The best way to run your practice? Look to corporate America

For many radiology groups, the business side of running a practice is the proverbial elephant in the room -- its effects are obvious, but how to deal with it often isn't as clear. Traditional, "extreme radiology" models don't work as well in an increasingly competitive economic environment, leaving groups vulnerable to losing business.

Corporate America offers a business model that can help radiology practices streamline their decision-making processes and also foster a strong leadership base that's crucial to long-term success, according to Dr. Richard Duszak of Mid-South Imaging and Therapeutics in Memphis, TN, and Worth Saunders, Mid-South's chief administrative officer. Duszak and Saunders discussed this model at a recent Radiology Business Management Association (RBMA) conference in San Francisco.

A few practice governance models have characteristics that a radiologist can find almost everywhere, Duszak said. These models represent the outer edges of a practice management continuum: despotic rule by one authority on the one hand, and a diffuse, consensus-based governance that makes decisions difficult and hard to sustain on the other.

The "despot" model includes obedient shareholders and often an aggressive or controversial business plan, Duszak said. The benefits of this paradigm are quick decisions (after all, only one person is making them) and therefore what appears to be streamlined operations.

"In this model, one person is calling all the shots," Duszak said. "And although it is less prevalent now than it was a decade or two ago, there are certainly some attributes of this model that exist in many practices today."

In contrast, the consensus-at-all-costs or "Kumbaya" model is characterized by long group meetings that can leave members unclear about the plan of action.

"Debates go on forever, and if someone doesn't like a decision, they can discuss it further," Duszak said. "Everyone likes each other and likes to sit around and Kumbaya, but nothing gets done."

Fantasy radiology

Like fantasy baseball teams, there could be fantasy radiology practices. What if a group could make use of the positive attributes of both these extremes, combining the despot model's quick decision-making and the consensus model's inclusivity? Using a corporate framework -- radiology as a business -- may offer groups a shot at this combination, according to Saunders.

Radiology groups "are multimillion-dollar businesses, not the small, cottage industries that were prevalent in the past," he said. "We can look at what other industries have done to find better, more effective ways to govern our practices."

Corporations have a representative board of directors that manages operations and is elected by shareholders. This same structure can be effective for radiology groups with 15 members or more, Saunders said. Boards facilitate decision-making with a few key tools:

  • Annual board calendars: Help with strategic planning and protect the group from one individual making all the decisions.
  • Committee charters: Allow for substantial issues to be decided by subgroups, based on agreed-upon guidelines.
  • Decision protocols: Outline how decisions are made by the board and committees, and delineate authority for financial management, human resources, risk management and quality monitoring, and acquisitions and mergers.

"Trying to sell physician members of the practice on improving efficiency and decision-making can be tough," Duszak said. "You may get eye rolling from the back of the room, 'This is all business speak. What does it have to do with me? I'm a doctor.' It's important to educate physician partners that this isn't simply business, it's a way to be able to carry out the quality service mission of your practice."

Paradigm shift

If a radiology group wants to shift from the extremes of the monarchy or the Kumbaya model, a number of tools can help, according to Duszak and Saunders.

Bring in the bylaws. Bylaws formally define an organization's structure and decision-making protocol. They should include legal, organizational authority, and leadership election and removal parameters; when reviewed regularly, they help the practice avoid power clashes that can damage its success. And keep in mind that any decision-making that happens outside of the bylaws may not hold up if legally challenged.

The writing of the group's bylaws should not be delegated to lawyers, Duszak noted. "They don't know how you want to run your practice," he said. "You tell your lawyers how you want your group to run."

Look for leaders. In many organizations, the leadership ideal is that those with natural leadership talent step forward willingly and cheerfully. But the reality is that leadership needs to be identified and fostered. Consider whether your practice encourages both younger and older physicians to take leadership positions. Are members encouraged to attend leadership education meetings and conferences? How are leaders elected? What are the term limits? Are the term limits staggered?

Create compensation. Group members often respond to incentives for taking on leadership tasks. Compensation for time spent in a leadership role could be money, time off, or schedule flexibility.

Increase inclusivity. To create an inclusive culture in a practice, committees can allow involvement from nonboard members in ongoing projects that aren't sensitive, such as human resource issues. Fostering inclusivity helps a practice develop a "farm team" of future leaders, allows more junior members to learn from seasoned ones, and can avert rebellions initiated by those who consider themselves outsiders. "Inclusivity minimizes the sense of back-room dealing," Duszak said. "And it allows those not in leadership positions to see the time commitment and responsibility of elected leaders."

The end result

Duszak acknowledged that it can take a lot of work to develop a new governance model, work that often doesn't make sense to group members on a daily level.

"Quality doesn't just happen, it's the result of a process," Duszak said. "Physician members may ask whether a functional board meeting really allows them to read spine MRIs any better, and on a microcase basis, maybe not. But on a macrobasis, it allows you to recruit and retain the best and the brightest, grow your market, and deliver high-quality imaging care to your community."

By Kate Madden Yee
AuntMinnie.com staff writer
April 2, 2008

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'Purchasing Capital Equipment,' Part 2 -- Capital budget versus operating budget, October 17, 2007

'Purchasing Capital Equipment,' Part 1 -- Radiology as an overall hospital component, October 9, 2007

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