Recently, I heard a speaker mention the acronym “VUCA,” a military term that stands for volatility, uncertainty, complexity, and ambiguity. In recent years, the business world has adopted “VUCA” to describe the world in which we work. It’s never “business as usual” anymore.
Health care is awash with VUCA. We feel tossed and turned—and with good reason. During my time at Eye Care Leaders, I’ve talked with physician owners who are grappling with how to chart a profitable course for their practices amidst rough waters and murky horizons. To navigate through 2017 and beyond, practices must become more innovative, strategic and agile than ever before.
Market Forces Affecting Your Eye Care Practice
First, let’s step back and bit and look at what’s causing the VUCA we are attempting to navigate.
The demand for eye care services exceeds supply.
The Baby Boom generation needs more eye care than ever before, but there are fewer ophthalmologists entering the profession to take care of them.
A fragmented market is consolidating.
As larger practices scale up to tackle ever-increasing compliance, technological, reimbursement, contracting and staffing challenges, solo and small practices struggle to survive.
Your revenue is not just claims anymore.
It’s cash. The rise of high-deductible health plans and patients’ willingness to pay out-of-pocket for elective surgeries or premium upgrades presents huge revenue opportunities—and risk. Your RCM team has evolved to squeeze money out of Medicare and third-party payers, but do they have the skills to market your cash services and to collect that cash in full?
Fee-for-value is upending fee-for-service.
As MIPS transforms Medicare reimbursement and other payers follow suit, practices must focus more on patient outcomes and satisfaction.
Ambulatory surgery centers and optical shops remain robust revenue opportunities…
…but they require skilled partnerships to manage optimally.
How to Navigate the VUCA—and Thrive
It’s time to gear up for the voyage ahead, and many physician owners are taking steps to help them prosper amidst a changing marketplace.
For example, most practice owners understand they need to discard the old “just sell your share in the practice when you’re 65” model if they want to gain full advantage of the equity they’ve built over their careers.
The median age for ophthalmologists is 52 years old. This is leading to a glut of near-retirees looking to sell their shares to fewer and fewer new doctors. Supply often exceeds demand, leading to devaluation of practice shares.
To collect optimal equity at retirement, stakeholders must pay rigorous attention to succession planning, recruitment, and transition periods that begin long before they reach retirement age. Physician owners are looking at the potential of equity partnerships to get the most value from what they’ve worked hard to build their whole careers.
Equity partnerships can benefit other partners besides those nearing retirement age. This is because they can supply the capital the entire practice needs to gear up for the market challenges ahead.
For example, many physicians are happiest when they spend most of their time on patient care and surgeries. And, their practices benefit financially when they do so. But as reimbursement models and the eye care business become more complex, practices must hire more staff to profit. Those staff must be more skilled and higher paid than they were in the past.
How Capital Helps your Practice
Capital can also help practices scale up. How?
- By propelling acquisitions and mergers that position practices to get what they want when negotiating with payers.
- By making it easier to do the analytics necessary to participate in Accountable Care Organizations (ACOs) and other value-based payment initiatives.
- By allowing practices to build the teams they need to mitigate risk associated with changing payment models and respond to heightened compliance challenges.
Practices may need to invest in technology or outsourced services to thrive, and capital can help a practice raise its overall practice management game.