00:00 – 00.45
Karen: Thank you for joining us for this session on Business 101 during the pandemic. My name is Karen, and it is my pleasure to welcome you to the second presentation of a three part series on business resilience and continuity during COVID-19 which is proudly supported by the Commonwealth Bank of Australia. This session’s presenter is Dr Todd Cameron, co-founder of Scale My Clinic and Acting Chair of the RACGP Business of General Practice Specific Interest Network.
Before we get started, I would like to recognize and acknowledge the traditional custodians of the land and sea in which we live and work.
In this session, Todd is going to take us through the strategies and plans to drive business admit a COVID-19 environment and understanding the profit margins in business. We’ll now jump right in and I'll hand over to Todd to get us started.
00.45 – 01.00
Todd: Alright, pandemic business 101 and you know obviously COVID brings about a lot of change in the environment around us.
01.01 – 01.40
Todd: We know from the owners that we've been speaking to that one of the biggest issues that they're facing is insolvency. There's been a dramatic shift in the way that clinics are receiving revenue, in that those that were mostly privately billing might have noticed a change towards more bulk billing, Telehealth on numbers, etc.
And it feels like in the early stages of the pandemic, you're probably rewriting policies and protocols, pretty well on a daily basis. So solvency remains a big issue. You may have seen that article in the ABC about the number of practices that applied for the job keeper stimulus package.
01.41 – 02.10
Todd: And as well as solvency, people are concerned about safety and it's easy to understand that safety is a relative thing during a pandemic, of course. But we don't want to be subjecting anybody in our team to an excess risk. Not only our teams, but our families, our communities more broadly, and our patients as well. So there is a lot for practice owners to be on top of in this in this safety sphere.
02.11 – 03.29
Todd: And lastly is that sense of being overwhelmed. You know, it is really, really easy to be overwhelmed in the current environment so I don't think there's any of us that we wished for one more amateur Chartists or graph maker getting the crayons out and the little squares, just to try and work on communicating fear more effectively with a graph.
You know, we're receiving information from Internationally, obviously some really unpleasant numbers in Europe and the US, of course, and it can feel a little bit disconnected from that, you know, because we've done really well in this first wave, and the question on everybody's mind is, can we maintain that and avoid a substantial secondary wave.
So the overwhelm is real. We've obviously got a lot of concerns about the people in our work environment, we've got an obligation and a moral and ethical responsibility to provide a safe workplace. We're getting stuff in the news all the time, you know, new numbers social media family. And also, a lot of the people at work as part of your practice may well be sharing their anxieties and concerns with you. So it's very, very easy to become overwhelmed.
03.30 – 04.05
Todd: And we all know that happens, you know, you really don't know which way to turn so during this time, it can be really, really difficult to know what's the right thing to be doing. Because there are a lot of voices telling you what they think you should be doing. And the truth is, there isn't really one right thing, of course, because you know the pandemic isn’t the same in all parts of Australia and it isn't the same in all parts of clinics, you know, general practice clinics are not one homogenous beast and Australia is certainly not homogenous in way that the pandemic is rolling through them. So this is very, very relevant to the local context.
04.06 – 04.33
Todd: However, you know, no matter what you do, you are going to need to have a really strong financial plan. And it's probably the reverse of this, it's probably now a plan B. Plan A was probably what you're running up until early to mid-March and plan B needs to be dusted off, it may even be down to plan X, Y, or Z in your case depending on how many different iterations you've been through.
04.34 – 04:44
Todd: And we need to take a proactive approach to protecting our people and making sure that the people that we care about a safe and there are lots of different ways of addressing that.
04:45 – 05.31
Todd: And we also know why we manage overwhelm is by engaging the team, you know, if we can have an engaged team and more democratized leadership style. We are much, much more likely to succeed.
One of the models that Sachin and I at Scale My Clinic have talked about is like the Hydra. And if you're of the era that you maybe aware of the ancient origins of that will then the mythical Hydra, you could want one head off the beast, and it would continue to function.
If you're a more modern fan and know of the hydra through the Avengers. Well, you know, the hydra is everywhere. And so the idea is that you have a more distributed leadership style. Which just means that if one or more of you are not able to function for a period of time, the whole business doesn't fall down.
05.32 – 05.47
Todd: And if you can do all of these things really well then you're much more likely to have more clarity and more purpose about the direction that you take and more confidence when you're moving forward with the best plan that you can put together.
05.48 – 06.25
Todd: All right, firstly, I'm going to get you this everybody to think about what you sit in that spectrum. From the first few which you know being worried about solvency, worried about safety, and worried about overwhelm towards addressing those, you know, solvency you address for having a strategic business systems approach.
Safety through building proactively protected people and neutralizing overwhelmed through having a resilient team around you. We're going to doing a bit of a walkthrough as to what we might be able to do to address those areas.
06.26 – 09.14
Todd: The things I want to talk to you about. Firstly, there's profit, how profit works? And I think this is commonly misunderstood, just in a general sense, but also in general practice clinics and the reason I say this is I’ll talk to owners and they'll say, I'll ask them, how are they doing? They’ll say “look I’m down by 20 or 30%, but I don't feel too bad. There are other people that are worse off”, which may be true.
But let's use the analogy of a restaurant and you know of, I'm a fan of Ramsey's Kitchen Nightmares, I think one of the greatest business educational series that you'll ever come across. And let's say you've got Ramsey's model of around about one third of fixed costs, one third variable costs, and one third profit. Let's just pretend that our restaurant has 30 sets of tables and chairs. So it's pretty easy to work out what's paying for what.
So the first 10 sets of tables and chairs. If, therefore, all you can guarantees that your overheads, your fixed overheads are paid. The second bunch of ten is there to pay for all a variable costs and in most cases that's going to be staff and in the restaurant game, of course, that would be the raw products, the raw ingredients for the food.
And then the last 10 tables are the ones that that are the ones that provide the profit. So if you don't have anybody sitting in those last 10 tables if they never fill, then you just don't get to bank any profit basically.
And the reason this is important is that when, if you're not somebody who actually has the finger on the pulse of your practice and you're waiting for the accountant to report to you as to how things going, at the end of the quarter and usually six weeks after the end of the quarter, you're off and running your business based on information that up to four or five months old. Which is going to be useless and the most likely outcome is that you get a phone call from your practice manager or your accountant or bookkeeper that says you know what, we need you to put your hand in your pocket, because we don't have enough money to pay the staff this week, or this month. And that's a really, really big deal.
So I want people to have a good understanding of the way that profit works and mostly we have a businesses structured where its revenue minus expenses equals profit. And if that's true for you, then you need to make sure that you have a really good understanding of revenue, you have a really good understanding of expenses, because if you don't have profit, then what that means is your sustainability is threatened and at some point in time, you're probably going to have to make some difficult decisions about what you do from now on. So make sure you have a good understanding of how this works.
09.14 – 19.01
Todd: Okay, now what I'm going to do is stop the screen share and I'm going to share from my iPad and we'll do a little bit of drawing.
So this is based on the information that Sachin and I have had when we've been chatting to people that are general practice owners at the moment. And essentially, there are 4 layers in this hierarchy and the bottom line here is bleeding and this is a lot like Maslow's hierarchy of needs, of course, and we're going to say this is minus 10% or greater in terms of revenue lost and slipping is between zero and 10% reduction, Stable is zero to 5% increase and Leading is plus 5%. It looks like they were four layers here because that's what I'm drawn, but in fact, there are only two layers. This bottom layer is all about survival. And you would much prefer to be at this top layer, where the problems that you are solving are all around growth. So it's really, really important to get yourself from down here to down here.
And much like Maslow's hierarchy, you know when you're doing the bottom what you tend to find is that you will have a much more of a scarcity mindset. It's much harder to think and plan at that level. And this is a little bit of a diagram as to what we can expect. So today is what is today, it's the 18th May 2020 and what we do know is that in three years’ time will be the 18th May 2023 and what we know in the world at the moment, is suffering a lot of pain and this could well turn out to be imprecise. But we're probably headed for an 18-24 months of a somewhat difficult time, at least until there's either a treatment that's a viable treatment for COVID or a vaccine that's effective and if it turns out to be less, well then that’s great. We can always manage things when they're less then what we expect. But if we have ourselves sort of in the mindset is it will be sorted in a couple of weeks or a couple of months then we’ll get fatigued, because the demand is much, much greater.
And it really is going to be three outcomes in businesses, full stop, and in particular in general practice what you're likely to see is that those businesses that make no change will fail and those businesses are likely to be the ones that did really well in the environment prior to COVID. And so, you know, there's a bit of grief there, you don't want to see things change because you really enjoyed that environment and it meant that you able to win. And so what this is, is kind of a bit of a trouble of letting go of the old and accepting the new and so these people make no changes.
And what happens is there's a fairly dramatic slippage. In fact, in some cases, this may well look more here, it might not make the 15 to 18 months. And what happens when they fail, is they abandon a large group of clients, customers in our case patients.
And then the second group are those that make some changes. And these people kind of change enough to stick around and they're able to actually muddle the way through by just doing what they need to keep their head above the water line. And at the end of three years there in much the same place as they were at the start and that might seem like a really good thing compared to that first group of course because it is. But at the end of the three block, they are knackered, they're not in any position to do anything.
Because, again, there’s most likely a scarcity mindset here, is that they probably shared some of the best clients, customers again in our, in our case, patients along the way. Just because they're not innovating and they're not changing enough to meet the demands of the community. And so they will abandon some of their patients along the way and probably some of the best patients, you know, their highest value patients.
And the last group are likely to be something like this. And these people make smart changes. And during this period of time they recognize that there is value in delayed gratification serving their communities, making sure that they refine and recruit the right clients, customers in our case patients across. What you'll see on the other side of adversity, as with everything else in history, ever, there is great opportunity. And they are in the best position to be able to take advantage of that.
This gap here is largely about leadership, about recognizing you want to be able to lead. You want to be making those smart changes and you want to be taking those opportunities on the other side of adversity and driving up towards a more successful business. Importantly the upswing is fueled by these abandoned clients, customers, as I said before, patients in our circumstance. They all are looking for somewhere to go and this is most likely going to be those that are on the green line.
So part of our mission today is to make sure we get you on the green line. One way to look at this is your current patient population. So this is how you're going to recruit those patients across and the best way to think of this is to understand your doctor, you patient rather. And you do need to make sure that you have doctors that are clearly avatars of yours as well.
So what do I mean by that? Well, your general practices actually more like a market place. So what that means is, your job is to match up GPs and patients and make sure they share similar values so that you get the best outcome. So if you don't do that, you'll often see there's a substantial mismatch. So your job is to make sure they understand what your avatars are and that you understand your patients that align highly with your avatars, those that are not necessarily fully aligned and those that are certainly not aligned with your avatars.
And in the current circumstance, you probably have a bunch of patients that looks something like this. You got mostly, probably about 80% of your patients are the ones you want, that actually fit nicely with your practice and your practice fits nicely within. There'll be a few that that is not necessarily the case and it is a few that probably you should never have got together, because for a variety of reasons you don't particularly address their needs well. They don’t particularly enjoy coming to a practice like yours to have those needs met. And this will exist in all of our practices and it exists in all businesses.
You know, this is that kind of Pareto principle that that 80% of, sorry 20% of your clients, in this case, patients will be responsible for 80% of the issues and so that would typically be these group where, you know, they don't really fit with the style of practice that you run.
So your mission during this time should you choose to accept it, is to recruit patients from the community that are a match with you. So you want to bring more people in and during that time where you'll probably find is some of these ones that are less of a good match migrate to other practices. That would be the best outcome that they end up in practices that very, very much suit their avatars, suit their needs and are able to deliver on those reliably.
And because this is telehealth and driving time are vastly reduced, you could probably recruit some patients from a little bit further away than you otherwise might have in the past. So it's important to have this mindset of actively seeking to recruit the people that you want from your community and maybe slightly outside of your normal catchment zone. So many I back to the slide deck.
19.02 – 20.43
Todd: Alright, well the technology works. OK, so the premise was really just to remind me of the pyramid, but it's a great photo.
The sheers, you know we talked a bit about the issue around business solvency. One of the things you're going to need to do is because it is revenue minus expenses, then you're going to need to get to work on pruning your expenses.
How do you do that? Well, I'm going to suggest that you are very, very aggressive in pruning your overheads, because you can always add it back in if you've gone too far.
So if you're questioning maybe that stays, or maybe it goes, let's see how you go without it. And if you need to add it back in, that’s going to be relatively easy to do. It might be easy to think here that you don't want to be cutting any of your services or your suppliers back, but I strongly encourage you to use this time and opportunity to review any of your commitments you have made and work on reducing those dramatically. If there are further downturns and you're not ready for them, that money that goes out the door is the worst kind of money because you never ever get it back. The best money you'll ever earn is the money you never spent. It’s my favourite, it never leaves your pocket in the first place.
So get to being really, really aggressive and confident in reducing your overheads, particularly your fixed costs.
20.44 – 25.23
Todd: You're going to need to change your service delivery model substantially you know this this brand is up here. Not because it's a particularly fabulous brand, but it is really highly associated with change. Obviously those that stood in front of Uber and didn't want to have their existing model changed didn't fare so well. And so, pardon the pun, and so this is going to be the same thing with your general practice, as I said, COVID is not impacting Australia in a uniform manner. Which is what we expect with a pandemic, but you are going to need to have multiple service delivery models so that you can accommodate your patients in a safe way, in practice that is perceived as and is safe by your employees and by your contractors.
I know that we've had a lot of people that we work with and we personally have had a lot of doctors approached us about working with us because they do not feel safe in the current workplaces. So you saw on that, on that red graph earlier that those clinics that fail early are likely to be low trust environments so the types of places where people go to work for money and not much else, where they really feel that the people at on the practice and their colleagues do not have their back. That is their biggest concern. So you're going to need to build service delivery models, models of care that you can operate in.
And I like to think of this in three zones. So the Green Zone is where there is no surpass risk in delivering on care and in most cases, that would be the telehealth part of your general practice, but you do need to remember that within the practice transmission within the practice is still an issue.
Now you've seen this in McDonald's in Victoria, there have been quite a few cases as well as the meat works. Those environments tend to promote spread because of the close work environment. So I strongly encourage you to continue to have appropriate social distancing within your practice. The one thing you really need to work hard to avoid in your general practice is synchronous infection because that will take most of the leadership group out as well as everybody else, even if they're not particularly unwell, they're all taken out at the same time.
And so it would be very, very hard to have service continuity for your community. So you need to make sure that your green zone, the telehealth zone where people should be safe, that they actually are safe. And the right people are in that environment, if you've got people that are older, that have a really high risk profile with comorbidity for poor outcomes with COVID, those people, immunosuppression, etc. they need to be working in the Green Zone and ought not to be interacting with patients in any kind of an orange zone, unless you are confident that there is no transmission in your community.
Now remember a pandemic is by definition, uncontrolled global spread so we need to be mindful about thinking that isn't in our community because you don't get a little notification to say, oh people have just started getting this. Typically what happens is, seven to 10 days later, you start seeing the numbers rise locally. So we could all be operating in hotspots at any time, and particularly in rural communities, this will hit them very hard. We know this from the overseas experience.
We've talked about the Green Zone. The next zone is the orange zone where there is some patient contact and you just need to make sure that you nail safety in that environment, that you shorten the visits as much as possible, so as that it is not prolonged contact. That you stay away from head and neck examinations, unless you have appropriate protection. And you keep yourself safe at all times and then you need to consider what happens at the end of a shift for any clinician, nurse or doctor or admin that’s working in the orange zone.
What do they do at the end of the workday? Do they go home, or do they have a process whereby they can they can doth and be safe to go back into the Green Zone.
That's going to be important for you to determine. I don't expect that's a five minute job, that's going to take you a lot of time. And you probably need to have multiple models that you roll out at different points in time. Don't be lazy in this, don't have the change of service delivery model forced upon you, from an adverse outcome in your clinic. I strongly encourage you to think about this in advance.
25.24 – 26.09
Todd: And again, you know, when we get to the part about being overwhelmed in engaging our team. You're just going to need to make sure that you have the best plan, you can muster and that there is plan a, b, c, d. And you can actually make sure that you are retaining some profits during this time, because if you're not able to maintain a profitable and sustainable practice, then things are going to get really tough. You know as well as I do that, you've probably had some of your allied health, subleases that have said we're out or we're not continuing or we're not paying the same amount and a lot of pathology companies have done the same.
So you're going to need to be really flexible in your modeling and probably spending a lot more time on this than you may have considered in the past.
26.10 – 29.12
Todd: Now this is about which part of your practice do you fix first? If you don't have enough volume as in, you're not seeing enough patients and the other way to look at that is revenue. If the revenue is not high enough, then you need to go and look for the patient populations that are probably ignoring their care at the moment. That may include the elderly, that might include people with preventative health issues that they've suspended. That may include people with high chronic disease burden.
But there are groups of people that we know have that have just said, I'm not going to go anywhere. At the moment, I'm not going to engage in my health care because I'm just hoping this will go away. A bit of an ostrich response.
So what I'd suggest is if volume is your problem and revenue is the problem, then you need to go looking for the patients that you serve, that need your help, that are not reaching out to you and you need to reach out to them. That's a very different service delivery model than what most of us are used to. And if you are seeing them but they're not coming back then that's a retention issue that we'll get to in a moment.
The layer after revenue is about profit. And so this is the way you design your internal financial systems and processes. And making sure that they are robust and you do that really aggressive prune of your overheads and you do your best to make sure that you're making profit at any stage during the pandemic. The reason that's important is sustainability, you know, you're taking your higher risks during this time, as an owner and there are opportunities that you may miss if you're not actually recording a profit through this time.
The last one is around retention. So if you're not able to keep your patients coming back. And of course, this is in appropriate numbers. We know that the average number of visits Australia wide is something like 6, 6.1 and that varies from the highest is about 7.7 which is in South Western Sydney and the lowest is in the fours and that's in the Northern Territory and that's probably more about the social gradient. You know, we know that the health needs a high in areas that are more impoverished. In the Northern Territory, it's most likely about accessibility issues and the representation of GPs across that population there.
Making sure that your patients are seeing you the right amount of times, you know, it's really hard to solve everything in one visit, we've all done that where somebody comes in with you know 25 different some different problems and you're trying to get to it all in one visit. I mean, in most cases, people are only going to remember the last one or two things that you talked about in any case. So making sure that you understand whether your problem is a volume problem, whether it's a profit problem or whether it's a retention problem, is really important for how you continue to grow and successfully run your practice.
29.13 – 30.36
Todd: Okay, well that's it from me. Our next webinar is going to be on cause and effect and we will be doing a little bit of a combination. So we just had Craig James do a really nice big macro view on the changes in the economy and here’s a little snapshot of past present and the predictions as well. What we're going to do is overlay that with the work that we've just done this webinar and have a little bit more of an understanding about how that impacts health in particular and your sector as well as those around you, you know, we are connected to other health care providers, obviously allied health is one and pharmacy.
So it's important to understand how they're going because we interact with them on a daily basis and they're all part of the primary care workflow. So we'll understand how those two things merged together and then you’ve got three webinars that are going to help you navigate your way through this COVID crisis and hopefully come out the other side in better shape. Yes, that is possible, I think.
Thanks, I'm Todd Cameron.
Karen: Thanks very much for sharing your knowledge, experience and time with us today. We hope you everyone viewing found this business update during a pandemic informative and beneficial. Thank you.