Grow with purpose: Why growth alone isn't a strategy for your practice

Growth can be an exciting opportunity for a physician practice. A new colleague, a second location or a new service line can open doors for your patients, your staff and your own career. But growth for the sake of growth is not a strategy. It's momentum, and momentum without direction can carry a practice somewhere its owners never intended to go.

Adding physicians, opening locations, expanding services, increasing patient volume or acquiring another practice can each create meaningful opportunities. Each can also introduce new financial, operational, staffing and management challenges. The practices that grow well are rarely the ones that grow fastest. They're the ones that decided, deliberately, what growth was supposed to accomplish.

What does growth mean for your practice?

Ask five physician owners what growth means and you'll likely hear five different answers. That's because every practice has different objectives. For some, growth means adding another physician. For others, it means getting more out of the physicians already on the team. Growth may mean:

• Adding another physician
• Increasing physician productivity
• Recruiting a new specialty
• Opening another location
• Expanding an existing facility
• Adding services or procedures
• Developing ancillary services
• Increasing referral volume
• Improving patient access
• Acquiring another practice
• Entering a joint venture
• Building a larger organization

• Increasing the long-term value of the practice

Notice how different these are. Increasing productivity might require nothing more than better scheduling and workflow. Opening a new location requires capital, a lease, staffing and a plan to fill the schedule. Acquiring another practice means integrating two cultures, two sets of systems and often two sets of expectations.

The right growth strategy depends on what the physician owners are trying to accomplish.

Start with the why

Before evaluating any specific opportunity, the owners need to be clear on what they want. That sounds obvious, but many practices skip this step and go straight to the opportunity in front of them: a hospital that wants them to staff a clinic, a retiring physician down the street, a vendor pitching an ancillary service.

Consider a few questions:

• What problem are we solving, or what opportunity are we pursuing? Is patient access a concern? Are referral sources asking for capacity? Is there a service your patients currently have to go elsewhere to get?
• What do the owners want their own lives to look like? A group of physicians who want more time away from clinical work will pursue a very different path than a group that wants to build a regional presence.
• What does success look like in three to five years? More revenue is not a complete answer. More income per owner, more free time, a stronger negotiating position with payers or a more valuable practice down the road are all different goals with different strategies.
• Do all the owners agree? Misalignment among partners is one of the quickest ways for a growth initiative to stall. If one partner is thinking about retirement and another is thinking about expansion, that conversation needs to happen before any commitments are made.

Answering these questions won't make the decision for you, but it gives you a filter. An opportunity that doesn't serve your goals can be declined without guilt, no matter how attractive it looks on the surface.

Growth adds complexity

One of the most common surprises for physician owners is how much complexity growth introduces. A practice that runs smoothly with three physicians and a handful of staff can feel very different at six physicians and two locations. Problems that were manageable through informal communication and personal attention start to slip through the cracks.

Here are the pressure points that show up most often:

Financial. Growth usually requires cash before it produces any. New physicians take time to build a panel. New locations carry lease, equipment and staffing costs from day one. Payer credentialing can delay revenue. A practice needs to know how much investment it can absorb, how long it can wait for a return and what happens if the ramp-up takes longer than projected.

Operational. Scheduling, billing, referral management and clinical workflows that worked at a smaller scale may not hold up. Processes that lived in one person's head need to be documented. Technology that was adequate may need to be upgraded or replaced.

Staffing. Every new physician or location requires support staff, and hiring and retaining good people is a challenge for nearly every practice. Growth that outpaces your ability to staff appropriately tends to hurt patient experience and burn out the team you already have.

Management. Perhaps the most underestimated challenge. Someone has to lead the larger organization. Physician owners who are excellent clinicians are often stretched thin trying to manage a growing business on top of a full patient schedule. Growth often calls for stronger administrative leadership and clearer governance, and it may require owners to spend their time differently than they're accustomed to.

Test the opportunity before you commit

Once the goals are clear, a disciplined evaluation can keep enthusiasm from overriding judgment. Before moving forward with a significant growth initiative, it's worth working through a few practical steps:

1. Build a realistic financial model. Include start-up costs, ramp-up time and a conservative scenario. Then ask what happens to the practice if the results fall short.
2. Assess your infrastructure. Can your current management, systems and staff support the change, or will you need to invest in them first?
3. Understand the market. Is there demand for the service or location? What are competitors doing? How are payers likely to respond?
4. Consider the impact on existing operations. Growth that pulls attention and resources away from the core practice can weaken the very foundation you're trying to build on.
5. Get input from the right advisors. Consultants who have seen similar transactions can spot risks that are easy to miss from the inside.

None of this is meant to discourage growth. It's meant to ensure that the practice enters it with open eyes.

Growth and the long-term value of the practice

One item on the list above deserves special attention: increasing the long-term value of the practice. Many physician owners don't think of themselves as building an asset, but that's exactly what a well-run practice is. The decisions you make about growth today influence what the practice is worth tomorrow, and how many options you have when it's time to transition, merge or sell.

Growth that strengthens the practice, through better systems, a deeper bench of physicians, diversified revenue and stronger management, tends to increase its value. Growth that leaves the practice more fragile, more leveraged or more dependent on a single person can do the opposite. Being intentional about the difference is what turns growth from a gamble into a strategy.

The bottom line

Growth can be one of the best things that happens to a practice, provided it's pursued with purpose. Define what you're trying to accomplish. Make sure your partners are aligned. Understand the financial, operational, staffing and management demands before you commit. And measure every opportunity against your goals, not just against its own appeal.

The question isn't whether your practice should grow. It's whether the growth you're considering gets you where you actually want to go.

Nick Hernandez is founder and CEO at ABISA, LLC.