How To Assess Your Situation

"From discord, find harmony." - Albert Einstein

It starts with not sleeping well or getting a very funny feeling in the pit of your stomach. This is when it is important to find a place where you can be alone and be brutally honest with yourself. Advisors should be called on to help assess the situation, including partners, lawyers, accountants, referral sources, friends, spouses, and even staff members. Get help, no matter what it takes. Sometimes, even a lender can be an advocate, although everyone's first instinct is not to tell them anything. A lender can restructure the debt repayment program to make it easier for you to meet your near-term cash needs, especially if you are open with them. The last thing they want to see is a creditor go out of business and then have to either bring someone else in or pull out the equipment and sell it on the open market. You are their best chance for a full payout of their money and they do generally know that.

What can go wrong?

Have you run out of cash? Cash is always king. You have heard that before, and it is never more true as you start your business or as you try to grow your business. You need to have a stash to keep the wolf at bay - if you do not, the wolf will huff and puff and blow you away.

Do you have the right partners? They can in fact be part of your salvation: rewrite your debt structure, give you better repayment terms, help you develop and execute a new business strategy, and be there to help with some key decision-making. They need to be included as part of the solution and not viewed as part of the problem. The problems are likely not them and/or not caused by them. To the extent that any of these people or other enterprises are part of the problem, then you need to decide to end that relationship or modify it severely.

Did you hire the right people? Do you have the right partners, can you rely on them in a pinch, have they done their jobs to the best of their abilities, have you allowed them to do that, and are you keeping them informed of your situation? Again, these people can be a source of strength and a remarkable resource for you.

Are you keeping your customers happy? Referring physicians want timely, friendly, and accurate service for their patients and for themselves. They do not want patients waiting inordinately long periods of time for service, and they do not want to wait very long for results to be reported back to them. Keep the referring physicians happy and you will keep your flow of patients. If you don't, you already know what the result is going to be.

Do you understand the strengths and weaknesses of the competition? Competition can be one of your biggest threats or one of your biggest allies. If you understand your competition and their strengths and weaknesses, then you can determine how you can differentiate yourself in the marketplace. If you underestimate them and assume that your ego will overcome, then you may have a problem looming in your future. Competitors come in several forms as providers of services similar to what you are offering—hospitals, physician groups, and business people (both physicians and nonphysicians). Just know who and what you are dealing (or are going to deal) with, and make sure you understand how you can withstand a competitive threat from any one or more of them. Never underestimate a competitor.

Is your business model attractive to payors? Payors are always key to any good business strategy in the outpatient health care sector. Recent attempts by payors, and state and national government sources, to limit the continuation and proliferation of outpatient providers in my region include:

  • New Jersey has a 3.5% ambulatory care tax on collected revenues that it has levied on a number of specific nonhospital-owned outpatient providers, including diagnostic imaging (MRI, CT, and PET or PET/CT), ambulatory surgery centers, physical therapy facilities, and sleep centers.
  • In Pennsylvania, two of the major third-party payors are restricting or denying provider contracts to single-modality facilities, forcing some businesses to rethink their futures and others to reconsider new projects and opportunities altogether.

Understand all constituencies, how they act together, how they can hurt you, and what you can do about it. Sometimes, deciding to pull out and take your licks is the best strategy to employ.

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