Growing Your Healthcare Business
- 1.5 hours on-demand video
- Full lifetime access
- Access on mobile and TV
- Certificate of Completion
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- How to grow your practice, get more patients, and become more profitable
- How to increase your profits by getting more patients, increasing your prices, lowering your costs, and running a more efficient service business
- You should be a health service provider or in training to become one
This course is for naturopaths, physicians, dentists, psychologists, health coaches, nutritionists, physiotherapists, and other health service providers.
In this course, you will learn how to:
Get more patients
Grow your health service business
Increase your profits
Cut your costs
Increase your prices without alienating patients
Become a trusted advisor
Develop a rock-solid strategy
Grow faster than competitors
Market your services
Home Healthcare Business
- Health service practitioners such as naturopaths, physicians, dentists, physiotherapists, psychologists, health coaches, etc.
This course will teach you how to grow your health service practice. This course was designed for practitioners such as physiotherapists, naturopaths, acupuncturists, psychologists, dentists, physicians, health coaches, and others who offer similar services. My name is Dekker Fraser and I’ve done consulting for many healthcare businesses. I am an expert in business growth and have an MBA from Northwestern University. The content in this course is not only based on my personal experience and research but also thorough academic studies. I’m excited to share my insights and to help you grow your practice! Let’s begin!
Growth is about getting more patients. But it’s also about much more than that. Growth is really about growth in profits. There’s no point in getting more patients or revenue if you can’t do so profitably. Some practices grow in size, but actually become less and less profitable over time. They could actually be losing money and approaching the verge of bankruptcy!
The key to growth is actually very simple. It all comes down to one basic equation that you use to calculate profit. Here it is.
Profit = (Price – Cost) * quantity sold
Or a more accurate and expanded version of this equation looks like this.
Profit = (average price – average cost) * quantity sold
What you can see from this equation is that growing your practice can come from 3 places. Let me repeat that: growth can come from 3 sources.
Number 1 – increase your prices.
Number 2 – lower your costs
Number 3 – sell more (Alternate: Increase your sales)
That’s it. It's that simple. Growth can’t come from anywhere else. How could it? That’s the equation for profit and those are the only factors you have to work with.
Whatever association you belong to, check to see what their recommended rates are. Where do you stand with respect to those? Are the prices for your initial visits too low? Are your supplements selling for less? Take a look at your colleagues and competitors. Are their rates higher than yours are? Increasing your prices can be an easy way to grow your practice. But tread carefully. Patients might not react well to a sudden increase in prices. You may want to ramp up your prices gradually over time. You need to keep your patients happy.
So maybe you get to the point where you’re charging about average for your services and products. Now what? Do you want to be average? Here’s where a lot of professionals run into problems. They can’t command premium prices. Patients are price-sensitive and don’t want to pay more. So, many professionals settle for mediocrity. This is not a good position to be in. You’ve essentially become a commodity. A price-taker. Later, I’ll discuss strategies that will put you into a favorable position where you will be able to charge more than your colleagues are. A position wherein patients are perfectly willing to pay you premium prices.
The great thing about running a medical practice is the low fixed costs. Fixed costs are basically the setup costs for your business. You don’t need a factory. And for many practitioners, you don’t need a lot of equipment either. This makes it much, much easier to become profitable. Think about it. Let’s say you’re a psychologist. You could work out of your own house and even claim part of your house on your taxes. Your setup cost is virtually nothing. There’s very little pressure to cover your overhead because you effectively have none. But this also creates a problem. Because it’s so easy to setup a practice, the barriers to entry for competitors are very low. Now, don’t get me wrong, schooling does serve as a barrier to entry. Not everyone is willing to spend four years practicing nursing, medicine, physiotherapy, or naturopathic medicine. Or to put in the time required to get a PhD in psychology or to complete a specialized medical residency. But what I’m getting at is that – unlike industries such as manufacturing – you don’t generally need heavy capital investments. This means that new graduates can easily enter the market and start competing with you. Later, I’ll discuss the best ways to deal with this problem –how to compete effectively.
Where a lot of practices run into problems is when they start investing in fixed costs. Let me give you a few examples. Let’s say you decide to leave your current clinic and start your own. You might buy or lease a property, hire a receptionist, and buy your own equipment. You might go into considerable debt to do this. Suddenly you need a ton of revenue just to break-even…just to cover these setup costs. Or let’s consider some smaller examples. Let’s say you invest $5,000 into a website or $10,000 into a custom software package for your clinic. These are fixed costs that you need to cover with added revenue. Suddenly that lean practice of selling your expertise and time has become a battle to pay off your investments.
So you can see how fixed costs can be a big hurdle holding you back from growth. But that’s really just when you’re small. When you’re just starting your practice, you want to build-up your client-base and prove that your business is viable. Once you’ve done that, fixed costs become a blessing. Let me explain.
A lot of big practices are successful because they grow without adding a lot to their costs. This is how it works. Let’s say you hire a receptionist when your clinic has 200 patients. Two years later, let’s say you have 400 patients. You just doubled your revenue without needing to hire a new receptionist. Now let’s say your practice gets so successful that you decide to add a new location in a small town. That receptionist at your main office could still handle all the calls for that second location. What you’re doing is growing your revenue without adding to your costs. You are spreading your fixed costs across new revenue. In economics, you are achieving what is called “economies of scale.” Many small practices never reach this point. They invest in all the setup costs but never generate enough revenue to realize economies of scale. Economies of scale are a very strong competitive advantage. They enable you to lower your costs substantially. So even if you charge the same prices as all your colleagues, you’ll be more profitable.
In short, you need to be very mindful of your fixed costs because they can either bankrupt you or become a source of competitive advantage.
People will tell you a hundred different ways to get more patients – Google ads, social media, public speaking, referrals, and so on. But these are really just tactical tools. What most practices are missing is a strategy, and it is very clear when looking at a practitioner’s website if they really don’t have a strategy. Usually what I see are practitioners who offer all things to all people. A psychologist might offer everything under the sun; from anxiety management, to therapy for grieving widows. A naturopath might offer IV therapy, women’s health, men’s health, and treatments for acne. And these professionals usually talk about the benefits of whatever generic service they offer. For example, a naturopath might talk about the benefits of naturopathic medicine or a physiotherapist might talk about why you should see a physiotherapist. These are all strong indications of this failure to have a strategy. Strategy involves tradeoffs. It means choosing what you do and what you DON’T DO. If you are aren’t making a tradeoff – if you think you can offer all services to all people – than you have no strategy. If it’s not a bit painful or uncomfortable, then it’s not a real strategy. Most practices have no real strategy, and that’s why the formula for success can be so easy. If you’re one of the few health service providers to have a strategy, you’ll succeed easily and grow quickly.
Marketing strategy is really quite simple. It just means choosing a target market and knowing how to create value in that market. That’s it. You just need to make two decisions. Number 1 – what will your target market be? And Number 2 – how will you create value in that market?
Let’s start with the target market. The market is defined by the 5Cs: customers, competitors, collaborators, company, and context. The most important of these is the customers because they help define the other Cs.
If you have an EMR or CRM system, open it up. Take a look at your patients and see who your most profitable ones are. Based on the statistical analysis I’ve done personally and the research I’ve seen, your profit is probably being driven by a small group of patients. 80% of your profit could be coming from just 20% of your patient base. Identify similarities among them. Now, this doesn’t necessarily mean superficial characteristics such as age, sex, and income. But more importantly, what are their motivations for seeing you? What conditions do they have? What complaints do they have? Why do they keep coming back to you? Now, your target customer group does not necessarily need to be your most profitable patients. This is a strategic decision – something you need to decide for yourself. What’s important is choosing a homogenous group of people. It could be professional athletes, trauma victims, people with certain diseases, people with obsessive-compulsive disorder, or men with fertility problems.
How narrow your patient group is will depend on a number of factors such as your size and location. If your practice has 10 practitioners, then you may need to pick a wider group of clients – for example, people with anxiety as opposed to social anxiety specifically. If you’re in a dense city as opposed to a small town, then you can pick a narrower specialty such as physiotherapy for competitive soccer players.
Once you’ve deliberately chosen a target group of customers, you can look at who your competitors are. Your competitive set will have changed by this point. Your competitors are no longer all physiotherapists or all doctors in the area. It’s now just the subset of those who serve your target customer group. This is good. You have fewer competitors so that’s a better position to be in strategically. The more saturated your market is, the harder it will be to get new patients. Let’s say the target customer group you chose was men who have fertility issues. Your competitive set could be other practitioners who treat fertility. But take a closer look. What you might find is that while many of them treat fertility, they may not be particularly good at it because they also treat many other people with completely unrelated issues. Your competitors in this case really don’t have a strategy, and prospective clients will notice this. By positioning yourself as an expert in treating men with fertility issues, you’ll stand out among those who haven’t chosen to specialize as narrowly.
This may sound counter-intuitive. If you want more patients, why not take anyone and everyone? After all, everyone is a bigger market than just someone. The problem is that if people don’t have a reason to choose you, they won’t. And in a competitive market, even if you get new clients, you won’t have any say over what you can charge and you’ll be settling for mediocrity.
So your target market is defined by who your customers are and who your competitors are. But it’s also defined by a group called collaborators. This can be a pretty broad group. It could be suppliers of supplements for people with anxiety, or professionals who offer supplementary services such as acupuncture or massage therapy. Sometimes it’s difficult to determine what the difference is between a competitor and a collaborator. Surveys and interviews with your patients can help you understand the difference. Do your customers view massage therapy as a competing service or a complementary service? Collaborators are very important in getting new clients. That’s because strategic partnerships and referrals are so essential to professional service marketing. Collaborators create leverage. You can achieve more by working with these people than you ever would working alone or just with your employees. Keep in mind that your collaborators are defined by the target customers you’ve chosen. If you’re only targeting young, female athletes, then a supplier of anti-aging medicine is not likely a target collaborator.
Your target market is also defined by you – your company. It’s important to take an honest look at yourself. Are you the kind of person who wants to manage a big clinic? Or do you prefer working alone as a specialist? Do you have expertise in a certain area? Does your company have the funds to cater to a certain customer group? Look at your capabilities and assets. Leverage those to figure out your role in the market. Keep in mind that expertise and learning develop over time, so don’t be afraid to grow into a role you may not be 100% comfortable with just yet.
Lastly, it is important to look at the context of the market. Is the government introducing new legislation that will fundamentally limit your ability to be profitable? Are wages in your geographic location declining? Can people afford your services? Is acupuncture growing in popularity? Is technology going to render certain services irrelevant? Some target markets are weak choices because macroscopic factors render them unprofitable.
Choosing a target market is probably the single most important strategic decision you can make. The next biggest consideration is how you will create value in that market. You don’t just create value for your patients. You also create value for your company. This value includes profits and the lifestyle you want to have. You also create value for your collaborators. For example, by referring patients to them, you are adding to their revenue. That said, the biggest consideration is probably how you will create value for patients. Think about all the ways you create value. Making them feel better, making them capable of playing sports again, making them more relaxed, curing rather than treating a certain condition. In some cases, you may even save them money – for example, if your clinic is much more efficient than other clinics or if you’re so specialized in their condition that you can treat it without a whole lot of diagnostics. Now there are lots of ways you can create value. Many of these are what we call “points of parity” – that is, they are on par with your competitors. For example, having the designation “naturopathic doctor” makes you an expert – but it makes your competitors experts equally. Many things that you think are sources of value may actually be “points of irrelevance” – in other words, patients don’t actually value them. For example, let’s say you offer online in-take forms but your patients prefer filling these out on paper. That is a point of irrelevance. Some things you do may actually be destroying value for patients in ways you never realize. For example, being efficient in your appointments may be perceived as being inconsiderate.
Now, I want you to pay close attention to your “points of difference.” These are the ways you are – or wish to be – different from your competitors. Not all of these are particularly important. For example, the fact that you practiced for four years in New Zealand may make you different – but not in a way that particularly matters. You want to focus on points of difference that will matter to your patients. Your years’ experience treating weight loss or acne will be highly relevant to certain patients. The fact that you’re a cancer survivor could be relevant. Maybe you have a unique location. Maybe you offer a subscription service rather than a pay-per-service business model. Your strategy should focus on creating superior value relative to your competitors’. In a competitive market, what really matters is the value you create above and beyond your competitors. Your education and broad assortment of services may not be all that important.
Positioning is when you choose to focus on a particular area in which you create value. Being an expert in the treatment of knee injuries is an example of strategic positioning.
Research shows that practices which specialize are far more likely to grow faster and be more profitable than those that don’t. Looking specifically at medicine, we can see that specialist doctors bill out at substantially higher rates than generalists do. If you specialize, you are far more likely to get booked up. This is because patients value expertise – particularly with respect to their condition. This expertise trumps almost all other factors – even location in some cases. But you don’t necessarily need to specialize in a specific condition. You could specialize in different ways. For example, you could specialize in particular types of customers or in particular types of services. You could also present an innovative business model such as offering subscription or retainer services.
Strategies are somewhat pointless if you’re not aiming towards a particular goal. Your goal helps define every decision moving forward. For example, you might decide that you yourself want to earn $100,000 in salary per year – or perhaps you want to grow your practice to $5M in revenue. Make sure your goals are realistic by looking at benchmarks. Schools sometimes publish data on what their graduates make based on their years’ experience. You can also use Glassdoor or research reports. By setting a specific goal, you’ll have a better sense of how many services you need to offer each year, each month, each week, and each day. Goal setting also gives you a sense of how many supplementary services or products need to be offered. Be careful: don’t spread yourself too thin by offering newer and broader services. You want to stay strategically focused and often new services just dilute your profitability. You should budget about 5 or 10% of your revenue for marketing.
Don’t go spending money on radio and television. You want to focus on a clear, narrow set of prospects. This is what the highest-growing practices do: they concentrate their marketing on well-defined target groups of people so they don’t waste a lot of their budget. Public speaking is one of the single most effective tactics. You can give speeches at community centers, libraries, associations, networking groups, or MeetUps. For example, if you offer knee treatments for soccer players, give a speech at a soccer event. If you offer women’s fertility services, give a speech at the library that will attract women with fertility challenges.
Referrals are even more important than public speaking. Health services are highly dependent on referrals. Make sure you reward those who refer clients to your practice. You can do this with cards, e-mails, or gift cards. If you start referring to other practitioners with complementary services, they just might send referrals to you in reciprocation.
Other effective tactics to get more patients include blogging about your specialty and search-engine optimization.
There are tons of marketing tactics out there, but these are likely the most effective uses of your time and other resources.
Health practitioners are experts. But what patients really want are trusted advisors. This means you need to prioritize listening to patients rather than just broadcasting your expertise. One of the most common complaints of healthcare providers is that they don’t listen. Asking questions can be just as important as giving answers. You want to collaborate with your patients to come to solutions. After all: if they don’t take ownership of the solution, they don’t adhere to your recommendations anyways. You want to form trust on a personal level, not just a professional level, and become a truly insightful advisor.
It’s hard to resist the urge to promote yourself. You want to talk about your expertise and all the credentials you worked hard to obtain. But what patients really care about is the end-result. They want to know what the future looks like when they work with you. They want to know you can solve their problem. They are hiring you for that purpose.