Practice Key Performance Indicators, Side Hustle Do’s & Don’ts and More

David begins by noting he and Nolan Bradbury will first focus on traditional private practices and then then transition into “side hustles” and doctorpreneurship.

In terms of private practices, David asks Nolan about key financial priorities in running a profitable practice, including the importance of key performance indicators (KPIs) and the critical difference between delegating and abdicating. They also discuss a number of important success factors if doctors are looking to grow the practice and, eventually, exit in some type of merger or sale.

Turning their discussion to side hustles and entrepreneurship, Nolan explains what he sees as must-haves in terms of considerations for physicians branching out into these areas. Nolan also gives insights into how a physician or practice can find a good CPA who is the right fit for them.

TAKEAWAYS:

Takeaway 1: Business practices and tips for private healthcare practitioners

Nolan Bradbury stresses the importance of understanding the structure of the practice and how services will be delivered. He further emphasizes the need to delegate tasks effectively, advising practitioners to focus on their areas of expertise and delegate other tasks to professionals in those areas.

Mandell agreed, noting that successful practitioners often highlight the importance of delegation. He also pointed out the importance of having a three-year vision, rather than focusing on shorter timeframes like quarters or single years. Both speakers agreed that Key Performance Indicators (KPIs) are vital tools for tracking progress and identifying areas for improvement.

Takeaway 2: Understanding the exit strategy for private healthcare practices

The conversation also includes a detailed discussion on exit strategies for private healthcare practices. Bradbury emphasized the need to start planning for an exit at least two to three years in advance, and to have a clear vision of what the exit should look like.

Bradbury advised, “When you think about KPIs, a couple things are important to factor in. One, limit the number of KPIs you have…three to five is really the sweet spot of where you want to be.” He further talked about understanding what the practice is worth, noting that it might not be as high as the owner expects. According to him, understanding the true value of the practice and managing expectations is crucial in the exit planning process.

Mandell agreed, adding that increasing the profitability of the practice before exiting is essential. He said, “One thing you didn’t mention but you talked about it before is getting that practice to as profitable as it can, get that EBITDA up, get it positioned right.” Both speakers agreed on the necessity of careful planning and realistic expectations when planning an exit strategy.

Takeaway 3: Importance of proper financial and operational management in side hustles

The discussion also touched upon the financial considerations involved in starting a ‘side hustle’. Nolan Bradbury highlighted the need to treat a side hustle like an actual business, ensuring proper compliance, registration, and financial management.

Bradbury advised, “Even though this oftentimes…we refer to side hustles and things like that and we sometimes mentally discount that as, oh, it’s not a real job or real company, it’s just something I do on the side… You need to treat it like an actual business.” He emphasized the importance of having a proper legal structure, bank account, and compliance with regulations.

Mandell agreed, adding that doctors should make sure they are legally allowed to engage in the side hustle, and should have proper insurance to protect themselves from potential liability. Both speakers concluded that proper planning and management are essential for doctors considering starting a side hustle.

INSIGHTS

• Key Considerations for Starting a Practice: Important factors include the type of practice, service delivery method, and identifying essential versus delegable tasks.
• Importance of Delegation: Delegating tasks to experts rather than doing everything oneself is crucial for growth and efficiency.
• Three-Year Vision for Practices: Practices should have a three-year projection window for planning and development.
• Key Performance Indicators (KPIs): Recommended KPIs include lab costs as a percentage of revenue, payroll costs, utilization rates, and lead generation metrics.
• Delegating vs. Abdicating: Delegating involves assigning tasks to the right people while maintaining oversight, whereas abdicating is completely relinquishing responsibility.
• Challenges in Practice Growth: Common issues include inefficient delegation and misalignment between delegated tasks and individuals’ strengths.
• Preparing for Practice Exit: Planning for exit should start at least three years in advance, considering factors like desired outcomes, practice valuation, and sale terms.
• Buyer Due Diligence: Prospective buyers will scrutinize financials, tax returns, and compliance, which can impact the sale price and terms.
• Side Hustles for Employed Physicians: Considerations include legal allowances under current employment, market viability, and necessary compliance steps.
• Importance of Insurance and Legal Compliance: Ensuring appropriate insurance and legal compliance is crucial for any side hustle or entrepreneurial venture.
• Finding the Right Accountant: Key factors include communication style, services offered, and compatibility with the practice’s needs

LINKS:

• Guest, Nolan Bradbury’s Bio
• Host, David B. Mandell’s Bio