Solid Infrastructure Minimizes Growing Pains

Those of us in this industry with a conscience and real mission know that we should provide the best service possible to the patients we serve. We must also remember that it is not mutually exclusive that we do good for others while also succeeding and feeding our families. We can do both.

As I’ve observed some of the largest, most successful treatment centers talk about their mission and their processes, I look at the deals I’ve facilitated with some smaller providers being bought or invested in by larger companies. I’ve seen countless instances where the provider that I am representing and the larger company purchasing them have a disconnect in communication because they are from two different worlds and focus on different things and customary ways of conducting business. The selling provider may still be using processes, policies and software/tools/methods that they utilized when they started on their mission. The buyer might expect an organization with the same infrastructure that it has, which makes for a smooth process and easy modeling and forecasting of potential. I frequently see this cause deals to slow or even fall apart.

In light of this, I sought out some larger providers for their advice on managing these situations.

No shortcuts

First, understand there are no shortcuts, silver bullet or magic tricks. Don’t try to use questionable business tactics to artificially increase numbers. Provide great service and deliver on your mission. Show value and that you care. Most are in this business for personal, honorable reasons, so stay focused on that and let that culture permeate your office and staff and the numbers will come over time.

Secondly, it is always hard to take a chance and think about hiring and paying people when you don’t think you have the money to do so yet. Human capital, however, will not only be your most important investment in your business, but it will also provide you a better work-life balance in which you can learn to delegate. This will allow you to spend your time on the big picture and long-term strategy, focusing your energy on the 20% of people and tasks that earn you 80% of your revenue.

Budget for top talent

The consensus among leaders I spoke with is that you must pay very attractively and hire top talent in financials, marketing and business development, HR, compliance, and legal. One way to prepare for this expenditure is to run as lean and frugal an organization as possible at the very beginning and focus on clinical care and building a reputation. Make the hiring of these top talents an immediate priority.

“Hire those key positions way early, before you think you need them or can afford them, so that the CEO can be looking out six, 12, 18 months ahead and forecast. Invest ahead of time, which is very difficult,” says Scott Kardenetz, CEO of Odyssey Behavioral Health. “Top talent is not cheap.”

Today’s technology helps facilitate this. Of course, you can outsource if you do your homework and interview potential vendors and feel confident they’ll do their best work in your interest. But these days, technology is so intuitive and helpful that if you can find the right mixture of software to work well together, you may only need to hire a person or two to deal with items such as medical records, revenue cycle management, billing, and utilization review.

Many of the executives interviewed for this story say they are not fans of outside vendors of service and strongly encouraged bringing those tasks in house as soon as possible.

“In hindsight, I’d be more cognizant of technology and how that impacts what we do across the board, the trends, etc., become operationally prepared and knowledgeable of its capabilities,” Danny Prince, president of Paramount Healthcare and New Day Recovery, says of what he would have done differently early on. “I’d continue to build businesses based on a relationship mindset though. Trust is important, more than marketing or finances or technology or anything else. We’re in a service-oriented business.”

Establish infrastructure

I advise those running smaller facilities to bring tasks in house as soon as possible, be efficient, and begin to update infrastructure – processes, software, policies, org chart and structure, compliance and UX process – to emulate those larger providers you most admire and want to resemble.

“I would start to organize my company like the ones that I respect or would want to be acquired by as soon as I could, to make it easy on them if that is my goal and because the process obviously works for them,” says Nick Stavros, CEO of Community Medical Services.

I’ve found many providers within the industry are very quick to lend a helping hand. Seek out networking groups, events, best practice tips and forums, and ask advice and experiences from those who have been there before. It may be possible to hire some of them on a very short-term, contractual consulting basis to help with some of the early growth steps and concerns. Find a mentor and ask their opinion on strategic growth from their experiences.

Jacob D. Lynch is associate partner for Stoneridge Partners, a merger and acquisition advisory firm that focuses on selling home care, hospice and behavioral health agencies.