Although some private practices might think of business strategy in immediate terms, it is important to think about the long-term goals, or governance, of the organization. Not doing so could prove disastrous to a practice's future business, experts say. One of the first things a private practice should do is understand the difference between governance and management.
"What you are asking governance to do is to set a strategy that will factor in to the next 10 years, and it will also shape your organization," says Michael Dugan, vice president of Health Directions, LLC, a Chicago-based healthcare strategy and operations consulting firm. "The management of that is the actual follow-through. I guess you can say governance is what you want the organization to be, and management is how you want the organization to get there."
Governance, in other words, is providing direction toward the goals or mission of the business, whereas management is implementing that direction.
The first, and perhaps most important, aspect of establishing governance is to establish a mission, a vision, and a culture for the organization. To do so, the organization's governance needs to be responsive to and aware of the resources necessary to achieve these goals. For example, it is important to specifically outline what type of treatments the office will offer, what type of patients it will see, and what short- and long-term goals it hopes to achieve.
Another important factor is identifying which roles officials will play in planning the governance of the organization, which can be difficult. "Physicians who are more financially adept, for example, should head up the finance committee, do the contracting for the group, and serve on the committee for next year's budget," Dugan says.
Sometimes, the practice's physicians might strictly provide leadership and direction and ensure that the resources are there for the organization. In addition, physicians might want to stay away from the management or daily operation of the practice and delegate that responsibility to management.
Some offices do not take the time to develop a strategy in relation to governance or to regularly review its business operations. When mistakes are made in regard to governance, Dugan suggests starting at the top and making an honest assessment of previous decision-making so the organization can learn from its mistakes. The organization needs to sit down and determine what to spend money on and what it needs to grow, as well as the areas in which it wants to grow, he says. Not taking the time to properly plan could be disastrous.
This article was adapted from one that ran in the November issue of The Doctor's Office, a HealthLeaders Media publication.