Follow Your Doctor's Orders for Success: Don't Fly Solo
While it may be true that anyone can dream up a new business idea, creating a sustainable business model "takes a village": For most entrepreneurs, success is contingent upon aligning with the right partners.
Recent data backs this up. According to the Small Business Administration’s Office of Advocacy, both short- and long-term survival rates are lower for sole proprietors than they are for small businesses.
Still, entrepreneurs tend to think of themselves as competitors in a race featuring . . . only themselves. Certainly, their avoidance of partnerships may stem from concerns about joint-venture liabilities, which is understandable. Yet, while the solo route can work, they're unlikely to find success without ancillary support and connections.
One industry that is embracing partnerships is healthcare. As government regulations and health-plan-run initiatives create more opportunities for providers to share risks, reimbursement and rewards, physicians are learning that proper alignment with the right players is key to growth, customer satisfaction and outcomes. And entrepreneurs might consider following suit.
Why physicians need partners
Like many industries, doctors traditionally operated mostly in “silos.” In the 1970s -- the era of Marcus Welby, MD -- referral networks were only loosely present. A generalist was trained to perform surgery and take care of many problems that now are routinely referred out.
Today, however, networks of physicians have become more reliant on one another, and this trend has continued to grow as new sub-specialties are created. As these sub-specialties emerge, payment models are moving away from fee-for-service (FFS) structures toward those in which financial risk is distributed across a network of providers.
For most providers, this trend toward sharing clinical and financial risk has grown in acceptance for many years.
The one exception to the partnership trend in healthcare is the concierge practice model, where physicians don’t share financial risk and are not required to comply with Medicare or health-plan rules. Yet, concierge physicians still have to work with sub-specialists in order to resolve clinical risk, proving that every practice model needs to coordinate in some way as part of an ecosystem. No one doctor can resolve all the health issues a given patient presents over his or her life span.
How to align with the best players
Just as the most successful physicians have sought out and aligned with like-minded providers, the best way for entrepreneurs to grow is to seek out compatible partners:
- Know your goals. Entrepreneurs must first understand their own priorities, the ecosystem in which they operate and what they hope to gain -- and offer -- in a partnership. Then, they should look for partners who prioritize similar goals. In the case of physicians, this might mean looking for sub-specialists who prioritize patient care -- and have the outstanding clinical outcomes to prove it.
- Consider a partner’s core competencies. Successful physicians know their strengths and limitations, and use this information to build a network of complementary services. There are a growing number of ways entrepreneurs, too, can increase ancillary revenues, by adding complementary services to their offerings. Physicians, for example, do this by renting office space to a provider offering a complementary service (such as a dietitian who can offer a weight-loss program, alongside someone who is a primary-care doctor).
- Know your value. Entrepreneurs must figure out points at which their skill sets might be valued by an attractive partner. One example is a pain-management physician in Orange County, California, who strategically located his office next door to a major hospital. Because that hospital wanted to grow its services but lacked a pain-management component, the physician made himself an attractive potential partner just by being in close proximity.
- Ensure that your partners have “skin in the game.” Ensure a partner is invested in his or her growth as well as yours. In the case of physicians, this might mean keeping a close eye on the sub-specialist partner’s use of technology to avoid adverse events. It might also mean a commitment to pricing transparency and customer satisfaction.
Of course, aligning with partners comes with the challenge of being reliant on another party’s cooperation. And that's not always for the best: If your partner doesn’t follow through, you can’t deliver goods or services to the market.
However, by carefully vetting potential partners, your chances of survival are far greater than if you decide to go solo.