Do you need a professional employer organization (PEO) to handle your human resources needs?
By Kevin Mason
Business owners today are faced with a growing list of challenges to be successful—from recruiting and training the right employees to growing revenues and keeping clients happy and everything in between. Often, the aspects of business that become most challenging involve the ever-expanding rules and regulations around employment. Whether it’s collecting the right information at hire, paying employees and taxes correctly, keeping an up-to-date handbook, maintaining compliance with the Affordable Care Act, handling terminations, or any other employment action—it’s enough to make your head spin and potentially get you into trouble.
When it comes to managing the employment side of your business there are many options to consider for help. There are a growing number of vendors with which to work to outsource various aspects of your human resources (HR) services. Payroll companies are common and will help make sure you pay your taxes timely and accurately. Employee benefit brokers can help you put together a competitive benefits package for your employees. HR consultants can assist in making sure your handbook is up to date and that you have the right policies in place. There are also separate vendors for services like retirement plans, background checks, employee perks and discounts, safety training, unemployment management, flexible spending accounts, and more. It can become a full-time job just managing all these relationships.
An alternative to having so many vendors is working with one partner that can manage all of these things for your business. Professional employer organizations (PEOs) do just this for small and mid-sized businesses. While the PEO industry is not a new one, many businesses are not aware of the value they can bring. So what exactly is a PEO?
A professional employer organization (PEO) helps businesses manage complex employee-related matters such as employee benefits, human resource compliance, workers compensation, payroll tax compliance, and unemployment management. A PEO partners with your business to perform these processes, assume associated responsibilities, and provide expertise in all human resources matters. A PEO provides a suite of integrated services, often a tailored HR solution, to effectively manage your critical human resources responsibilities and employer risks.
Here are seven of the top reasons that businesses will partner with a PEO:
- PEO clients are often able to offer a broader array of benefits to their employees than companies that do not use PEOs.
- PEOs remove the heavy burden, distractions, and worries of HR management, allowing you to focus on what you do best.
- Clients often receive savings on certain employee benefit plans by leveraging the relationship with a PEO.
- A PEO helps minimize threats to your business, from compliance to insurance, record keeping, tax filings, immigration issues, and beyond.
- The employee turnover rate for PEO clients is 10 percent to 14 percent lower per year than that of comparable companies, according to the National Association of Professional Employer Organizations (NAPEO).1
- Using a PEO as a single-source provider lowers internal costs.
- Businesses that use PEOs are approximately 50 percent less likely to fail one year to the next when compared to similar companies (NAPEO study).1
A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client’s worksite and by contractually assuming certain employer rights, responsibilities, and risks. How does a PEO relationship work? PEOs and their clients sign a co-employment agreement in which both the PEO and client company have an employment relationship with the worker. The PEO and client company share and allocate responsibilities and liabilities. The PEO assumes much of the responsibility and liability for the business of employment, such as risk management, human resource management, and payroll and employee tax compliance.
The client company retains responsibility for and manages product development and production, business operations, marketing, sales, and service. The PEO and the client share certain responsibilities for employment law compliance. As a co-employer, the PEO provides a complete human resource and benefit package for worksite employees.
Do you think a PEO is worth considering for your business? If so, here are a few steps to help find out which PEO might be the right fit for you. Most PEOs are similar to each other, but differences in service model, benefits offered, billing method, and accreditations might be very important. Here’s what you can do:
- Investigate the PEO’s accreditations. Have their business practices been independently accredited by the Employer Services Assurance Corporation (ESAC, www.accessesac.org)? Are they a current member of NAPEO, the national trade association of the PEO industry? Do they have proven financial strength, security, and comply with the industry’s performance practices?
- Explore the employee benefits offering of each PEO, paying special attention to the doctor’s network for the areas where your employees live. Also, make sure to compare the details of the plans with your current plans to make sure you know what you are getting into. There are almost always differences with copays, deductibles, prescriptions, etc. Hopefully more of the differences are in your favor.
- Check within your network and ask for client and professional references. Do you know anyone who has had success and would recommend partnering with a PEO?
- Research the locally headquartered PEOs. Oftentimes a locally headquartered PEO will have better options for employee benefits. Ensure that they can handle multistate employees, if needed. To find a service provider near you, search NAPEO’s online member directory.
- Explore your options and most importantly, give yourself time to evaluate. A minimum of 90 days prior to your renewal is recommended.
A growing number of business owners are looking for help managing the employment side of their business. Each year the rules and regulations seem to change, and the costs for employee benefits and other services continue to rise. Solutions to these issues can take a number of forms. Could a professional employer organization be the right solution for your business?
1. National Association of Professional Employer Organizations, http://napeo.org/what-is-a-peo/about-the-peo-industry/napeo-white-papers. Accessed May 2016.
Kevin Mason is the business development manager for GenesisHR Solutions in Burlington, Massachusetts. He can be reached at firstname.lastname@example.org.
*The author has a vested interest in this article’s subject matter.
How to get your practice in order to consider a sale.
By Bridgit A. Finley, PT, DPT, OCS, FAAOMPT
Have you ever noticed that most people live in their house and never go to the trouble of fixing it up until they put it on the market? My neighbors did this. They put in a new fence, landscaped the front yard, and put in new outdoor lighting and copper guttering. The very next day, a For Sale sign went up in the front yard. The same thing happens in business. We do not get our house or business in order until we consider the possibility of a sale. When I ask private practice owners if they plan to sell their practice, 95 percent of them say yes. When I ask them their plan, only 5 percent have a plan. Unless you plan to never retire, this is an eventual step in any business.
“The nicest thing about not planning is that failure comes as a complete surprise.” John Harvey Jones
As I began considering what the next phase of my life might look like (someone like me does not really ever “retire”), I knew that I would need to get a few things in order to attract a buyer. I started this process about five years before the sale. Some of these changes just make sense as your business grows. Others are necessary to attract the right buyer. To put your practice in the best possible position for sale, I would encourage you to examine these six areas: (1) succession planning, (2) technology, (3) compliance, (4) legal agreements, (5) accounting, and (6) outcome tracking. Potential buyers invariably want to see your financials (profit and loss statements and balance sheets), metrics (ie, visits, new patients, charges, units, etc.). You will want to sign a nondisclosure agreement prior to initiating the due diligence process.
Your business is your people. A prospective buyer will only be interested to the extent that your best people are enthusiastic about the transition and will stay on board after the close! I determined early on that the best way to success was to invest in developing ownership opportunities for my employees. I wanted to make sure that I kept the key people in the organization. This enhanced the short- and long- term value and what prospective owners desire. They do not want to buy a practice where all the goodwill just walks out the door when the owner retires. That leads me to the next consideration. The current owner will need to be willing to stay on for at least one to three years and run the business through a transition. I love my job so I wanted to partner with someone who would value my ongoing role and desire that I stay on and run the business. You need to consider what role you will want after the sale.
Technology: Electronic Medical Records/Billing
One of the biggest decisions a practice will make is in the selection of a robust electronic medical records (EMR) and revenue cycle management (RCM) partner. The integration of a “real-time enterprise” consisting of electronic scheduling, documentation, billing, outcomes, and management reporting are essential for a growing practice to address the burdensome regulatory environment as well as to create operating efficiencies to streamline the organization. Paper charts or claims submission should now be remnants of our past. This necessary transition will automatically enhance the value of your business and facilitate your ability to provide timely and accurate information to a prospective buyer. A program that allows you to track and document visits, evaluations, referral sources, billings, payments, and collections is imperative to valuing the practice.
A major concern of prospective buyers (after valuing the practice) is to know what problems they may be acquiring. The contract will generally require the seller to make representations that the company and therapists are in compliance with all federal and state laws including adherence to practice acts, and ethical and practice standards. Are there any current or pending lawsuits? I engaged an outside consultant and formed an internal compliance committee. I wanted to make sure that everything in terms of coding, billing, and documentation was spot on and would not be a potential risk for the prospective buyer. You will need to be able to provide copies of compliance policies, documentation of audits, internal training programs, and evidence of remediation in cases where minor findings may have been found.
Selling will also require you get your legal house in order. The buyer will want to see documentation of your leases, corporate authority (good standing), and documentation of any benefit programs you offer your employees. In addition, a buyer will also consider the effect a departing employee will have on your business. I hired an attorney to draft employment agreements that contained noncompete clauses, nonsolicitation provisions, and confidentiality clauses for all of my employees. It may be controversial to use restrictive covenants; however, if you have ever mentored a key employee only to have them open shop across the street, you will readily understand that this strategy is very fair and is in alignment with all parties. It also allows me to share key business trade secrets openly and hold nothing back from my partners, including their financial results. You will need to provide a list of all employees and their compensation and benefits.
Improving our financial reporting and implementing “best accounting practices” was the area for us that needed the most work. Frankly, many of these items had to be addressed after the sale. With hindsight, I regret not investing more resources into getting my financial reporting to a more enterprise-level scale as doing so would have made the due diligence process go more smoothly and perhaps increased the value of my practice. Given the high level of merger and acquisition activity in the physical therapy industry, most companies will have to upgrade their financial reporting. For example, we had to move to generally accepted accounting principles (GAAP). Some of the other items we needed to improve were tracking receipts, submitting expense reports, establishing policies for use of credit cards, and cleaning up the financial chart of accounts for each of the 16 clinics. We were operating like 16 small businesses and needed to consolidate financials, payroll, and accounts payable. Last year, we also moved from cash to accrual accounting, which was painful but necessary because this optimizes the ability for sophisticated businesses to best manage their practices. Until last year, I thought EBITDA (earnings before interest, taxes, depreciation, and amortization) was a new sushi dish. Potential buyers will want to see at least two to three years of tax returns, profit and loss (P&L) statements, and balance sheets.
The last key component is clinical excellence and documenting your clinical success or outcome tracking. As we move from a predominantly fee-for-service to a value-based payment system, successful practices will learn to provide evidence-based clinical pathways and to collect outcomes to demonstrate the effectiveness of the care. With our new partner we are able to provide residency training, which ultimately leads to board certification and highly motivated physical therapists. Without clinical excellence, it is hard to differentiate and build a successful physical therapy practice. Perhaps more importantly, I have found this leads to a happy and engaged team because the best therapists want to be engaged in lifelong learning and professional development. In addition to clinical outcomes, patient loyalty, and mystery shopping scores, preferably from independent third parties, will further demonstrate the value of your practice.
Cleaning or shoring up your practice in these six areas will help you build a great company and improve your value whether selling to an internal partner or taking on a new one.
As a final note, I caution sellers to choose wisely. With ever-increasing regulations, declining reimbursement, and eroding profit margins, consolidation may be the only way to counter the market forces. Physical therapy clinic acquisitions are on the rise. The last big consolidation happened about 20 years ago, and we saw large corporations and private equity firms hungry for big profit margins swoop in and gobble up many privately owned clinics. This time around it feels and looks different to me as many of the big players are physical therapy businesses that are run by physical therapists (PTs). This is what I was looking for when I was looking for someone to partner with. I wanted to be proud of my partners, be part of something bigger, and be in the same room with business-minded physical therapists. Even if a sale is not on your radar, I would recommend that you enhance and elevate your business by establishing enterprise systems and best practices. Doing so now will improve the effectiveness and efficiency of your existing business while also preparing you for a sale at the same time. You will be able to enjoy your new landscaping and fence, and the investments will add value to your home and business.
Bridgit Finley, PT, DPT, is a Private Practice Section (PPS) member and owner of PT Central in Norman, Oklahoma. She can be reached at BFinley@ptcentral.org.
5 Key Steps in Succession Planning During a Time of Significant M&A Activity
By Paul Martin, PT, MPT, CBI, M&AMI
Succession planning in most industries is done over years, taking time to carefully complete each step along the way. However, in the current outpatient rehabilitation market, this may not be the case. There are upwards of 20 regional and national public and private equity–backed companies that are aggressively seeking to acquire outpatient rehabilitation businesses in every market in the United States. This is the most active mergers and acquisitions (M&A) market that the rehabilitation industry has seen in the last three decades.
So, depending on your current goals for succession, you may need to act fast as this explosive acquisition market will not last forever. One view is that as the large acquiring companies begin to run dry on local and regional acquisitions, they will begin to merge and to seek large-scale acquisitions among the top 20 companies. If this is indeed what occurs, the market for acquiring smaller outpatient rehabilitation companies will greatly diminish. So, whether you have been in business for one year, 10, or 25, it is crucial to begin planning a successful transition strategy.
Step 1: Have your business valued and assessed for current market interest.
Have a valuation/industry expert value your business based on the current market trends in your market area. Even more importantly, have an industry expert assess your company to provide you with an understanding of how the current purchasers will view your company. In the current market, acquiring companies are looking for market leaders that have an appetite for growth and have shown a pattern for growth over time. This is a huge value driver in the current market. A business that is growing will always sell for a higher earnings multiple and better deal structure for the seller than a business that has stayed stagnant or is possibly on a decline.
Step 2: Consider timing and structure of a transition.
Once the value of your business has been defined, develop a timing strategy for transitioning based on the current market and your company’s current performance. If there are potential short-term fixes (less than six months) that could add significant value to your business, then consider a focused effort to make those improvements. This is a very calculated decision. The ability to time the market in order to attain the best deal as well as predict whether short-term fixes will impact your company’s performance can be extremely difficult. Whether you have a long- or short-term growth strategy, keep a close watch on the market to make sure it does not run by you. If your decision is to remain independent, a growth strategy must be developed in order to compete with the new regional and national competitors.
In regard to structure, the current market can have the best of both worlds. Some acquirers will wish to purchase 100 percent of your company, while other acquirers prefer a partnership structure. Therefore, based on your desire for a full transition out of your business or to stay actively involved as a partner in the business, both choices are probably available to you in the current acquisition market.
Step 3: Do the “personal balance sheet” test.
You should seriously consider the financial impact resulting from the full or partial acquisition of your business. A 100 percent sale, as well as a partnership and restructuring of your business, will have an impact on your personal balance sheet and income. This look at “the bottom line” will give perspective as to how a transaction of your business will impact you personally. It will shed light as to whether you can fully retire or whether the transaction provides you with security and income for the near-term future only. This will help you to discern whether to consider a transition in this current market or to potentially remain independent knowing that there will be another opportunity in the future. Make sure an expert has analyzed the valuation of your business so you fully understand the tax consequences as well as potential risks of an acquisition.
Step 4: Develop a focused growth strategy for success.
The next step is to take the information from the valuation and assessment of your business and develop a focused strategy for either continued growth on your own or growth with a partner. In this current market, growth is not an option, but a requirement to successfully stay in your business or exit your business.
If you decide to grow with a partner and go into the market in the near term, outline all of the steps so your business is confidentially presented to all qualified acquirers in this current market. In addition, be sure that you have clearly outlined the attributes that you are looking for in a partner, and that those attributes are clearly defined in the information that will be presented to the acquirers.
If you decide to remain independent and grow on your own, outline the specific strategies and steps needed to continue to increase your market share, and meet the challenges head on of the new competition in your market.
Step 5: Execute the transition plan.
This is where most companies struggle, the ability to execute on a developed strategy. Depending on the path you have chosen, put an internal and external team together tasked with the execution of your desired strategy. This team should meet at least once a month or, if you are going into the market to be acquired, once a week is recommended. This weekly meeting ensures that you are moving forward as efficiently as possible with your strategy to transition.
Paul Martin, PT, MPT, CBI, M&AMI, is president of Martin Healthcare Advisors. He can be reached at email@example.com.
It is time to listen up and notice!
By Rick Katz, PT, DPT, MA
I would assume that the vast majority of physical therapists in an outpatient environment have not really taken the time to read through many of their payment contracts with insurance companies. Why do I assume this? I was one of you until I got burned a number of years ago. There was a simple statement in a contract that provided me with a flat per visit rate. The rate was acceptable to me; however, that was not what I was paid. Elsewhere in the agreement there was a section that described the administrative fees. As it turned out, this contract was not with an insurance company at all; it was with a third party who administrated claims on behalf of many insurance companies. The net result was that I was now going to receive a discount from a multitude of payers from which I was already being paid a contract rate! I learned quickly that by just signing an agreement I would not get more business at a good rate but I would get the same business at a discounted rate. Thus my interest in payer contracts and contract negotiations began.
A physical therapist should be able to review a contract and get an overall sense if it offers beneficial terms. The contract goes beyond what you will be paid for your services. Recently many of us have been offered contracts that insert themselves between the provider and the payer as a third party administrator (TPA). The TPA may provide a service to the payer by managing their network, credentialing providers, and controlling utilization. Unlike the provider networks that represent therapists in negotiating contracts with payers, these networks work for the benefit of the payers and themselves. One would think that the payer would pay a nice sum to provide these services. In reality they often offer to provide these services to the payer and save them money. How do they accomplish this? They lower their payments to the providers and control the number of visits a patient might receive. In effect, when you participate with one of these entities you are agreeing to sign a secondary contract that reduces your payment and visits more than your primary agreement with a payer. You are agreeing to allow this TPA to insert themselves between you, the patient, and your referral source in the medical management of your patient. Why do we do this? One explanation is that we fear that by not signing the contract we will lose business. That might be true but if all of your payers adopt this new rate, would you survive? There are some simple things that you should do before signing such an agreement. I recommend that you have an attorney review the contract if the language is not clear to you.
Know Your Costs
If you do not know what it costs you to deliver care, then it will be virtually impossible to know if the terms being offered by the payer would be favorable for your practice. The easiest calculation of costs can be done on a per visit basis. In the private practice environment it is a simple calculation of your total annual costs divided by your annual visits. It is important to include the normalized compensation of the owner as part of your costs. Normalized compensation removes the added bonus or distributions that you pay yourself in addition to a salary. As an example, if your annual practice costs are $625,000 and you perform 9,300 visits per year, your cost per visit would be $67.20 per visit. That should give you an idea of where you should price your services when negotiating a contract with reimbursement based on a typical visit. If you are capable of providing more visits without increasing your costs, then you will see your cost per visit drop. The goal would be to build in a profit margin above and beyond your cost to derive a profit. Compare the initial proposed payment with your cost plus an expected profit margin. Note that some payment scenarios are complex and may not provide you with language that is clear enough to determine your exact payment. One way to approach this is to present a typical patient bill to the payer and ask them to price the payment.
It is far more challenging to establish your cost per visit in an institutional setting. If your employer provides profit and loss statements by cost center, you have some ability to perform the calculations as you would in a private practice. If these numbers are not available, you may be able to request the allocation of indirect costs for your department. This along with an idea of staffing, benefit, and supply costs may provide enough information to make an estimate of your costs per visit. If you are reviewing an outpatient contract, then only include the space and overhead devoted to outpatient services.
Determine Market Penetration
Market penetration of the payer is important as often payers offer access to patients in exchange for a lower rate of payment. This is most likely true only if there is a significant concentration of enrollees in a 5-mile radius from your facility, and the area is underserved by physical therapists. I would suggest that you first check the website for the payer to see if they post a provider list. Check on the following:
- Referral sources that are currently sending you patients. Are you missing out on additional patients from this referral source because you do not have a contract?
- Who are the other physical therapists on the panel and do they currently compete with you?
- How many of your current referral sources are not listed? You may want to contact them to see if they plan to obtain a contract with the payer.
- How many potentially new referral sources are listed? Will signing the agreement allow you access to these patients?
In addition to this information you should ask the payer to provide you with enrollment data for zip codes in your market area. You should also ask which employers offer their insurance to their employees. You cannot rely solely on residents in your community as targeted patients. Often individuals seek care close to work even though they live outside of your market.
Read the Fine Print
This is the area that creates the biggest challenge for the physical therapist. Here are some red flags that you should look for and understand:
- Assignment of the Agreement: Can the contract and payment terms be applied to any other payer without your consent? If so, the discount that you just accepted can be applied to other payers who may currently be paying you at a higher rate. By signing you may have just discounted a majority of your business.
- Provider Tiers: Does the contract allow for you to be placed in a tier level? If so, know your initial placement and the criteria used to gain a more or less favorable position. Tier levels are often determined solely on utilization. The tier may require you to submit paperwork after the initial evaluation to get approval for additional visits. It is rare to see a tier system that pays you more and allows for more visits based on your outcomes versus utilization.
- Fee Schedule: Is the fee schedule an addendum or attachment to the contract or is it found in the body of the agreement? Many contracts allow the payer to modify an attachment without your approval. This would mean that the contract rates could be decreased without you having the ability to renegotiate. Understand your rights for renegotiating rates.
- Definition of Covered Services: Are there exclusions for services that you provide? Most contracts require you to bill using current procedural terminology (CPT) codes. If specific codes are not covered, they can reduce a per visit or per diem rate accordingly.
- Definition of Medical Necessity: Who establishes medical necessity and what type of professional (or nonprofessional) handles the appeal process?
- Out of Network Benefits: Find out what the out of network benefits are. You might find that you are better served by seeing these patients and balance billing them.
Payers may not be easy to negotiate with, but you should always attempt to seek payment that is commensurate with the resources provided. This may require that you explain why your practice requires a higher rate. Highlight the unique skills of your staff, therapist-to-patient ratio, unique services and programs, and type of documentation. This may get you nowhere but do not be surprised if they come back with a higher rate. A couple dollars per visit may be a true victory with some payers. Contracts have a term duration. It is common for contracts to just roll over from year to year; however, it is at this rollover date that you usually have a window to renegotiate the contract or cancel it.
If it is bad for you, then it might be bad for all of us.
Unless you are in a desperate situation where you need business at any price to survive, it is best to walk away from a proposal that does not meet your rate requirements or sends up red flags on other contract points. In effect, contracts and networks turn a discounted service fee (negotiated between an individual provider and a specific insurance company) into the usual and customary fee for the entire physical therapy industry. Every clinic owner is at risk of experiencing additional payment reductions, and this is largely because when many providers accept low rates the outcome is felt throughout the profession. A payer network must provide adequate coverage to the enrollees in order to fulfill its legal obligation in the State of California, for example. When insurance carriers cannot present a viable provider network, it presents the opportunity for individual practices to negotiate fair and appropriate payment for services with other nonpredatory networks. If you are unsure of how a contract will impact your practice, then seek advice. I have been told more than once that the terms of the contract are nonnegotiable. If you sign a bad contract, it could shut you down and impact the rest of us.
Resources are available within the American Physical Therapy Association (APTA), most state chapters, and the Private Practice Section (PPS) websites to assist you. A good contract may contribute to the success of your business. Pay attention to your contracts!
Rick Katz, PT, DPT, MA, is the president and chief executive officer of Adient Physical Therapy, which operates clinics in Alaska, Arizona, California, and Oregon. He serves as the chairperson for the California Physical Therapy Association’s Payment Policy Committee, is a member of the Finance Committee, and also serves on the Private Practice Section’s Payment Policy Committee.
Create the right environment to keep your exceptional employees on board.
By Stephen Anderson, PT, DPT, and Lori Dillon, MPA
As private practice owners, we continuously navigate turbulent waters. Reimbursements and expenses fluctuate, regulations change, treatment approaches evolve, patient needs and demands grow. We rely on different resources to achieve success (at minimum, sanity and stability), the most significant being our valuable team members. Arguably there is nothing more important than skilled and loyal employees and partners.
We all know that sometimes employee turnover is positive. If you are seeking a culture change, dealing with a disgruntled underperformer, or your business needs evolve, you might intentionally devise a turnover plan to reach your ultimate goals. Most often, however, the turnover we experience is not in our control and has a devastating impact on our business. Much research has been done on the costs (direct and indirect) of employee turnover. Estimates are 1 to 12 months’ worth of an employee’s pay, depending on the role and experience spent to replace that person.1 Losing a good employee takes a toll on us and our business financially and emotionally. To avoid this, we try to proactively hire the right people.
The Right Seat on the Bus
Most of us have heard Jim Collins’s reference to getting the right people on the right seats on the bus2 in relation to great business practice—ensuring that the skills and experiences of our teammates align with their roles and our business needs. This is what makes recruiting so important—and time consuming. Though not foolproof, at our company, we have found that investing time and resources at this stage in the process reaps rewards. Ten years ago, we hired a dedicated recruiting specialist to facilitate this process. You may not have the resources for that, but there are other things you can do. Set aside time in your schedule to dedicate to these tasks, or delegate to a skilled teammate and ensure that they have time to focus on this work. Add hours and recruiting responsibilities to a current employee’s schedule—especially if it is someone you are mentoring to be a leader for your organization. Acknowledge when and how to use an outside recruiting company (perhaps for temporary coverage, or to maximize your exposure if you are in a rural area), but know that you and your teammates are the best spokespeople and relationship-builders for your business. You are poised more than anyone else to define the seats on your bus and attract the right people for them.
When it comes to interviews, do not rely on just one point of contact, especially for key positions.
- Consider multiple meetings. Maybe start with a Skype call so that you can get a feel for each other’s personalities without the full investment of an in-person interview.
- Have trusted team members interview candidates in addition to your interview.
- Invite the candidate to shadow in the clinic for part of a day.
- Use the interview process to observe and confirm behavioral patterns. Anyone can present a persona in one interview; it is more difficult to fabricate behavior over multiple engagements.
Get deeply curious about what drives your top candidates so that you can craft an enticing offer. Of course, pay and benefits are crucial to meet basic life needs. However, we know that our practices often run on thin margins and relative to other industries and settings, our base pay ranges will likely not be at the top of market scales. We have to get creative. At our company, we offer programs that attract the kind of motivated people we want to hire: a structured one-on-one mentoring program, Orthopedic Residency, and a 4-level Leadership Development Program designed to build leadership skills in every employee, at every level of our organization. We encourage all employees to develop a personal education plan, and we support their goals with continuing education dollars (sometimes even for learning endeavors not directly related to their role, but purely to enhance personal growth). We attract many entrepreneurial people to our company because of our equity ownership model, the opportunity for a motivated therapist to become a clinic and company owner one day. Your clinic may not be in a position to offer what we do but you will benefit from identifying what makes you unique. Figure out how to maximize those qualities for new hires. Think outside of the box and beyond the pay and benefits that your market competitors offer.
Research has repeatedly shown that money is not a primary motivator for most people.3 The promise of camaraderie, support, trust, and respect in the work environment is what draws people in (and keeps them around). Take the time to demonstrate this to your top candidates. Connect with them beyond the interview process: send a thank you note following an interview, email links with resources that you think they might enjoy, offer to connect them with other people in your clinic (or even past employees) who can share personal stories and answer questions. If you have not seen Simon Sinek’s TED talk “How Great Leaders Inspire Action,”4 we highly recommend it. In it, he argues that people are motivated to take action—make a purchase, seek services, choose to work somewhere—not because of the details and data, but rather because of why the company exists. People want to be a part of something inspiring. Show them why you are great.
Whatever you do, do not hire out of desperation. We have all done it . . . and it never works out well. Waiting for that right person can pose short-term pains but almost always leads to far surpassing long-term gains. Good companies are picky. Hire slow and fire fast. If you weed out people who do not fit, that is good turnover. And the ones you end up hiring often turn out to be legacy-building teammates.
Keeping the Right People Engaged
After we have the right person hired, our work has only just begun. Avoiding negative turnover relies on strong leadership and fostering a positive clinic culture. Thanks to resources like Daniel Pink’s book Drive, we know that an ability to direct our own pathways, to learn and create, and to support and advance ourselves and those around us are profound human motivators.5 Likely these factors are at the core of why you got into private practice in the first place. The people who make your company great are those who seek a culture that allows them to have autonomy, achieve mastery of something, and live for a greater purpose. Give them opportunities to continuously have these things.
The best way to do this is through regular conversations. To really understand the needs of your team and truly support them in meeting those needs, you cannot rely only on an annual review. The best leaders dedicate time to these kinds of dialogues. Often what we discover in these talks not only helps us support an individual employee, but also uncovers other opportunities to celebrate or investigate in the clinic. Additionally, we know that millennials (the generation that many of us are hiring nowadays) want coaching, mentoring, and frequent feedback. We have found that even a few minutes of daily check-in and acknowledgment of a job well done can go a long way toward their satisfaction and loyalty.
Mentoring has become a buzzword within our profession. We believe that true mentorship is building skills, but more than that, it is about building leaders. Innovative companies recognize that successful leadership development for the future relies on the collaboration of diverse individuals who bring different perspectives, giving individuals ownership over their own development plans, and encouraging “vertical” versus “horizontal” development.6 Horizontal development is skill-building (to use a metaphor, it is filling a glass with water). Vertical development is supporting an individual through the stages of how they make sense of their world (transforming the shape of the glass of water entirely). Vertical development is when problem solving and complex thinking evolve. We know that the health care landscape is complex, and the future of our profession relies on innovators who will be able to work collectively to seek out, explore, and solve problems that may not even be on our current radar. Cultivating these skills in our teammates not only retains good people, but grows our profession. Our company encourages vertical development through investment in a yearlong development program for our directors. Annually, a new group of directors meets once per month with a facilitator to discuss and strategize challenges and opportunities in their roles. This program has not only grown participants’ skills, self-awareness, and confidence, but has also positively impacted our overall company culture. None of this is easy. It takes time and consistent work. It requires us as business leaders to do our own self-reflection and energy recharging. But if we can get these things right, those turbulent waters that we navigate on a regular basis will feel a lot more manageable.
1. www.forbes.com/sites/edwardlawler/2015/07/21/rethinking-employee-turnover/#7456f3db1496. Accessed April 2016.
2. Collins, J. Good to Great. www.jimcollins.com/books.html.
3. https://hbr.org/2013/04/does-money-really-affect-motiv. Accessed March 2016.
4. www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action?language=en. Accessed March 2016.
5. www.danpink.com/drive. Accessed March 2016.
6. http://insights.ccl.org/wp-content/uploads/2015/04/futureTrends.pdf. Accessed March 2016.
Steve Anderson, PT, DPT, is chief executive officer of Therapeutic Associates and past president of the Private Practice Section. He can be reached at firstname.lastname@example.org.
Lori Dillon, MPA, is director of professional development for Therapeutic Associates in Seattle, Washington, and can be reached at email@example.com.