20/20 Money Episode #219 – Measuring and improving productivity in your practice with Dr. Steve Vargo
January 17, 2023
Steve joins me back on the show to talk about the idea of employee productivity and how that translates into the overall success of the practice. We bifurcate this topic by first talking about associate vs owner productivity and steps that an owner can take to increase productivity of associates in their practice. We transition then into talking about the front of practice activities (optical and front desk) and the importance of distilling the big practice goals down into measurable and impactful activities that each team member can take ownership improving over the course of the year.
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And with that introduction, I hope you enjoy my conversation with Dr. Steve Vargo.
Adam: Welcome back to another episode of 2020 Money. Joining me again on the show here is Dr. Steve Vargo with IDOC. Steve, good to see you again. Thanks for coming back.
Dr. Vargo: Hey, Adam, thanks for having me back. It’s great to be back.
Adam: Yeah, we were kind of volleying back and forth on some ideas on what we wanted to talk about. I know you have a re-release of your book that is coming up here which we can talk about, and I’m sure we will weave that into the conversation here in our conversation.
Adam: But I thought a good topic for us to unpack and talk about, which would benefit our listeners, is this idea of measuring productivity in a practice. There are various different ways in which you can measure productivity. The challenge is understanding the relationship between the person you’re talking with, as the OD, as the owner. Invariably, whether you like it or not, you are the de facto leader of the organization. Your team is looking to you for direction and guidance. Conversely, it’s incumbent upon you as the leader of your organization to keep track of the areas of your practice that drive revenue.
Adam: This is a business, and we want to make sure that we are not only driving top-line revenue that is commensurate with the goals of the practice and the owner but also understanding the inputs required from the practice and the people in the practice to drive that revenue. What are the key performance indicators and team productivity metrics we should focus on? Whether it’s doctor productivity or staff productivity, it’s all crucial.
Adam: So, there’s that very institutional, dare I say, cold aspect to it. It’s a measurement, a number, a figure, but there’s also a human element to that as well. There is certainly a right, or maybe I should say there’s a right and certainly a wrong way in which to lead, measure, and improve productivity. I thought we would have a conversation about, from your perspective, the research that you’ve done, the conversations that you’ve had with practice owners. How do you think about productivity in a practice? When I ask that question, Steve, what comes to mind when I mention the words productivity, employee productivity, and practice? Where does your mind go first?
Dr. Vargo: Well, the word itself has been on my mind a lot lately, especially through the changes that we’ve seen over a couple of years now, certainly since COVID. With what we might consider a labor shortage or the difficulties in finding and retaining good staff, it’s crucial to consider the kind of productivity you are getting out of the people that you have.
Dr. Vargo: As consultants, we sometimes refer to certain metrics that we track, like how many full-time equivalent employees you should have based on a certain amount of revenue in the practice, or what percentage of the overall revenue should staffing be from a budgetary standpoint. But when we do that, we’re really just looking at bodies, the number of people we should have. We’ve entered a time where we really need to start looking at productivity per employee and understanding how much productivity we are getting out of each one and how we can increase their productivity.
Dr. Vargo: This brings us back to leadership, right? We don’t necessarily want to overwhelm people. If we’re an office that needs six people and currently we only have four, it doesn’t benefit anybody to just overwhelm the current team with all that additional work. But at the same time, how do you get people to perform at a higher level, and not just because they need to, but because they want to? A good leader can really take that employee that is in a position of “I’m going to do just enough to not get fired” and move them from that sort of entry-level position to a more advanced level of leadership where we’re actually motivating and inspiring people. They should want to perform at a higher level because they want to, not just because they have to.
Adam: It reminds me of the phrase that you can’t push a rope. Having people motivated and inspired to work is crucial. And it’s triggering different, dare I say, catchphrases or just business laws, if you will, or theories. There are three different areas that a business can focus on if they’re wanting to improve upon the production and the performance of the business: platform, processes, and people.
Adam: Staff will typically default to focusing on people, and owners may do that as well. But it’s an expensive proposition relative to what it can mean to focus on the other two, which is your platform and your processes. How do you think about measuring productivity in an office? What are some of those metrics that you think of when you’re talking with practice owners about improving upon this? How do you measure capacity? How do you measure productivity? Because like you said, we all have these numbers. Oh, you should have every non-OD staff member generating between $120 to $150,000 in revenue. But if we get one or two degrees deep from that and zoom in deeper, we start asking ourselves the question: How do we actually measure productivity with team members? What are your thoughts?
Dr. Vargo: Well, it’s worth considering, do we need more people? Because sometimes that is the answer if you truly are understaffed. But at the same time, listening to their feedback as well, I’m a pretty big advocate for bringing everyone together and letting other people come up with the solutions. Now, ultimately, as the leader, not everyone can have their way. And I think there is an expectation in most organizations that we all have to get on the same page when we agree on a solution.
Dr. Vargo: But I think where a lot of people in leadership positions get into trouble, and doctors do it all the time, leaders do it all the time, is they go to their team and they say, “Here’s what you need to do; you have to do it this way.” They start setting edicts for people, and what do you get? You get resistance and pushback when you do that. Versus going to them and saying, “Here’s the problem, here’s the goal.” I think any leader that can clearly define what the problem is and what the goal is, and then let the team figure out how to get there, is going to have a lot more success.
Dr. Vargo: You absolutely need their buy-in on these things if you want them to push these initiatives through. So the question arises, and while there are countless metrics you could track, let’s highlight a few as examples. For an Associate OD, it’s probably easier to come up with a metric if we just consider revenue per patient. I like to focus on things that you have control over. So, it’s wise to track, let’s say, overall production for an Associate OD. However, it’s important to acknowledge that this is dependent on some factors that they might not have control over.
Adam: That’s a crucial point, Steve. When we’re evaluating productivity, especially for associates, it’s essential to focus on areas they can control. If you’re an owner listening right now, consider this perspective. When providing feedback or sharing data with your associates, ensure it’s centered around areas they can influence. For instance, if you critique them for not conducting enough comprehensive exams, their immediate response might be to ask for more time for business development activities, like school screenings or networking events, to promote the practice. However, many associates might not have the opportunity to engage in these activities, and not all owners might allow or expect them to do so. Therefore, it’s crucial to reposition the conversation around what they can control and influence directly.
Adam: It’s been common feedback — well, “feedback” is perhaps the wrong word — but there’s been concern or reservation, a focal point if you will, especially among owners thinking about bringing in an associate. This concern is particularly pronounced if the associate is a newer graduate who doesn’t have much real-world experience. Owners might say, “Well, my revenue per patient is $583, while theirs is only $325. Why is that?”
Adam: It’s crucial to start unpacking that question. This scenario reminds me that one of the best traits a great leader can have is not necessarily the advice they give but the questions they ask. So, from an ownership perspective, if you’re looking at your data and seeing a discrepancy, if you’re pulling your practice management reports and noticing a significant difference in revenue generated per patient between you and your associate, it’s time to ask probing questions to understand the root cause of this disparity.
Adam: Is it the case that the associate isn’t recommending the same level of care or products, or is it that patients are more likely to accept recommendations from the owner? Or is it just a slow season? It’s essential to delve deep into these questions without jumping to conclusions. Engage with your associate, have open conversations, and understand their perspective and approach to patient care. This dialogue is not just about addressing the revenue gap but also about aligning the practice’s standards of care and ensuring consistency across the board.
What are your thoughts on that discrepancy between owner and associate revenue per patient?
Dr. Vargo: Yeah, it’s a good question. When we go back to where you started with that and consider the associate’s role in potentially growing the business, our position has generally been that it’s the owner’s responsibility to grow the business. They hire the associate primarily to see patients. Now, is it okay to ask your associate to take on roles outside of patient care? Absolutely, if that’s what you both agree upon. I would always suggest having that conversation at the very beginning because it’s very difficult to, six months in, suddenly say, “Oh, by the way, I want you to start speaking at schools.” The associate might respond, “That’s not my job; that’s not what I went to school for.”
Dr. Vargo: But when you hire someone, especially if you think there’s going to be downtime, you might want to block out certain times for them to engage in these additional activities. A lot of doctors feel that their associates add the most value by just seeing patients. So, deciding on their responsibilities is really an owner’s call. The concern or problem regarding the revenue per patient discrepancy, where you use the example of $583 versus $325, is common. I always tell people, if I’m the practice owner and my revenue per patient is $500 and my associate’s is $480, I’m probably not too concerned about that.
These disparities do get as big as you mentioned and even bigger. So, it definitely warrants a follow-up, a discussion, and an effort to understand why these disparities exist. Especially if you’re a more senior doctor working with a junior associate or someone who hasn’t had business ownership training, it might be beneficial to take on a mentorship role and provide them with feedback.
Dr. Vargo: Some level of accountability is helpful here too. And I don’t mean accountability in the sense of micromanaging or constantly looking over their shoulder, critiquing their clinical work. You want to be respectful of the associate. But at the same time, consider having, let’s say, a quarterly business meeting with your associate. Sit down, maybe go out to lunch, have a meeting, and look at the numbers. In general, people don’t want to keep underperforming. They don’t want to continue to be in a position where they have to explain to their boss why they’re not meeting expectations.
Dr. Vargo: So, if my revenue per patient as the owner is $583, that sets a benchmark. I think you can set an expectation that should be well beyond $325 for an associate. The “owner effect” is an interesting perspective, and there might be some truth to that, but I believe those numbers can come pretty close together when an associate is willing to take feedback from another doctor in the practice who’s proven that revenue per patient could be at the level that they’re reaching.
Adam: Can we zoom in on that a little bit more about the act of coaching and leading an associate? Because I know there are listeners that are in this position. We have a number of relationships where seasoned owners are introducing an associate into the practice. How can this transition be smooth, not overwhelming, but also not too lengthy? How can we bring them up to the owner’s standard of care and try to democratize that revenue per patient?
Dr. Vargo: Quarterly business reviews are great. Is it about doing weekly chart reviews and going through their patient charts to find out if they missed anything? Like you said, it’s a fine line from a clinical standpoint. You don’t want to second-guess or destroy confidence by questioning or second-guessing their clinical diagnoses from a patient standpoint. But is it more about looking at how they’re presenting treatment plans to patients? Is it about how they’re recommending additional services or products? Is it about how they’re building value in the mind of the patient for why they should proceed with your recommendation?
Adam: Like you said, it’s a fine line from a clinical standpoint. You don’t want to second guess or destroy confidence by questioning or second guessing their clinical diagnoses from a patient standpoint. But is it more of looking at the patient chart and saying, well, this would have been a great opportunity? Did you talk to them about XYZ? How do you think about that?
Dr. Vargo: I don’t think it’s as much of a standard of care issue in this context as it is a communication issue. Okay, so you can take a seasoned doctor, you can take a new grad, and the standard of care is probably there. There likely are exceptions to that. Right out of school. You may have to be that mentor for a young OD that doesn’t have as much experience treating glaucoma or treating other right. But as far as the if we’re focusing on productivity, I think the majority of the time what we’re dealing with is an associate that has a lot of reservations about discussing anything that even remotely sounds like selling. And that’s it right there. That’s it right there. I spend a lot of time, and I do a lot of speaking, and I’ve done a lot of research, and I’ve pulled things from different industries.
Dr. Vargo: And I actually do try to understand the world of sales better because even though doctors don’t necessarily identify as salespeople, I think people that are good at sales, there’s a lot of things that we can adopt from that because a lot of times people that are good at sales, they don’t feel salesy to the customer. Right. It truly does become understanding the person that you’re talking to and trying to help them solve a problem. So a lot of my work in this area in writing, in speaking, is around trying to get doctors more comfortable with the conversation.
Dr. Vargo: Because I think sometimes we go so far to avoid anything that feels remotely like selling that it actually becomes a disservice to the patient. Because now we move into an area where we’re avoiding talking about things that would benefit the patient. Adam, that’s ridiculous. That is absolutely ridiculous.
Adam: We should be able to have these conversations, but I think we have to deal with the challenge that we operate in a retail world as well. And I think some doctors have trouble with the conversation and not letting it merge into that other side. So I think coaching can be done in that area to say, look, I’m not asking you to sell products from the chair, not sell the patient. But I would coach them on how to have those conversations with patients that at least get them interested and get them curious and get them to understand why investing in whether it’s a product or a service would benefit their vision, their health, their quality of life.
Adam: Okay, that’s a good point. I would agree. Sales is a fascinating psychological study, if you will, and a topic to dive into. This is one of the ways in which I really changed my mindset on sales. I learned this from a coach years ago. I don’t remember exactly how he phrased it, but I think this is pretty close: sales is nothing more than influencing the outcome of an opportunity.
All we’re doing is presenting information in a very conversational way about what our recommendation is. And what I’m hearing you say, Steve, most importantly, is how does that benefit the patient? Why does it benefit the patient? Why is it in their best interest?
Dr. Vargo: Absolutely, Adam. It’s about helping the patient understand the value of what we’re recommending, not just telling them what we think they should do. It’s about having a conversation rather than giving a lecture. And it’s about listening to the patient’s concerns and addressing them in a way that makes sense to them. This approach not only benefits the patient but also enhances the doctor-patient relationship and ultimately leads to better patient care and a more successful practice.
Adam: And to your point, that’s where that takes practice. That’s not something that is candidly, probably not taught very well in school. A lot of the education in school is obviously focused around the clinical aspect of it.
Adam: But it’s that, dare I say, chairside manner and how the owner presents and converses with patients as they’re going through the exam process. Anything else that I’m missing there that you want to expand upon?
Dr. Vargo: No. And I actually like the idea of shadowing. One of my earlier jobs, the owner asked me to come in and just shadow him for a couple of hours, and what he said always resonated with me and made sense. He says, “I’m not asking you to practice just like me, and I’m not going to micromanage your abilities clinically. But he said, we do have a certain brand that we’ve worked hard to build here. We have a certain way of talking to patients and treating each other. And before you accept this position, I would just like you to come in and observe and make sure it’s a good fit for you,” and that always made a lot of sense to me. I think that’s a fair expectation when you bring someone into your practice, they’re going to be a good fit for the brand that you’ve worked hard to build.
And to the other point as well, I really have come to distinguish between education and communication because we really focus on patient education, which is really just a transfer of knowledge. I’m giving you information which I think we do a really good job at, where I think we drop the ball a lot is from a communication standpoint, is not doing an effective enough job of listening, really, and understanding what the patient’s going through beyond just the superficial symptoms or problems that they’re complaining of. And even doctors are notorious for interrupting patients really quickly. We don’t even realize we do it.
A lot of us work at busy practices, but, Adam, you come in for an eye exam, you sit down, I ask a couple of questions, and then I interrupt you. And I think that’s where we miss the opportunity to really understand what the patient is going through. And I think that’s where the opportunity is missed to really connect with the patient on a deeper level, to understand their needs and concerns, and to provide the best possible care.
Adam: Absolutely, and to your point, that’s where that takes practice. That’s not something that is, candidly, probably not taught very well in school. A lot of the education in school is obviously focused around the clinical aspect of it. But it’s that, dare I say, chairside manner and how you’re presenting that to the patient that makes all the difference. And to your point, it’s reps. And that’s where, gosh, I’m thinking, like, role play with your associate, have those conversations with them about how… I don’t know if it’s as much as I don’t think you would necessarily shadow the owner OD. I don’t know. Maybe if you have had associates that have shadowed the owner OD, maybe that’s part of the interview process where the associate can get an idea of how the owner presents and converses with patients as they’re going through the exam process.
Dr. Vargo: I think it’s 17 seconds on average, doctors will interrupt the patient while they’re explaining the reasons that brought them in, because we think we have enough, really. And then we start launching in with education and information, and we’re just dumbfounded at why. A lot of times the patient just kind of nods their head politely, but they don’t move forward with what we want them to do. We don’t do a real good job of understanding the patient and what they’re going through and how this problem is affecting them. That, to me, gets into someone who’s a good communicator versus somebody who just thinks they’re doing a great job because they spent a long time educating. And a lot of times when we do that, all we’re doing is taking a long time to get a no. I heard this once for sales, okay. And it’s a great quote.
Dr. Vargo (continued): It’s not a sin to not get the sale. It’s a sin to spend a long time not getting the sale.
I think a lot of doctors feel like they’re taking a long time to get a no because they’re not comfortable with the selling aspect. They’re not comfortable with the communication aspect. And I think that’s where the opportunity is. It’s not about becoming a salesperson. It’s about becoming a better communicator. It’s about understanding the patient’s needs and wants and how we can meet those needs and wants through the products and services that we offer.
Dr. Vargo: I think we could insert in here, “Okay, you heard the patient, but were you actually listening?” Because there’s a difference between hearing and listening. Hearing is simply perceiving sound. But listening? Listening is making sense of what is heard, and it requires focus and concentration. It’s an active process where we receive, understand, evaluate, and then remember the information being shared with us. And that’s where the opportunity lies for us as practitioners. When we truly listen to our patients, we can better understand their needs, concerns, and expectations, and in turn, provide them with the care and solutions that best meet their unique situations.
Dr. Vargo: But something else from the sales world. They’ve done studies on the most effective salespeople, and you know what one of the top characteristics of top salespeople is? They’re the ones doing the least amount of talking, which really goes counteractive to, in many ways, how we were trained.
Because during school, we would go in, see the patient, ask questions, educate the patient—all the intake history, right? Do all the work up, do all the questions, and present to the doctor. And they would say, “Did you educate them on this? Did you tell them that?” And we’d have to go back in and give them more information.
Not once in optometry school did one of the doctors I worked with ever send me back in or ever ask, “Do you really understand what the patient’s going through and how this is affecting them?” Once we understand that, it makes it easier to find the solution.
You know, you and I like to quote people, and so this is an— I know I’ll kick it off here—Albert Einstein. Albert Einstein said, “If I had an hour to solve a problem, I’d spend 55 minutes understanding the problem and five minutes solving it.” So once we understand the problem, the solution becomes easy. And I think the same can apply to patient care. If we listen, if we ask good questions, listen, and take the time to really understand, then it becomes much easier.
Dr. Vargo: Otherwise, we’re talking to them or at them about things that potentially are important to us as their physicians, as their clinicians. But the assumption that because something is important to us, or we think it should be important to the patient, a lot of times just creates a disconnect in the relationship.
Adam: You’re asking qualitative questions because you genuinely care about the patient. You have a relationship with them.
Adam: You generally care about them. But it’s a quick question. And again, one of my cliche sales phrases that listeners may or may not have heard, probably ad nauseam, is we have two ears and one mouth.
The other part that I’m thinking of here is a friend of mine, Carl Richards.
He used to write for the New York Times. And I don’t know if he actually still has his column, but he’s a really good thinker in the advisory space. And one of the things that I have learned from him that has always stuck with me—and this isn’t just applicable in the advisory space:
People don’t care about your solutions. They care about their problems. And the way in which you as a clinician can help gather that qualitative and quantitative data is by asking good questions, and asking more questions.
I don’t know how to tie a bow around that anymore other than just ask more questions, don’t be obnoxious about it. And I know that’s a fine line of being overbearing, but genuinely involve yourself in the conversation with the patient and understand what a day in the life means for them. Because as the clinician again, this is where I’m dancing very close to that clinical side of things, of how you translate that into your diagnosis and recommendations in script. But you’re going to find opportunities there to provide a better quality of life for their vision than if you were to, quote, unquote, just meet the base level reason of why they came in.
Dr. Vargo: And we don’t have to guess at this. Survey after survey shows that what patients value the most in their doctors is doctors who listen and care. Survey after survey shows why patients leave doctors, and it always tops the list that my doctor didn’t listen. About 15% of patients actually say they’ve left a doctor because that doctor didn’t listen. If you look at your patient, 15%, that’s a huge chunk of numbers. And you’re absolutely right. People are always going to be more passionate about their problems than your solution. I think that’s where people get uncomfortable as we kind of wrap back to that issue.
Adam: Eventually we’ll come back to productivity.
Dr. Vargo: The associate OD, that’s production is 325. When yours is 583. They feel like they are, in some cases, maybe being asked to sell the solution when we really need to understand the problem, because people are always going to be more passionate about their problems than their solution.
So I think sometimes we avoid that conversation altogether. But to the point of listening and a real quick story, I’ll share it’s fresh on my mind because I’m working it into a presentation I’m doing. It was done at the University of Colorado Medical School.
When patients came in, they handed them a card, and there was one question on the card, and it was, what has you most worried about? What brings you in today? And the patients wrote down answer, and then they went to see the doctor, and one of the individuals was a 68 year old male.
Dr. Vargo (continued): And when he went back to the doctor, his chief complaint to the doctor was chest pain. And that’s what the doctor heard, and that’s what the doctor treated, the chest pain. When they went back and looked at his card, what he wrote down was, “I’m afraid I won’t be able to walk my daughter down the aisle at her wedding.” That’s a different conversation. That’s a different level of understanding of what’s going on with the patient. And I think that’s where we have the opportunity to really connect with patients on a deeper level.
That’s listening. That builds loyalty. Again, it drives everything. It drives clinical outcomes, it drives financial outcomes, it drives word of mouth referrals. Heck, it even drives your mental health because you just feel better about the work that you’re doing in your practice.
Adam: That’s a good point. That’s a good point.
Adam: So, some action items around that. As I think about how listeners can take what we’re talking about here and weave that into the way in which they lead in their office, you have to have a conversation.
And instead of having the conversation from the patient perspective, as you and I are talking about, it’s crucial to block time and schedule leadership conversations with your associate. Especially with a younger associate, there are training, mentorship, and leadership conversations that need to happen. It’s one of those things where you don’t realize how good you are at what you do.
I’ve gotten to know a colleague really well here in Indiana, and he introduced me to these four levels of competence. The fourth level is unconscious competence, where you just don’t know how good you are at what you do.
For experienced ODs, a lot of that might just be because you’ve had a lot of time in the saddle. Well, you have a great opportunity here to be able to mentor and guide your associates to help them realize their potential and grow in their competence and confidence.
Adam (continued): But let’s talk about the front end. How do we think about that with optical and opticians and the dispensary of a practice when we think about measuring productivity? What are your thoughts? How do you think, does anything change in what we’ve talked about from the OD’s perspective, from the provider’s perspective? What changes or to what extent does it change in the front end of the practice?
Dr. Vargo: I think it’s similar. It just might be different numbers. I mean, you could really decide, I think, from if we’re just looking at what metrics are we going to track or focus on, I think sometimes it’s just a matter of what do you want to improve? What do you want to get better at? If you want to get your revenue per patient up $20, let’s have a conversation about that.
What do you need to do differently? Can I give some input? Let me hear your ideas. Let’s align on some things and try it. Okay, great. Now, what are we in January? Let’s sit down on April 12, mark it on the calendar here, and let’s do the things that we talked about and let’s sit down and schedule a meeting three months from now to look at the results. Now, at the back of your mind, Adam, you’re thinking, okay, this isn’t just something that we’re not going to be followed up with, but rather, oh, we’re going to sit down and look at the numbers.
Dr. Vargo: I think sometimes it’s just a matter of what do you want to impact with productivity? So I’ll just pull a number out of the year’s average frame sale for an optician. This comes up a lot. You probably deal with it as well. In terms of setting, let’s just say incentive plans or incentive bonuses, I think a common mistake or something that holds that back because a lot of times people say, well, I set a bonus, but it didn’t change anything. Well, when we just dangle a carrot out there and you say, well, if we grow 10% this year, everybody, we’re going to have a pizza party and everybody gets a bonus, please don’t do that.
Dr. Vargo (continued): What are we going to do? And the question I always do, and again, back to the point before about the power of questions, because I forget how you agreed with whatever you said. I just can’t remember exactly how you phrased it. But a lot of times when somebody says, look, I’m going to set a bonus this year, what do you think about it?
If we grow by X percent, then everybody gets a bonus. I’ll be like, okay, fine. What is everybody expected to do to drive those results? So a couple of things I usually recommend building into an incentive program is directing the focus to the actions that people need to take and that could be as a team. It could be individually and then meeting with the individuals to make sure that they’re following through as well.
Dr. Vargo: I’ve seen some owners probably try to track too many metrics, which just becomes confusing. I think if you pick just a couple of key ones, whether it’s department or whether it’s individual employees that they can focus on, then meet with them as well and get their input. How can you drive this number? What are your ideas? What’s holding you back from doing that? But then also establishing that accountability where let’s sit down and review the results.
But then also establishing that accountability where we sit down and review those numbers. Monthly might be too much. Maybe it’s quarterly, but once the employee realizes that we’re going to sit down and talk about these, it builds some accountability.
My favorite all-time definition of accountability is getting people to perform in advance in a way in which they know they’re going to have to account for their performance at a later date. And a lot of times, that falls through the crack because, hey, Adam, here’s…
Adam: I think that was a really important point. Say that one more time.
Dr. Vargo: Getting people to perform in advance in a way in which they know they’re going to have to account for their performance at a later date. It’s the difference between me saying, Adam, I need your average revenue per patient to go up $20, and I never follow up with you, versus saying, let’s talk about how we can get your average revenue per patient up $20.
Let’s have a conversation about that. What do you need to do differently? Can I give some input? Let me hear your ideas. Let’s align on some things and try it. Okay, great. Now, what are we in January? Let’s sit down April 12, mark it on the calendar here, and let’s do the things that we talked about and let’s sit down and schedule a meeting three months from now to look at the results.
Now, at the back of your mind, Adam, you’re thinking, okay, this isn’t just something that we’re not going to be followed up with, but rather, oh, we’re going to sit down and look at the numbers.
I need to implement these changes. I need to do some things differently to drive those results. Otherwise, I have to sit in front of my boss and try to explain why nothing has changed, why I’m getting the same results as before.
Adam: It’s one of my pet peeves — and for practice owners listening, I don’t mean to be too harsh with this — but if you’re doing this in your practice right now, I will really encourage you to rethink about the way in which you set goals. What you had said earlier, Steve, I know that’s such a nice way of saying, stop doing that.
On the topic of setting goals, let’s not say we want to grow by 10%. First of all, as the planner, the planner in me says, Why 10%? Why not eight? Why not twelve? Like, what is the substance behind that arbitrarily decided number of 10%? Is it just because it’s the first double-digit number? So, again, not to digress too far down that path.
But you hit it spot on, Steve, which is why I want to draw attention to it. First of all, people don’t understand percentages. There’s not a concrete connection to 10%. If you have kind of an open book policy or open numbers—if your practice has kind of an open books policy where everybody knows everything in the practice—okay, maybe you can talk about that from a percentage standpoint.
But I would still implore you to convert that to a dollar perspective. More so, most practices, I think, don’t do that. And so it’s incumbent upon you as the owner to take that a couple of steps further and delineate between what goal or maybe not delineate, but to take the goal that you have set for the practice and then decide and determine for each person on your team and each seat on the bus, so to speak, is how does their day-to-day responsibilities translate into the accomplishment of this goal if they’re currently here?
Whatever benchmark that is, if they’re front desk and scheduling, and our fill rate is 84% and we want to get and you want a goal of increasing top line revenue by X tens of thousands of dollars, and that would mean Y number of comp exams per year divided by Z number of weeks. Well, that means that we need to take our fill rate from, what did I say, 84% right up to this number. That is one variable in that equation that the person in your practice filling this specific role that they have control over.
And then to your point that you so eloquently put, you’re having these conversations, you’re setting these expectations, you’re setting these goals, and then you’re following up on them. And I think that’s the key, right? The follow-up is where the accountability happens. It’s where the rubber meets the road. It’s where we actually see if what we’re doing is making a difference, if it’s moving the needle in the practice.
And I think that’s so important for owners to understand. It’s not just about setting the goal. It’s not just about having the conversation. It’s about the follow-up. It’s about accountability. It’s about making sure that we’re all moving in the same direction towards the same goal.
Dr. Vargo: Absolutely, Adam. And I think that’s where a lot of practices fall short. They set goals, but then there’s no follow-up. There’s no accountability. And without that, it’s very easy for things to fall by the wayside, for people to lose sight of what they’re working towards. So that follow-up, that accountability, is crucial.
Dr. Vargo: Because all too often what I’ve seen is we’re going to set a bonus, hoping that it motivates people, but at the same time they still need that in itself is not a substitute for the things you need to be doing as a leader to drive outcomes. In fact, it’s kind of lazy leadership, right?
Dr. Vargo: I’m not really investing in my team in terms of their development or support. I’m not having meetings, I’m not giving them feedback. Don’t really know what goes on with the training process. My manager, somebody over there, does it, but I really don’t have any oversight on that. But hey, I’m going to throw a bonus out there.
Adam: I’ll just solve it with money.
Dr. Vargo: I’ll solve it with money. And that often disappoints. And I know people tell me it might work in the short term, but it might not work in the long term. And I’ve had people tell me we implemented incentives, bonuses and numbers. Let’s say in optical my opticians really responded to it great, keep doing it. But for every one of those, I hear ten people say we implemented a bonus and nobody did anything different. Well, again, what did you want them to do? Did they know what they were supposed to do differently? Or did you think they were just going to come to work and all of a sudden just sort of organically start doing things they weren’t doing before without any kind of clarity on what that looks like?
Adam: How often do you think it is acceptable? Is that acceptable to review progress and have that feedback-type conversation with your team? I know practice owners that will review numbers daily. Now, I know they’re reviewing it daily. I don’t necessarily know that they are communicating with their team on a daily basis about progress towards goals.
Is that something that you see practice owners do in a weekly huddle? Is that monthly? I can’t see that it would be anything less frequently than quarterly. What are your thoughts from a tactical standpoint about how you communicate that accountability and productivity as it translates to the goals of the practice?
Dr. Vargo: Yeah, and I don’t think there’s one right way to do that. Anything beyond quarterly, I think, is just too long. There’s nothing wrong with an annual review. It’s just twelve months is too long to go between giving feedback.
Dr. Vargo: And for some employees, that’s all they get. And it’s frustrating for employees too, because sometimes they’re getting a bad review and thinking, “I really wish somebody would have told me this before and I would have made these corrections.” You mentioned something before, what was it? The time the task will take, the amount of time that we allow for it.
Adam: Right, yeah. Parkinson’s Law, a task will take as much time as allotted to it. So if I tell you, Steve, read this book, I want you to read it by the end of March. There’s a great chance that you might extend that out versus, hey, I need you to read this book by the end of the day on Friday. Exactly.
Dr. Vargo: So I typically shoot for more of just on goal setting, more of the quarterly. A great book if you want some really interesting ideas and takeaways on goal setting and how it can actually be to go beyond just setting the goals, It’s called The Twelve Week Year, and for me, it was validating on two fronts. Fantastic book.
And it was so validating on things that I really believed. But when it was spelled out in that book, it’s like, yes, I felt this way forever. One of those was to be more action-driven, be more task-oriented, don’t just set a goal, but really focus more on the task itself that needs to be completed versus just the outcome. Because the outcome really just tells you if the things you’re doing are working or not. The other one was urgency.
Dr. Vargo (continued): So back to that Parkinson’s Law, a lot of practices might set an annual goal, right? Well, his concept in the twelve weeks, which you could make quarterly, but there’s a reason he actually chose twelve weeks. And if you read the book, it’ll make a little bit more sense versus quarterly, even though they’re a similar time period, it creates a sense of urgency. And his theory, which I agree with, was that let’s just take an annual goal, for example, what do we tend to do? We either come out of the gate really strong and then we lose energy because we got a year or we procrastinate, well, we’ve got a year to accomplish this, so I’m just going to wait. And then there’s not a sense of urgency there to do that right away.
Adam: Well, it’s the classic phrase, “people often overestimate how much they can accomplish in a week, but underestimate how much they can accomplish in a year.” And doing your planning in this way allows you to kind of put guardrails because it’s hard to think out a year because just so much of life can change, but it’s fairly easy to look twelve weeks in advance and see, not a lot of things are likely going to change in those twelve weeks.
So when you plan out and allocate this time, this is something that I’ve learned as a member of a strategic coaching group with Dan Sullivan in his way of time management around free focus and buffer days and the weekly planner. Dan and his organization and the concepts that he teaches talks very much about planning your life in quarters because it’s far enough in advance that you have enough time to get momentum behind goals that you want to set.
But it’s short enough in that you have a pretty good understanding of what life is going to look like over the next twelve weeks so that you’re not going to be thrown from any curveballs. So I’ll put a link in the show notes to The Twelve Week Year if anybody’s interested in checking out. Brian Moran, excuse me, is the author, as Steve mentioned, a very good book.
Adam: Well, Steve, this has been an enjoyable conversation, as always. We will put links to your contact information. I believe you and I will be seeing each other three-dimensionally coming up in about a month and a half, five weeks or so at IDOC Connection down in Orlando, which I’m looking forward to.
Adam: Seeing you and a lot of the other IDOC friends down there. So, any final thoughts?
Dr. Vargo: No, other than keep doing the great job with this podcast and everything you’re doing for other ODs, and I always appreciate the opportunity to come on here and great talking to you and likewise, I look forward to catching up in three D and in what, a few weeks from now?
Adam: Yeah, real quick, I believe, and I either saw this on LinkedIn or on an email that you had sent out your book. Are you working on a second release of your book? And what’s the ETA timeline of that? Can you share with the audience quickly about what you’re working on behind the scenes?
Dr. Vargo: Yeah. And it’s the same book. It is an audio—I get asked a lot, “Is there an audio version?” And I’ve really drawn it. So I finally recorded it. I’m going to do the other books as well, but I started with that one. So it’s in right now. Whatever Amazon needs to do to make sure it meets all their criteria. Probably by the time this comes out, it should be up. So if you just searched out on Amazon Ion Leadership, that’s the book that I turned into an audiobook, so the other one will follow that, but it takes a little bit of time to do that.
Adam: Awesome. Well, we’ll put links in the show notes to that book on Amazon, and hopefully by the time, like you said, this episode comes out, there will be another option there for someone to take advantage of the audio version of it.
So Dr. Steve Vargo with IDOC, thank you so much, as always, for sharing this conversation, and we’ll catch up with everybody else on the next episode of 2020 Money.
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