” of ophthalmology — mix it up. Their management team is a mix of young and old. New staff are hired from admired competitors to stir up the “gene pool.” And even in the boardroom, lively arguments are encouraged. Even if you are just one lone doctor out of many owners in your practice, you can strengthen your enterprise by encouraging a culture where opposing opinions are allowed to mix it up.

8. Growth is always limited. At the upper limits, we see few ophthalmology practices with more than $50 million in annual collections. Why this comparatively low threshold? It is a little like the question your high school biology teacher asked: “Why do elephants grow to a certain size and then stop?” The answer has to do with the practical physics of surface area vs. interior volume, but also with environmental limits. More importantly, the founding doctors often do not make any more income for all the risk they take. Beyond a handful of doctors and a couple of office locations, a practice gets intensely complex. You can use this knowledge as a practice owner by being wary of excess growth and recognizing when practice scale has overshot control systems and leadership talent so you can take a pause to catch up.

“Biology is the study of complicated things that have the appearance of having been designed with a purpose.”
– Richard Dawkins

“Until we recognize the essential role of biology, our attempts to truly unify the universe will remain a train to nowhere.”
– Robert Lanza

John Pinto
John B. Pinto

Aside from the few outlier philosophy, Chinese literature and electrical engineering undergraduates who find their way to medical school, most people who study and go on to practice medicine started their college freshman year as biology majors, which means that most ophthalmologists are biologists at heart.

That is helpful because business and biology have a lot in common, and the most difficult things about being an ophthalmologist today are not the clinical or surgical challenges of the profession. It is the business of ophthalmology that has become so challenging:

  • Higher regulatory hurdles
  • Tighter profit margins
  • The growing difficulty of finding and nurturing staff
  • Competition from all directions
  • Resource limitations

As a fellow biologist (UC San Diego, Class of ’76) and a practice business consultant for the last 40 years, I really appreciate the mash-up between these two seemingly dissimilar spheres.

Let’s explore together eight things that biology and business have in common, and how you can use your original grounding as a biologist to better run your practice.

1. Your practice business is alive. What does that mean? It can grow or shrink. It functions on an input of energy and an output of waste products. In between, the energy gets things done — building facilities, accumulating equipment and workers, seeing patients, performing surgery, fending off threats. Your practice reproduces (the doctors and staff who leave take the skills they have learned elsewhere to be combined with others). It can change and adapt to its environment. The most briskly adapting practices are the most resilient. As a practice owner, you can use this fact to cultivate resilience: awareness of predatory threats; being a team that can work harder as per-unit fees decline; developing an aversion to nonessential debt.

2. Living things are born. They then grow and reach maturity. Eventually, they senesce. And of course, most practices are mortal, although the life of your practice can be extended by grafting it onto a hospital system or folding it in with a larger, regional eye care delivery system. The recent emergence of private equity in ophthalmology may represent a kind of “Methuselah gene” for small practices that would otherwise slip away as their owners retire.

PAGE BREAK

3. Practices operate within a dynamic, ecologic system. Even the most remote solo practice in rural America is part of the local ecology. Your environment is composed of friends (referring doctors, helpful venders), neutrals (noncompetitive hospitals, unencroaching colleagues) and adversaries (competing practices, unhelpful payers.) And of course, the most important component of your environment is the fauna of patients you must secure to stay corporately alive. As a practice owner, part of your time should be spent thinking like a field biologist. What are the helpful or harmful elements in our little niche of medicine? Can I control a more diverse or more predictable access to patients by reaching out to optometrists? Can I stand up to competitors if I build a satellite office in their service area?

4. Genes, cells, organs and fellow organisms must communicate effectively. The smallest genetic flaw or neurotransmitter malfunction can damage or kill. The same is true of facts, data and communication in your practice. Step back for a moment. Consider the thousands of messages passing back and forth in your practice on a single day. Between staff, doctors, patients, cell phones and computer systems. As a practice owner, you succeed or fail based on the fidelity of all this communication.

5. Successful practice businesses mutate and change. Such evolution does not take place haphazardly, through Mendelian genetics, over many generations. It takes place every time you and your team revise a failing protocol or hire a physician with subspecialty skills to augment patient care. Charles Darwin could not hold a candle to the power you have to improve the survival fitness of your practice.

6. Businesses that cannot evolve and change die out; the extinction rate rises when the environment changes for the worse. Scientists currently believe that the collective biome of the planet is going extinct at a pace 100 times faster than the preindustrial background rate. That sounds like ophthalmology today, in which the environment has become decidedly harsh in the last generation. In our consulting work, we are getting more calls than ever before from practices that are economically faltering and from surgeons ready to throw in the towel. You can avoid their fate by limbering up your ability to change. The most important thing you can do in the boardroom is simply acknowledge that the business climate for medicine is less benign and that forward planning is essential.

7. Hybrid strength is a key survive-and-thrive trait. Some practices, like some dog varieties, are highly inbred. As a result, they are prone to weaknesses and ill health. Such practices only look inward for answers. They inhibit dissent and fresh thinking. Other practices — perhaps the “mutts” of ophthalmology — mix it up. Their management team is a mix of young and old. New staff are hired from admired competitors to stir up the “gene pool.” And even in the boardroom, lively arguments are encouraged. Even if you are just one lone doctor out of many owners in your practice, you can strengthen your enterprise by encouraging a culture where opposing opinions are allowed to mix it up.

PAGE BREAK

8. Growth is always limited. At the upper limits, we see few ophthalmology practices with more than $50 million in annual collections. Why this comparatively low threshold? It is a little like the question your high school biology teacher asked: “Why do elephants grow to a certain size and then stop?” The answer has to do with the practical physics of surface area vs. interior volume, but also with environmental limits. More importantly, the founding doctors often do not make any more income for all the risk they take. Beyond a handful of doctors and a couple of office locations, a practice gets intensely complex. You can use this knowledge as a practice owner by being wary of excess growth and recognizing when practice scale has overshot control systems and leadership talent so you can take a pause to catch up.