Feeling the effects of regulatory and legislative implementations, shifts in practice ownership, and profitability demands, the healthcare landscape doesn’t look the same as it did 10 years ago. But what does all of this mean? Simply put, it means one thing: change. More specifically, change that can affect a physician’s key area of exposure: risk management in both their personal life and their practice.
What does change really mean? For many practice owners, change can evoke feelings of uncertainty and even anxiety, because change puts unknown variables into play. However, what change should mean for practice owners is that it’s time to review your risk management strategies, and stress test them against the changes. Unfortunately, this is a commonly overlooked topic during the rush of the whirlwind.
Where Does Risk Management Fit in Your Life?
While true risk management is meant to act as a hybrid function that spans multiple areas, too often for physicians it is compartmentalized into personal and practice risk management, which is often the result of practice owners operating under the idea that the financial risk in their personal life and their practice live in different hemispheres. Instead of reinforcing the fact that the two actually share a symbiotic relationship, with a physician’s practice tied to the health of their personal financial well-being, this can create a disjointed gap between the two.
Efforts in risk management can either be proactive (preventative) or reactive (damage control). A proactive approach doesn’t come from simply having risk management strategies in place, but from whether or not they’re operating in a cohesive manner; allowing them to operate separately between personal and practice life may actually be causing practice owners to take a reactive approach. The first step in a proactive approach comes by considering the physician’s complete current financial position, and taking a top down approach to evaluate their risk exposure.
Protection First: At Home
Instead of trying to forecast a future that we know nothing about, it makes much more sense to focus on managing your risk exposure to the changing information of today. Practice owners are an extremely critical financial asset, and their first stop in risk management should be themselves. Thus, the pivotal shift from a future first to a protection first approach ensues.
One of the first questions practice owners should be asked is: If something happens to you, what will happen to your family? As a business owner myself, I, like many practice owners, am the sole income provider for my family. Addressing the impact of losing that income stream, along with what any debts associated with your practice would do to their financial well-being is essential. The goal here is to develop a two-tonged, risk management strategy meant to protect you for your full economic value, and to protect your occupation through specialized definitions that apply specifically to physicians who are also practice owners; in other words, protecting that income stream from multiple angles. When practice owners think “protection,” they tend to automatically think malpractice or HIPPA violations. While important protective measures to have in place, they aren’t necessarily solo, bulletproof strategies that adequately span both your personal and practice life.
I often compare physicians to the likes of a professional athlete: people know that they have capital, and if their protection doesn’t start at home, they leave themselves in a vulnerable state. Instead, enveloping a practice owner’s complete financial life in a blanket of personal protection lays a dynamic foundation that not only ensures their personal well-being is safeguarded, but that can ensure their practice’s well-being is safeguarded as well.
Protection First: At Work
While practice owners are considering what will happen to their family if something happens to them, they should also consider this question: If something happens to me, what is going to happen to my practice? Here, the goal should be to produce a proactive business continuation plan or exit strategy, which will ensure that in an owner’s absence, the practice will still thrive.
Every practice owner will have to exit their business at some point, and efficient risk management strategies will allow for them to exit the practice on their terms, regardless of the circumstances. Many times, exiting a business will come through the seamless process of handing over the keys to a younger physician already in the owner’s practice; sometimes, the exit comes unexpectedly, with more twists and turns to be navigated. Not only can business continuation planning protect a practice from revenue loss if an unforeseen life event causes an owner to no longer be able to work, but it can also help ensure that the owner’s personal goals and wishes for the continuation of their practice are met in both ideal and unideal circumstances. Managing the risk that comes with exiting a practice isn’t limited to simply choosing which continuation strategy to implement, but also how to fund that strategy; an ideal source of which can come from the practice owner taking the time to protect themselves at home as well.
Riding the Tide of Change
Change doesn’t have to open the floodgates for fear and anxiety in a practice owner’s mind. Rather, it should imply that a time of innovation and refreshment is upon them, giving them the perfect opportunity to review their current risk management strategies.
For those practice owners who want to ensure that they are engaging in proactive risk management, it’s essential to recognize the overlap between your personal life and the life of your practice. With these two entities operating in a practice owner-centric manner, taking a protection first versus a future first approach can help you keep pace with managing the changing information of today, and ensure that your current strategies will still allow for your personal goals concerning your practice to emerge triumphant no matter the circumstances.