Thinking Inside the Box
September 2013 Issue
Business managers are aware of the constant need to improve and grow their companies' bottom line. In the O&P industry, it is particularly important to stay abreast of changes and innovations and, where possible, to drive change and innovation in order to remain profitable. As we struggle for ways to build our clinical practices, we are often encouraged to "think outside the box." This clichéd management advice has been repeated so often many people mistakenly look for areas of growth before taking the critical steps of first analyzing and addressing weaknesses at the foundation of their business "box."
The term "think outside the box" came into the cultural lexicon with the use of a decadesold brainteaser (Figure 1). The object of the puzzle is to connect all nine dots using four straight lines, without lifting the pencil off the paper. Most people's first strategy is to draw a box through the outside dots but this leaves the center dot untouched. The solution is to consider alternate configurations outside the boundaries of the box shape, in other words, to think "outside the box."
With the current business climate primarily recognizing and rewarding such out-of-the-box thinking, too many managers fail to understand the value of first strengthening their internal box-the corporate structure-of their business practices. In his Psychology Today blog, author Christopher Peterson, PhD, stated this very bluntly: "If you never venture outside the box, you will probably not be creative. But if you never get inside the box, you will certainly be stupid.... Knowing what is inside the box is the only way to get outside the box in a useful way once the basics are mastered."1 In O&P clinical practices, we have to define the metaphorical box in which we operate in order to plan our business strategy. How do we determine what structures create the framework of our box? One approach is to analyze our business within the McKinsey 7-S Framework (Figure 2). This model allows us to think broadly about organizational problems as well as to judge our business strategies.2 Managers are naturally biased toward changing the more tangible elements of strategy, structure, and systems. But the higher-performing companies also focus on the "soft" elements, which include style, skills, shared values, and staff.
In analyzing our business strategy, we have to be mindful of the operating constraints. The key to long-term profitability is to align our business strategy with our organizational arrangement and our employees, while recognizing the business environment including external forces beyond our control such as regulatory issues and changes and insurance requirements.
Analyzing Business Strategy
The word strategy comes from "strategos," the Greek word for military general. Inherent in the word strategy, therefore, are the ideas of both planning and execution. "The value of a strategy depends not only on the elegance of its conception but fully as much on whether the company proposing the strategy can really execute it."2 In addition, we must consider how the strategy aligns with the other business-model constraints. "A good strategy is not synonymous with a doable one. The challenge is to find a good, doable strategy."2
Our strategy should be synonymous with our goals. Our starting assumption is that we are in business to make money; therefore, the success of our strategy can be determined by whether or not we meet our financial goals. We often get distracted by the acronyms we use to measure or quantify success. Regardless of the accounting method used, our current business model is successful if it is meeting our profitability goal. We need to make sure we are aligning our business goals and strategy with profitability at every level. If any area is dominant, our strategy is unbalanced. If any area is weak, we are more likely to be adversely affected by external forces. We must look at our businesses at a structural level to identify how we are creating our own problems and then see what needs to be strengthened or adjusted to build the foundation for our strategic success.
Assessing Organizational Arrangement
The O&P profession is unique because in most of our business practices, each transaction has to satisfy three diverse customers: the patient, who brings individual expectations and needs; the payer, again with particular expectations and needs, but also specific requirements; and the prescribing physician, who has his or her own expectations, needs, and requirements. How is this unique from other medical services providers? They, in general, have one less customer to satisfy. For example, a physician only has the patient and the payer. For the O&P practice, the patient, the payer, and the physician form the structure of our box, our initial constraints, and the organizational arrangement. These constraints are the same regardless of what type of facility we operate-from a boutique facility with a limited product line to a larger patient care organization.
Practice managers must compare their business goals to their existing organizational structure. For example, a boutique O&P practice that specializes in high-end upper-limb prostheses would make an aligned strategic choice to focus marketing efforts on physician referrals and choose to base its box on physician referrals-marketing will not be based on price but rather on patient care quality. Alternatively (or concurrently), it may choose to focus on attracting payers that provide coverage for a higher level of individualized patient care versus payers that have a broader patient base but provide more "bare-bones" coverage.
Once we have identified how our O&P organizational arrangement is built on the framework of patient/payer/physician, we need to strengthen this framework. Employees are key to this organizational strength. We need to look internally at our existing talent and make sure they are aligned with our strategy and assess whether they add strength to the organizational arrangement. Are we a business-driven, cost-first practice, or do we work at a pace that is more conducive to detail-oriented production? How does our existing staff fit in with our other business goals?
We need to ask hard questions about our existing staff. Do we need a strong, dynamic practitioner at the price he or she commands? Does the business generated justify the cost? Are we losing profitability due to poor collection rates? Does it make sense in terms of our strategy to have an in-house technician? Would we be better served using a central fabrication facility? What impression is our front-office staff making? We often neglect the area of office staff, and it can be one of high turnover. The most valuable employee is the one who answers the phone-this is the first person who interfaces with our customers. Patients never get to see the best practitioners if they don't make it past the front office.
The Current O&P Business Environment
The best strategy, organizational structure, and employee group can be undone by forces in the business environment. The strength of our box allows us to respond to the challenges that come from outside. If we have a strong box on which to position ourselves, we can see what is happening around us. Is our current business model sustainable in tomorrow's regulatory environment? The structure of our strategy must allow us to shift and realign as changes occur. Don't get trapped in the "we've always done it this way" mentality. Standing on top of a business box that has a strong foundation allows you to see those forces and changes that are happening all around you and to react and prepare for them.
In a 2012 interview published in Fortune magazine, Ralph de la Torre, CEO of Steward Health Care System, says, "You have to look back at America and the trends in industries that have gone from being art to science, to being commodities. Healthcare is becoming a commodity.... Healthcare is finally maturing as an industry, and part of that maturation process is consolidation. It's getting economies of scale and in many ways making it a commodity."3 As O&P practitioners, we need to make sure we are not afraid of the term commodity-we sometimes become so caught up in considering ourselves artists that we forget we deliver a marketable product, indeed a commodity, in the devices we provide.
Our services themselves can also be considered a commodity. We pride ourselves on our workmanship, and this is a good thing but should not be a selling point. People expect a wellmade product. We do not buy a car and hope it runs; we expect it to run. Good patient care with an efficient delivery system and minimum administrative effort can be a potent business strategy.
As we strengthen and align the structural elements of our business box, we create a strong foundation on which we can stand to search out areas of further growth. Innovative solutions to business growth are then added to a strong internal business plan, following the aligned business strategy we have developed. We are then poised to identify our problems and give power and energy to our solutions.4
Jeffrey A. Nemeth, CPO, FAAOP, is an area clinic manager with Hanger Clinic, Chandler, Arizona. Nemeth served as the editor of the Journal of Prosthetics and Orthotics, has been the recipient of both the Thranhardt and Hammontree Lecture awards, and has lectured throughout North America on numerous clinical and business related topics.
Society Spotlight is a presentation of clinical content by the societies of the Academy in partnership with The O&P EDGE.
- Peterson, Christopher. 2010. First, Think Inside the Box. Psychology Today, November 7. www.psychologytoday.com/blog/the-good-life/201011/first-think-inside-the-box.
- Waterman, R. H. Jr. 1982. The seven elements of strategic fit. Journal of Business Strategy 2(3):69-73.
- Colvin, Geoff. 2012. Health Care's New Maverick. Interview with Ralph de la Torre. Fortune, August 2. management.fortune.cnn.com/tag/ralph-de-la-torre.
- Anthony Robbins.