Good to Great: Bringing the Lessons of a Business Classic to your Eye Care Practice

Part Two: Disciplined People

Good to Great Principle: Level 5 Leadership

Collins notes that virtually every one of the good-to-great businesses had what he calls a Level 5 leader. This highest level of leader embodies a strange duality: he or she manages to be both personally humble and professionally driven. “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company,” writes Collins. “They are incredibly ambitious, but their ambition is first and foremost for the institution, not themselves.”

This theory may seem counterintuitive in the age of the celebrity CEO, but Collins found that companies with self-serving leaders often either failed immediately or sank as soon as their “savior” left. By contrast, the humble Level 5 leader avoids publicity about their own work, preferring instead to talk about how the combination of a great team and dumb luck led to their success. Think President Lincoln, not General Patton. Think plow horse, not show horse.

Leadership, Collins concludes, can be summed up with the image of a window and a mirror. Level 5 leaders look out the window when things go well, giving credit to everyone and everything but themselves. When things go poorly, they look squarely in the mirror, taking responsibility alone. Bad leaders, on the other hand, do the exact opposite – they take all the credit for successes, and blame everyone else for failures.

Level 5 Leadership in Your Eye Care Practice

Dr. Craig Piso consults with practices all over the country, and he sees a unique leadership challenge facing physicians. “An ophthalmologist has to be able to show two different leadership styles,” he says. “In the operating room, it’s what I call the surgeon leadership style: traditional command-and-control micromanagement, where there’s only one person’s brain that matters and everyone else becomes an arm of that person. When it comes to being a business owner and manager, that same ophthalmologist would do well to shift to a leadership style I call management by objectives. You identify the objective to be attained, but then you recruit all your people to weigh in and even take the lead to generate strategies and do the work.”

Leading with this split personality can be difficult to master. “In the operating room, this style is healthy narcissism,” says Dr. Piso. “But outside that room, the same leadership style becomes toxic narcissism. The ideal style in the OR backfires miserably in any other context in work or in life, leading to resentment and resistance. If doctors don’t make that transition, and instead use the same style both in business and in surgery, they may not realize that they’re alienating their own people. It’s not natural for people to put their own brain into neutral and allow themselves to be micromanaged by anybody, even if they are the boss.”

Piso recommends that leaders in the eye care fields find ways to empower their staff even around the surgical and clinical arena – for example, by thanking assistants after surgery and then convening to receive their input on how the doctor might perform better in future procedures. Physicians are known for having healthy egos, but these touches of humility allow employees to feel more trusted and more invested in the business. Everyone succeeds together.

Good to Great Principle: First Who…Then What

“We expected to find that the first step in taking a company from good to great would be to set a new direction, a new vision and strategy for the company, and then to get people committed and aligned behind that new direction,” writes Collins. “We found something quite the opposite.” Before making any other decisions, his great companies first made sure they had the right people on board to make those decisions.

The right staff can adjust to any new circumstances that arise, and they demand much less management and motivation than the wrong ones.

Collins pictures the business as a bus; it’s the driver’s job to fill the bus with as many good people as possible, to see that they’re all sitting in the right seats to maximize their talent, and to remove the wrong people from the bus entirely. The right staff can adjust to any new circumstances that arise, and they demand much less management and motivation than the wrong ones. Bad employees, conversely, can drain valuable time and energy from managers and co-workers alike. Great companies both hire and fire right, not filling a spot until they have exactly the right person for the job, and not waiting to let someone go if they’re clearly the wrong fit.

“If I were running a company today,” says Collins, “I would have one priority above all others: to acquire as many of the best people as I could. I’d put off everything else to fill my bus. The single biggest constraint on the success of my organization is the ability to get and to hang on to enough of the right people.” And those right people can come from anywhere; Collins values character and discipline much more than experience or training (since anyone can be trained, but not everyone is disciplined).

Filling Your Eye Care Practice’s Bus

Hiring and retaining talented employees is a constant struggle in the eye care industry. In this tight labor market, many practices are getting creative by repurposing trusted staff into entirely new areas of the business.

If someone has a gift for optical sales, for example, why not try them out selling elective clinical procedures like LASIK or FLACS? It’s much easier to educate them about the particulars of a procedure than it is to teach the subtle art of making a sale. A great optical shop manager might transition seamlessly into being a great practice manager, because the operative skill for both jobs is organizational management, not just knowledge of frame stocks or appointment calendars.

By moving an existing employee to a different (and maybe unexpected) seat on your bus, you also reap the benefit of keeping them interested and challenged within your practice rather than losing them to a competitor. And when one staff member moves up, that opens a slot to bring in vital new talent at the entry level.

When it comes to hiring outside candidates, Ryan Patano of billing services’ company Alta Medical Management knows the value of moving on quickly if you happen to hire the wrong person for the job. “I think, at the end of the day, they either have ‘it’ or they don’t,” he advises. “A colleague of mine used to say, ‘If you hire a slug and train a slug, all you end up with is a well-trained slug.’ And if you know they’re not going to work out, cut bait and move on. When you keep underperformers around, it gives the performers permission to slack off. It isn’t fair to your best employees to keep those anchors around.”

Part Three: Disciplined Thought

Good to Great Principle: Confront the Brutal Facts (Yet Never Lose Faith)

Do you want a sunny optimist as your leader, or a blunt realist? Collins is convinced that great businesses and their leaders actually embody an unusual middle ground: they always keep the hard facts in mind, but they also hold an unshakeable faith that the business can succeed. He calls on companies to infuse every part of their decision-making process with a totally informed, realistic view of the facts at hand, and to use those facts to dispel any false illusions that might interfere with a prosperous future.

The problem with a charismatic, rah-rah leader is that employees are often afraid to give that leader necessary truths that might contradict their all-good-news-all-the-time narrative. At Collins’ great companies, open dialogue and debate based on clear data are celebrated, not discouraged. No one worries about hurting management’s feelings by talking about what the company is doing wrong right now, because that discussion will lead to the company doing more things right in the future.

Collins calls this “optimistic realism” the Stockdale Paradox, based on his conversations with Admiral James Stockdale, who famously survived eight years as a prisoner of war. Stockdale recalled that both the optimists and the pessimists in his camp suffered; the former because they were unrealistic, the latter because they were hopeless. Those that endured did so because they didn’t “confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they may be.”

Confronting the Brutal Facts of Your Eye Care Practice

MACRA, MIPS and the changes they will bring to reimbursement from Medicare and even private payers radically revise how physicians must think about reimbursement, especially in small practices. Your eye care practice can’t profit amidst these challenges by pretending nothing has changed.

When everyone knows where the business stands, they can more effectively pitch in to help it thrive…

“Having ‘Ostrich Syndrome’ and burying your head in the sand is not a good thing,” says Eye Care Leaders consultant Cheryl Welch. “I often recommend that practices get staff involved in finding solutions at regular administrative meetings. This helps you to find out what the problems are in the first place, and to involve everyone in solving them.”

Along the same lines, Welch suggests that eye care practices engage in “open book” management. That means sharing financial goals and ongoing realities with staff members, rather than keeping those numbers a secret. “You don’t have dumb people working for you,” says Welch. “People respect you if you’re honest about the goals and shortcomings of the practice.” When everyone knows where the business stands, they can more effectively pitch in to help it thrive – even more so if they have a personal financial stake in doing so. “Be optimistic for success by allowing your staff to buy into that success.” For example, Welch suggests that you tie employee bonuses to revenue goals. “Staff will be motivated to solve problems if those problems are also keeping them from earning more money!”

Good to Great Principle: The Hedgehog Concept (Simplicity within the Three Circles)

The philosopher Isaiah Berlin found a model for different ways of thinking in an ancient fable about a fox that hopes to catch a hedgehog. The crafty fox tries every trick it knows, from direct attack to clever trap to disguise. But the hedgehog wins every time, because it simply curls up into an invulnerable ball of spikes. Berlin’s moral of the story? “The fox knows many things, but the hedgehog knows one big thing.”

Great companies, Collins writes, are hedgehogs; they know exactly what they do best, and they pursue that core concept with laser focus. What Collins calls the Hedgehog Concept arises directly from the intersection among three circles of a Venn diagram: it is simultaneously the thing they are best at, the thing they are most passionate about, and the thing that drives their economic engine. Knowing their Hedgehog Concept also means cutting away everything else that distracts from that core focus.

Clear self-knowledge doesn’t come quickly, and you can’t impose a Hedgehog Concept unless it comes organically from all three circles. After all, you can’t dictate what you’re passionate about or what economic denominator powers your business. But once you isolate your core concept, it’s like clouds parting: every subsequent decision you make becomes faster and easier. Great companies make decisions based on knowing who they are, not based on what they think might lead to growth; strong growth is a result of good decisions, not a primary driver of them.

Finding Your Eye Care Practice’s Hedgehog Concept

Every ophthalmologist and optometrist wants to maximize their practice’s earnings while still maintaining a high standard of care. So they look for high-margin services, from fancy new procedures to elaborate retail shop offerings, in order to boost earnings. Recently, some practices have diversified even further, departing entirely from the eye care world to embrace adjacent medical fields like audiology that also appeal to the abundant 55-and-over demographic. This is especially true on the cosmetic side – oculoplastic surgeons providing Botox injections, for example.

But these seemingly profit-boosting services threaten to siphon the practice’s energy away from what it does best. “Expanding your menu sometimes works,” cautions Welch, “but often times it only clutters or dilutes the practice. If you don’t have the time or space to offer those additional revenue-generating services, then my advice is to focus on what you do best. Stick with what you know, and free up your schedule for more of that.”

Tantalizing though it may be to add on profitable services, consider that they might actually lose you business in the long run. Offering too varied a portfolio of services could make your practice difficult to market, with the scattered focus leaving prospective patients confused as to your specialty. And if you haven’t taken the time to master a new procedure, any inconsistent results could hurt your practice’s valuable reputation. Zero in on what you do well and love to do, and you’ll become the go-to practice in that field.

Part Four: Disciplined Action

Good to Great Principle: A Culture of Discipline

Collins sees long-term discipline as the single most important quality of any great business. A company of disciplined people engineer a path together using disciplined thought, and then put their plan into effect through disciplined action. When everyone is personally self-disciplined, they all police themselves instead of having to be policed. Bureaucracy and hierarchy are unnecessary, and every employee can focus on making the business work to its full potential.

Great companies have the discipline to stay within their core concept, not straying even when a shiny new opportunity jumps up.

Truly disciplined employees, Collins suggests, will flourish when they have both freedom and responsibility. To do that, they need a system with a clear framework and goals. But once that system is in place, he says, the business can “manage the system, not the people.”

The idea of a culture of discipline extends to a business’ decisions, not just its people. Great companies have the discipline to stay within their core concept, not straying even when a shiny new opportunity jumps up. They don’t simply have “to-do” lists; they have “don’t-do” or “stop-doing” lists that help them to eliminate anything that distracts from doing what they do best. Dogged, everyday tenacity – not occasional brilliance – makes them great in the long run.

Instilling a Culture of Discipline at Your Eye Care Practice

Eye Care Leaders consultant Cheryl Welch recently visited a two-doctor practice that counted an astounding seven managers on staff! To her, that level of bureaucracy signaled a lack of self-discipline across the organization. “Having that many managers might be appropriate in a very large practice,” she acknowledges, “but there is such a thing as over-managing your people and not giving them a chance to work independently. If you’re constantly managing them, they never have to discipline themselves.” The result is practice paralysis, with every employee waiting to be told what to do and no one taking the initiative.

“I recommend three elements to create a safe work culture: accountability, collaboration, and transparency,” Welch advises. “When employees don’t feel threatened, they’ll naturally become more disciplined.” For a more accountable workplace, she suggests working with staff to set clear goals and deadlines, and using project management programs to track whether those goals are being met promptly.

Another way to encourage self-discipline is to have staff members establish and work towards meeting quantitative metrics. When an optical shop manager aims to hit a specific gross profit margin or turn ratio, for example, they can devise their own tactics for achieving that goal without worrying about their boss micromanaging their work every step of the way. Not only does this goal-oriented system breed trust and make for more responsible, empowered employees, it also frees the physician up to focus on treating patients.

Good to Great Principle: Technology Accelerators

In this Information Age, when it seems like cool new technologies are revolutionizing our lives on a daily basis, it’s easy to think of technology as a solution in and of itself. But Collins found that great companies thought in a much more measured way about their use of technology. To them, it is simply another tool that can help their core business work better and more efficiently, never to be mistaken for the prime mover of the company.

The smart application of relevant technology is often the last puzzle piece in the transition from good to great…

That doesn’t mean great companies ignore technological advances. On the contrary, they often harness those advances better than their peers because their self-knowledge dictates what tech they use and how they use it. They know that technology can accelerate your momentum considerably, but it can’t create momentum in the first place. If a company uses a piece of technology as a quick fix or simply because everybody else is doing it, that company is setting itself up to fail.

Indeed, the smart application of relevant technology is often the last puzzle piece in the transition from good to great, after putting the right people in place and identifying the business’ core concept. After all, how can you choose the right technology for your company if you don’t know who you are and what you do first? “No technology can make you a Level 5 leader,” cautions Collins. “No technology can turn the wrong people into the right people. No technology can supplant the need for a simple hedgehog concept. No technology can create a culture of discipline.”

Accelerating Your Eye Care Practice With Technology

Ophthalmology and optometry depend heavily on technology by their very natures. But it’s easy to be seduced by every new piece of cutting-edge equipment that comes along. Practices should never purchase new technology just to say they have it, but rather because it leads directly to better patient care and doesn’t duplicate work their existing equipment performs.

The temptation for doctors to spend big money without researching the return themselves can be irresistible. Most sales people offer a financial analysis, Robert Wiggins, MD, Ashville Eye Associates and AAO Senior Secretary for Practice Management told AAO 2016 attendees. “To determine if you should bring in a new service, ask: “Do the revenues cover the cost?” and then solve that in one of two ways:

• How many services do I need to provide to break even over time
• How much do I need to charge to cover the services.

Any new technology must have a path to profitability. For instance, purchasing an expensive femtosecond laser to perform the FLACS procedure only makes sense if your practice has an affluent patient base and multiple surgeons to generate a high enough volume of cases. If the equipment can’t earn its keep, you’re better off sticking with only the technology you absolutely need to serve your patients.

Derek Preece, MBA, Principal and Executive Consultant with BSM Consulting in his co-presentation with Wiggins “Doctors and Administrators: Working Together to Make Sound Financial Decisions,” gave the following break-even example:

Laser costs: $450,000

Year 1 depreciation: $90,000

1 year interest at 3.5% on 5 year loan: $13,325

Set –up variable cost: $350 per case

Facility fee: $850

Equipment Fixed Cost: $103,325

Plug the numbers into the break-even formula:

Price x Visits = Equipment Fixed Cost + (Variable Cost/Unit x V)

And you get:

$850 x Visits = $103,325 + $350 x V

$500 x V = $103,325

V = 207 cases

“If the ASC performs 2000 cases per year, then 207/2000 or 10% will need to be done with the laser for the center to break even,” Wiggins explains.