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Developing and Maintaining a Successful Facial Cosmetic Surgery Practice
Jon E. Mendelsohn
Today’s facial cosmetic surgery practice is more complex, competitive, and confusing than ever before. The economic changes in health care have mandated a shift in conventional practices, transferring reconstructive and insurance-based surgery to cosmetic surgery. With significant increases in nonsurgical and minimally invasive surgical procedures, the competition between specialties is greater than in the past.1 Facial plastic surgeons are just one of the main specialty groups in this environment. Today, however, we also see other fields not traditionally thought of as providing cosmetic procedures entering this competitive environment. Even non–medical doctors, such as oral surgeons and dentists, are now offering many so-called nonsurgical cosmetic procedures such as Botox (botulinum toxin type A; Allergan Inc., Irvine, CA), dermal fillers, skin peels, laser treatments, and even surgical procedures such as facelifts, brow lifts, and rhinoplasties. Although these trends seem to be on the rise, taking the right proactive steps to achieving a successful practice in facial plastic surgery will help guide you toward the top of the competition and a fulfilling professional career.
The development of a successful facial cosmetic surgery practice involves knowledge of the market, planning, commitment to allocating resources, appropriate leadership and management, marketing, and precise execution, as well as a well-thought-out plan with achievable and predetermined goals. In this chapter, I will present information gathered from my own personal experience over the past decade, in which I established a solo facial cosmetic surgery practice in Cincinnati, Ohio, performing cosmetic procedures. Although I have made many mistakes and learned many hard lessons over the past years, I can now impart that the development and maintenance of a successful cosmetic facial surgery practice requires a well-thought-out strategy and the ability to execute the plan without hesitation.
I would like to mention at the outset that the definition of a successful practice is ultimately subjective. All of us would like to make a decent living and probably, by our nature, lead the competition, but I would also caution that success is also found in the amount of time we spend with family, our relationships, and ourselves. Although this chapter will not help you balance those things, you must nevertheless be aware of the consequences you may face in a tunnel-visioned pursuit of the successful facial cosmetic practice.
♦ The Business Plan for the Facial Cosmetic Surgery Practice
Business Management
If there is one critical component to developing and maintaining a successful facial cosmetic practice, it lies within the process of creating a business plan. A thoughtful plan will bring clarity and objectivity into the evaluation of goals, successes, and failures. The business planning process will also bring about an increased efficiency in regard to the use of a practice’s human and capital resources.2 This process of strategic planning will bring organization, focus, and discipline to those involved in making the practice successful. A well-thought-out and deliberate plan will also increase the likelihood of meeting or exceeding practice goals.
Preparing the Plan
Developing a long-term strategic business plan requires a vision for future options. When thoughtful evaluation of such options occurs, the practice builds a road map that it may begin to follow. This long-term vision will be achieved when shorter-term objectives are met—generally the result of a well-prepared marketing plan. It is the marketing plan along with other components of a strategic business plan that needs to be wisely developed so that goals and expectations can be measured and quantified. Simply stated, a strategic marketing plan should bring you one step closer to fulfilling tomorrow’s vision and meeting long-term goals.
The strategic business plan should address at least a few basic questions:
- What do we want the practice to be like in 12, 24, and 36 months?
- What products or services do we want to continue to offer, introduce, or change?
- What needs to be done now to meet the demands of the future practice (i.e., remodeling or acquiring facility, obtaining certifications, staff development, hiring key personnel, etc.)?
- How many providers will we have? What will be the specialization of each provider?
- What trends are occurring that may affect the practice in the future?
Answering the above questions will assist in the process of developing an awareness of the long-range implications of short-term events or emerging trends. This is the essence of thinking strategically.
Unfortunately, many practices only think “in the moment” and chase other practices that appear to be ahead of the pack in terms of marketing, facility development, or service implementation. What often occurs with this lack of perspective is that the short-term actions do not fit within the context of the long-term plan. In fact, a practice may not have developed a long-term plan in the first place. Required for the practice to have the best opportunity for achieving its long-term goals is the ability to think strategically and to recognize, understand, and appreciate the strategic business planning process.
Successful practices develop the ability to continually evaluate the marketplace and their own internal systems, as well as to modify their plans to progress toward their vision. Yearly strategic planning meetings may work for some practices; however, to increase the likelihood of success, it may be beneficial to meet more frequently to respond quickly to the changes in the market. Often, despite the best intentions, a business will seem to be tracking well when a down period occurs. During these times, an emotional decision is often made to pull marketing and impulsively change course. Marketing dollars may be impulsively added to an area without a plan to sustain that direction—resulting in impulse purchasing.
Whereas this has happened to all of us, this emotional mistake can be prevented when a plan is strategically prepared and the business goals are being tracked. Although many practices play “follow the leader” with the perceived benefit of reducing marketing costs, in the long run, the practice that does this has not developed the discipline or understanding that it takes to be successful. To begin the process of successful strategic planning, a series of preparatory or planning tasks are suggested.
Developing a Vision Statement
The vision statement is an overall picture of what the business will look like in the future. It addresses who you are and what you are about. It also outlines in general terms how the business will accomplish its goals. What is it that will make you the best? How will you meet patients’ expectations? Simply stated, the vision is the skin in which your business will operate in the future (Table 17.1).
Developing a Mission Statement
Defining the mission of your practice involves several preparatory steps that should be executed over a period of time, rather than rushed through as though they were a school assignment. Table 17.2 shows some of the steps that are basic to any business model and can be found in any business planning textbook or Web site. Completion of these tasks should result in an action plan that will serve as a road map for the practice. The mission statement answers the question, “Who are we and what do we want to become?”
Developing a strengths, weaknesses, opportunities, and threats (SWOT) analysis is the first step in defining your current position and will help establish an effective strategy that builds upon your strengths, minimizes your weaknesses (which are internal), takes advantage of your opportunities, and defends against threats (which are usually external). Developing a market and practice assessment will guide you in a specific strategic direction (Table 17.3).
The vision statement can be easily prepared by defining the reasons for being in practice and what your personal and professional goals are (Table 17.4). A mission statement provides more detail about how the vision of the practice is fulfilled.
| Vision Statement |
| We will strive to consistently meet or exceed the service and care expectations of our patients. We will maintain a comfortable, warm, and pleasing environment for our patients. We will strive to be available and accessible and to ensure we provide an appropriate amount of time for each patient. We will strive to offer state-of-the-art facial plastic surgery services through our practice and our referral network of providers. We will ensure the most compassionate and convenient care setting for our patients. We will do so by investing in staff education and new treatment modalities. We will provide them the tools necessary to most effectively and efficiently perform their jobs while reinforcing the basic tenet of providing excellent customer service. We will reward our employees with above-average compensation packages. We will plan and invest wisely in the future of our practice. We will diversify our service lines and invest in new technology in a conservative and well-thought-out manner. We will put in place financial controls and benchmark our operating results internally and with our peer group while striving to provide an above-average return to the shareholders. |
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Developing Your Strategy
With the vision and mission statement and the associated analyses completed, you are ready to translate all of this information into a strategic plan, with specific and relevant goals and objectives. This plan, however, should remain a work in progress, to be revisited and revised as new information becomes available from ongoing analysis of the market and practice. Questions that should be considered regularly are:
- Is the current strategy appropriate for the changes that have occurred?
- What changes need to be considered to diminish internal weaknesses and external threats?
- What can be done to take advantage of new opportunities to advance the competitive position of the practice?
- What are the best ways to maximize the strengths of the practice?
| External Assessment |
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| Practice Assessment |
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The strategy is to be tweaked, but not completely redesigned, to achieve greater success in the business in which you are competing. Should you recognize problems for which there are no easy changes, a consultant may be useful to help guide the next relevant steps.
Executing the Plan
Whereas much time, energy, and effort is spent generating a written plan, its success or failure lies squarely in its implementation and execution. Spoken from personal experience, it is relatively easy to establish a reputable practice and achieve moderate success. However, it is extremely difficult to truly separate your practice from others and to define it as exceptional and unique to maintain a competitive advantage.3 Several factors that contribute to the successful or unsuccessful implementation of your written plan are shown in Table 17.5.
| Source: Maller BS. Implementing Your Strategic Plan. Incline Village, NV: BSM Consulting Group, 2002. Reprinted with permission. |
| Our Mission |
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♦ Positioning Your Practice for Sustained Success
How do you position your practice for continued success? Presuming that the first steps have been taken, you must integrate the strategic plan with the operational functions of your practice. This means establishing the right team, creating a solid marketing plan, having fiscal policies for financing the practice, and developing a management team capable of moving the process forward.
Employees must possess the necessary skill sets to achieve practice objectives dictated by the strategic plan. Although employees may have helped establish the current status of the practice, its future growth is dependent on the ability of staff members to change and grow if necessary. If the necessary skill sets do not exist and training is too costly or difficult, the practice must hire the right individual(s) through recruitment. An effort should be made to pair the skill sets of the individual with that of the needs determined by the plan.
The marketing plan is also a necessary component of the strategy to implement practice goals. This document will serve as the road map for how the practice will follow its business plan for the year. The plan needs to carefully evaluate a variety of options based on the current and anticipated future market environment. It should also be a reflection of the overall practice strategy.
Establishing and maintaining a budget is of critical importance. The budget provides the financial means to implement the agreed-upon strategy. Stated simply, it forces you to “put your money where your mouth is.” When you begin to assign dollars to the plan, you begin to focus on your specific needs. The budget will also ensure that resources are efficiently used and that sufficient funds are allocated to the most critical components of the strategy.
Budgeting
A budget is a critical component of the overall strategic plan. It is the tool that can help the most in evaluating the financial impact of the initiatives of the plan. Once the financial analysis has been completed, decisions can be made in a timely and deliberate manner, rather than rashly, based on gut feelings. Practices that recognize, develop, and apply rigorous financial analysis consistently achieve greater success. It is not uncommon for practices to consider a potential opportunity, only to have analysis indicate that the risk contemplated is too great in relation to the potential benefit.
The best method of evaluating a budget is to take a look at historical data that incorporate a 9- to 12-month period of time. It is important to look at the core business, as well as any new initiatives that were undertaken over that period of time, to help obtain an accurate assessment for the year ahead. The numbers of facelifts or peels performed are likely standard items that would be evaluated in a facial plastic surgeon’s budget. However, the introduction of a laser technology such as Fraxel (Reliant Technologies, Mountain View, CA) or other new advances should be evaluated closely so that “good” money is not put forth after “bad.” An accountant or other financial advisor may be beneficial in establishing consistencies for future planning. Internal reporting may also be helpful and can be easily set up in-house through standard computer software.
The budget should also include the anticipated future costs associated with planned expansion, equipment needs, marketing, providers, and so forth. As resources and capital are limited, this process helps to guide the practice toward its goal, without “breaking the bank” and reallocating resources in an attempt to maintain cash flow. By preparing a budget that reflects the initiative of the plan, an accurate assessment for future revenue and expenses will aid in the overall implementation of the plan.
Completing Your Action Plan
There are several important features of completing the plan. First of all, there must be clearly defined goals, each with specific directives. The directives need to be written in a clear, actionable language. Each also requires that there is a responsible person assigned to it with a deadline for execution. If these guidelines are followed, employee ownership of the items will result in completion and accountability of each task, which will dovetail into a reward system for all involved parties.
Overall responsibility for the plan needs to be assigned to a single person, typically the director of operations. Whereas this may be assigned to a physician with leadership ability, most busy physicians will have difficulty executing these responsibilities with the little time they have. It is important that the director holds the respect of the other associates and possesses the organization and communication skills to follow through with projects and pay attention to detail. If the practice manager assumes this responsibility, he or she must provide progress reports to the physician owner on a regular basis. These reports should include action plans with notations on the progress made on each initiative.
Physician Leadership
The role of the physician in the process is twofold. Generally, it is the physician’s responsibility to educate the team to increase the likelihood of buy-in. The associates need to understand the value of their efforts and the goals of the practice and must also understand how they will benefit from its implementation.
When a physician leads these efforts, he or she usually fails to direct the change required for sustainable goal achievement. Although physicians may want to delegate the responsibility of communicating plan details to the administrators or managers, it is recommended they resist this temptation. Whereas these individuals are critical in the implementation of the plan, it is the physician who bears the responsibility to communicate the message to the rest of the team. However, generally, the physician has neither enough time nor the right information to effectively communicate and implement the plan. Asking for help or advice is a far better answer than embarking on a venture based on a gut feeling or inadequate information. Solicit the opinion of colleagues or trusted advisors before rolling out any major initiatives.
Committing to the Process
Although turning your practice’s written strategic plan into reality comes with challenges, success is possible. Remember that a practice should approach strategic planning as an integrated process that features a firm commitment to implementation. A well-documented action plan supported by a strong physician leadership team is essential to success. However, successful implementation is also contingent on limiting financial risks and ensuring the plan is having a positive impact on the financial health of your practice.
Financial Evaluation
The next area meriting consideration is associated with evaluating your progress. The use of certain financial tools will aid in limiting risk and ensuring that your strategic plan is having a positive financial impact. When planning, it is useful to undertake a break-even analysis. A break-even analysis will clarify whether planned objectives are possible. They are often used to evaluate opportunities for purchasing new equipment, bringing on other providers, expansion, or other capital-intensive proposals.4
This analysis will allow you to make wiser decisions as to how much new business is required to meet your break-even point. For example, let us say you are considering a new laser that costs $100,000.00. If the fee charged per patient for that new laser is $5000.00, then it might appear that you need to perform 20 such treatments to recover your investment. While this is probably adequate, it would be wiser to look at other costs involved with implementing the device. These include such things as provider salary, time, allocation of space, marketing costs, other in-office staffing costs, disposable costs, and so forth. When this is done properly, it helps focus on what the true goals and costs are so that a better and more educated decision can be made. Simply stated then, a break-even analysis suggests what level of business activity is necessary to cover expected costs.
Cost Categories
Cost categories generally include fixed and variable expenses. Fixed expenses usually do not vary with the volume of patients treated. Examples of fixed overhead include facility rental, most staffing costs, and insurance. Although there is a limit to how much volume can be handled with a certain level of fixed overhead, maximizing this potential is the main goal. If the volume goes up or down significantly, it may be necessary to either increase or reduce overhead.
On the other hand, variable overhead expenses are proportional to the level of business activity. An example is the cost of goods associated with the sale of skin care products, or a proportion of operating room personnel salaries, and so forth. Variable expenses will fluctuate with the number of patients treated or with the amount of revenue generated by the practice. In one sense, increasing the variable expense should be associated with increased revenue, as it often becomes a production number based on how active the practice is.
The Basics of Financing
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