No margin, no mission: on my first day of class at the USC Marshall School of Business I learned this tenet. In other words, when there is no profit and the electric bill is not paid, the lights will go off - no margin, no mission.
This concept was not foreign to me. In 1998, upon finally saving enough money to lease a modest office, I discovered my receptionist was regularly failing to collect co-payments from patients she empathetically felt were strapped for cash. After I "motivated" her by asking how long she would work without pay when we ran out of money, she quit. Thankfully my empathetic wife stepped in to collect the co-pays. Our lights stayed on. I kept seeing patients.
Health care expenditures in the U.S. are now about 18 percent of the GDP, or close to $3 trillion. Physicians rightly expect a slice of that pie - to pay the rent, the receptionist, and the electric bill - with something left over as profit.
Profit - the difference between revenue and expenses - is how most businesses define success. Generally, in our health care system the revenue for each case is set by a third party payer - e.g. the Medicare allowed rate of reimbursement. Thus, it would seem that the best formula for our success is to treat as many patients as possible at minimal cost - maximizing profit.
But should the practice of medicine gauge success by the profit margin?
According to Michael Porter and Mark Kramer, a narrow focus on profit in any business leads to the neglect of broader influences that determine long-term success. In "Creating Shared Value" (Harvard Business Review, January 2011 http://bit.ly/kRqE3T), they concluded that shared value - "the next major transformation of business thinking" - occurs as economic benefit becomes intertwined with social benefit. In other words, doing good for your fellow man is also good for your business. In keeping with this theme, management guru Dave Logan has advised that the first step in making a business profitable is:
Find a group of people important to your business who need help, and commit to helping them, without any thought about how this action will benefit your business.
Physicians do this intuitively. It is why we started down this tortuous path. It's why we gave up our youth to endless lectures, textbooks, labs, insomnia, and stress, risked our health, and stole from our family life. We went into debt, endured ridicule on morning rounds, and exposed our careers to legal ruin - all so we could commit to helping the people important to our profession: our patients.
But there are too many entrepreneurial sharks swimming around for us to ignore the business side of health care. Can one give a dollar value to the cry of a newborn, the tears of a cancer survivor, the renewed pulse of a resuscitated heart? Of course not, but to be successful also means that you have a place to come to work the next day.
So, learn the business of medicine. When you delegate decisions to companies who serve shareholders first, then you allow economic forces undue control of your ability to practice medicine. Physicians have an obligation to lead in the health care industry, and the industry will benefit by our leadership.
Shakespeare wrote, "To thine own self be true." For physicians this translates as: be true to how you - as an individual - define success. Fortunately, our individual definitions of success overlap enough to allow physician solidarity and leadership in our health care system.
No margin, no mission: the "mission" part comes naturally for us - finding people who need us and committing to helping them without any thought of how this action will benefit our business. It is our golden rule: care for others, regardless. But remember that caring for others means taking care of business too.
(No mission, no need for margin.)
Hold steadfast to our golden rule, not the rule of gold. Make a bold statement to the world. Start that non-profit you have been contemplating. Help organize that medical mission. Join that board. Show up and vote for that resolution. Run for that political office. Complete the training for that business degree. Attend that meeting in the executive suite.
Be the next major transformation of business thinking.