Where Will Disruptive Health Care Innovation Come From?

Healthcare is a system that's primed for disruptive innovation.

Can We Build a "Faster Horse"?

Henry Ford is qouted as saying, "If I listened to the people, I would have built a faster horse". Ford's Model T was the disruptive innovation that changed transportation. Clayton Christensen's description of disruptive innovation is that a technology comes along that has the potential to change an industry, often because it's cheaper, more convenient, or more satisfying to the consumer. Early automobiles didn't disrupt the status quo because they weren't a better alternative to horses. But when Henry Ford's business model of mass production to produce an affordable vehicle for the average American worker, the internal combustion engine had found it's place in a disruptive innovation.  

Now think about health care. The status quo is expensive, and often inconvenient for consumers and patients.  The financial incentives of our payment system encourage physicians to produce more services to cover the costs of keeping their doors open, and generating their salaries. Both independent practices and hospital-owned physician groups generally follow the same formulas for financial success.

Most doctors I've talked with do not believe they can be "a faster horse". Most consumers/patients don't want to spend a half-day or more in the doctor's office - away from work, home, or family - for health problems that might not require it. Many patients find the current health care system paternalistic and difficult to navigate with satisfaction. Shortages of primary care physicians are widespread, yet the solutions being discussed call for training more PCPs. Shouldn't we be thinking like innovators, and looking at changes in health care through consumers' eyes?

Maybe our mobile devices (cell phones, Iphones, Blackberrys, IPads, etc) can be the technology that leads to a new business model of both primary and chronic care that allows consumers to have a cheaper, more convenient, and more satisfying experience in getting health information and health care services. If payment reform comes in the package of bundled or global payment for health outomes, I can imagine a system where face-to-face encounters with a physician will be needed only for acutely ill patients, or periodic visits for chronically ill patients. The physician may be leading or supervising a team of health care professionals who provide health and illness information through wireless devices, video screens, remote monitoring technology, and convenient locations (often open 24/7). 

Under a new payment system, the hospital will be the most expensive and often most dangerous place in the health care system. I don't know about you, but I'm like the typical consumer in economist Michael Grossman's Theory of the Demand for Health: I want "health and healthy days" on earth - not time spent in the doctor's office or hospital. I'll devote my time, money, and energy doing things that will keep me healthy, and away from the health care system.

When insurers are purchasing medical groups, and new players to health care like Cerberus Capital Management are acquiring hospitals in the Boston area, you can bet that the opportunity for disruptive innovation in health care is coming.

Plan Your Non-Clinical Career Escape As A Physician: Building Your Team

Building your team to suport your non-clinical or non-traditional career moves.

I just finished reading a very interesting book entitled The Art of Non-Conformity by a guy named Chris Guillebeau.  I mentioned Chris' blog in a recent post on Lifestyle Design, and I thought I'd download his new book to see what I thought.

The book is an interesting read, mainly because Chris is an interesting guy and looks at things in a unique way.  The focus on the book is breaking free form our default patterns of living and stepping out into something more purposeful, more directed, and hopefully, more fulfilling.

At some point in the future I'd like to write an entire entry about Chris' book and give the Freelance MD crowd a rundown of my thoughts on this text, but suffice it to say I thought it was a good book and it helped refocus my energies on building Freelance MD.

If you've been reading much of Freelance MD, you know that we're offering various forms of career modification to physicians.  All life modifications-- regardless of their scope-- require a little risk, and it's this risk that holds many people back. The few individuals who do modify their careers or lives in some way often only do so when the pain of change is less than the pain of staying in the same place.  This push towards change is discussed in Chris' book and made me think some more about Freelance MD and what we could do to offer more practical goals so individuals who were considering change could begin stepping out in little steps.  Hopefully, these little steps would assuage their fear while at the same time help them make some forward progress with the hope that the inertia would eventually carry them through to something substantial.

It's in this spirit that I offer this post.  It's a sort of beginners guide to building a team that you will need once you launch out on your own.  You may see little need for the entire team right now, but once you go "over the wire" to a new life, these are the individuals you'll be tapping for expertise in a variety of crucial areas.

Team Member #1: Your Financial Advisor

The first person I suggest you recruit if you're going to move forward in your career is your financial manager.  A good financial manager is difficult to find since many are predators who do little to build wealth for you and lots to build wealth for themselves.  The unscrupulous in this field begin to salivate when they meet naive individuals with high incomes and little understanding of the financial industry (think, young newly graduated physicians).  However, a good financial manager can evaluate your financial situation and set you up with a plan to take you from where you are to where you want to be in 5, 10, or 30 years.

Freelance MD has recruited a great financial manager as an author in Dr. Setu Mazumdar who, in addition to being a board certified Emergency Medicine physician, also runs Lotus Wealth Solutions and specializes in helping physicians make good financial management decisions.  Another good outfit is Martin & Wight based in Hunt Valley, Maryland.  The folks at Martin & Wight have managed my finances for the past six years, and I've found them to be very approachable and honorable in their business dealings.  Both Setu at Lotus Wealth Solutions and the folks at Martin & Wight specialize in the financial management of physicians, something that is a huge help when discussing things such as disability insurance and other issues specific to physicans.

Please know that I am not a trained financial person and my experience with any financial management company is, at its core, anecdotal.  You need to use your own judgment when considering anyone to handle your finances, but these mentioned entities are a good place to begin. 

Red flags when meeting a financial manager that indicate you need to run screaming from the room?  Any sort of pressured sales job to sell you any products, especially in the beginning, or any requirement that you submit a large, up front cash payment to secure their services.  Either of these indicators are big warnings.  Maybe there are exceptions, but I would proceed with extreme caution and make sure I spoke to multiple references prior to signing anything binding.

Team Member #2:  Your Attorney

In medicine, when we think of attorneys we almost universally think of the profession in a negative light.  This is due to years of conditioning from hours upon hours of paperwork that we are required to fill out on every patient simply to make sure all the "legalese" is in its proper order, and the specter of a malpractice suit that colors every patient interaction.

However, once you begin to delve into business, you find that your attorney can be one of the most valuable members of your team.  You go to him (or her) for advice when you set up your company and when things need to be restructured as the company grows.  You also know that you have a dog in the fight if you ever do need to do legal battle, and in this day and age, this is a great comfort.

As you begin to broaden your career to do consulting, entrepreneurship, or even write a book, it's good to have an attorney around that you trust.  A good attorney can walk you through such issues as how you form your own company, writing or reviewing contracts, discussing ways to limit your exposure to lawsuits, and many other legal issues that might arise as your begin your new pursuits.

So how do you find a good attorney?

Well, you don't find one by asking your doctor buddies who they'd recommend.  They'll most likely end up recommending one of their golf buddies, or someone who they know who works in or around the medical field. 

The best way to find a good attorney (as well as the third member of your team that we'll be discussing very shortly) is by going to the best small business person you know and getting a recommendation.  A small businessman or businesswoman is an expert in the area you are just getting into, whether it's consulting, writing, or anything else-- small business.  These hardy individuals will recommend someone who also knows small business and can help you navigate through the mine fields of your new endeavor.

The culture these days is highly litigious and a good attorney is worth their weight in gold.  Get a good recommendation, build a relationship with an attorney, and listen to their advice as you begin to expand your career.

Team Member #3:  Your Accountant

This final team member is important because as a physician, your number one expense is your taxes.

As you begin to branch out from your current career into other areas, you should begin receiving income from entities other than your main source of income now.  When this happens, your tax situation can become very complex very quickly, and it is very important that you have a good accountant around to help you sort through the dos-and-don'ts of things like tax write-offs, expense accounts, savings plans, debt exposure, and the like.

A good accountant can give you advice on ways to invest your income into your business, and limit your exposure to unnecessary taxes.  Notice that I say unnecessary taxes since I want to be clear that I am not advocating for cheating on your taxes or not paying what you are legally bound to pay.  However, paying more than your share of taxes simply due to ignorance or laziness is not "patriotic" as some politicians have implied, but foolish and short-sighted.  If you believe you should be paying more taxes, fine, that's your prerogative.  I personally think it's wiser to pay what you owe and then take whatever savings your accountant can find and invest them into your company, or simply donate them to a charity of your choosing.

The point is that a good accountant is a huge help when you start expanding your career, and once you've found a good one (through recommendations from small business owners once again), listen to their advice.  Beginning a new endeavor is tough, and it would be incredibly unfortunate to take that first step towards freedom, only to have it dashed due to poor bookkeeping or foolish business practices.

So there you have a basic guide to building your team.  Start with a good financial advisor and as you get ready to branch out, find a good attorney and accountant. 

In future posts we'll be giving you some more specific tasks to take to your various team members, so you can continue to grow your competence little by little. 

You're a Physician. What Are You Worth?

You're a physician but what are you worth as a business asset? Here are 3 Ways to determine your price.

One of the key decisions every seller has to  make , whether it's a house, a business or any other asset for sale, is to detemine its value and price. I'm married to a residential real estate broker, one of the dwindling few left standing, it seems, in a business that's been in a tailspin for the last 3 years. Consequently, I hear lots of stories about how much people want for their houses and how they make the decision. Typically, sellers overprice, figuring that the largest drop in housing prices in 30 years does not apply to them, that they are entitled to recover every cent they spent on their gourmet kitchen renovation, and they need to build in some wiggle room in the price anyway since they know they will have to negotiate some away later. Then, of course, there is dreaded realtor's commission to factor into the equation.

When it comes to selling a business, there are three basic ways to value it.

The first approach is known as the Asset Based Approach. This approach derives an indication of value based on the costs to replace the tangible assets in depreciated or replacement cost condition. Some businesses for sale are generating negligible cash, so the assets are the only thing that has value. True, intangible assets, like intellectual property, and future market growth might have value, but let's keep this simple for now.

The Market Approach derives indications of value using ratios or factors derived from the earnings, sales and/or assets of past transactions of similar businesses. This approach is like getting comparables for house, asking what a similar house in a similar location has sold for in the recent past. In the case of businesses, the value is determined by comparing it to the selling prices of similar businesses.
 
The Income Approach derives indications of value by converting some level of earnings into a value using a capitalization rate, discount rate or multiple. There are several ways to calculate this net present value, but basically it has to do with using historical revenue numbers and applying a discount rate to determine the value of the revenue streams.

http://www.score.org/article_business_valuation.html

If you are considering branching out from your medical practice or leaving it all together, suppose you were to apply the same technique to valuing yourself?

Using the asset method, the monetary value of the chemicals and proteins in the human body is $4.50.

http://www.savingadvice.com/forums/everything-else/22337-how-much-your-body-worth.html

Using the comparables method, you are probably worth what most others who do what you do are worth. The average salary of a realtor, for example,  is about $45K and it is all commission based. But, don't tell that to all the ex-realtors trading resumes at Starbucks or Ms. Bigbucks still selling the occaisional multi-million McMansion.

Using the NPV method, you are worth the discounted net present value of the future cash flows you can generate compared to what you make doing what you are doing now.

Inevitably, despite the self-actualization talk, docs and  their families want to know how much they'd be worth if Mommy or Daddy did something different. Go figure.

2011 Medical Fusion Conference: November 11-13, 2011

This is just a quick post to ask everyone to mark their calendars for the 2011 Medical Fusion Conference that will be at the incredible Aria Resort at the City Center in Las Vegas. Dates for the Medical Fusion Conference are November 11-13, 2011.

The Aria Resort is a Five Diamond Award winning property in the heart of the new City Center development on the Strip in Las Vegas.  Room rates for this exclusive resort are an incredible $179 (plus a resort fee of $20) if you are a participant with Medical Fusion.

The Medical Fusion Conference is the only national medical conference where physicians learn cutting edge ways to expand their careers.  Our faculty are true experts and many are featured authors here on Freelance MD.  

Topics discussed at recent Medical Fusion conferences include telemedicine, concierge medicine, internet marketing, real estate investing, consulting to industry, international work, writing/publishing, and much more.

Continue to monitor Freelance MD for announcements about Medical Fusion faculty, topics, and special discounts to Freelance MD members.

For more information about the Medical Fusion Conference, please call  866-924-7929 .

Does Your Hospital Have An Innovation Management System?

We will need to innovate our way out of this recession. Doctors need a system to help them.

Hospitals have all kinds of systems to manage people, cliinical and administrative processes, assets and money. Very few have an Innovation Management Systems to identify, capture, develop, vet and launch innovation.

At www.venturequestltd.com , we work with healthcare clients to create the structure and processes necessary to insitutionalize creativity and innovation in healthcare. Among the many reasons for building such a system are it creates a competitive advantage, it  creates non-clinical revenue, and it attracts talented staff. There are three basic steps involved.

The first is an internal process of making faculty and staff aware of the process, soliciting invention disclosures, cataloging them, and detemining which are a strategic fit and worthy of further development.

The second step involves using tools and assessment techniques to determine whether the idea has market potential, is legally structured properly, has intellectual property protection and freedom to operate, and is technically feasible with time and budgetary guidelines. The essential part of this exercise is to get inventor input and well as critique and analysis from multiple innovation stakeholders of the feasibillity plan,  like content experts, advisors and executive leadership.

The third and final phase deals with further developing ideas that have passed the previous stage gates and given a go decision. The charge now is to write a commericalization or business plan , follow a spinout , licensing or other strategy, and secure the resources and talent to move the ideas foward to market.

We all have process, product and service ideas to thow into the top of the innovation funnel. The challenge is to stratify the ideas and pick an innovation portfolio that can be managed.

The beauty of the system is that innovators use simple, structured, valid tools to do a self-assessment of their ideas. The result is that bad ideas are killed early, marginal ideas are returned for further development, and good ideas are put to the head of the line. No one like to have their baby called ugly. Innovation Management Systems provide an objective, structured pathway using valid selection criteria to screen and stratify ideas. That way, you get to call your own baby ugly with no hard feelings.

How Will You Fund This Dept, Ms. Chairwoman?

Academic departments will need to be more entrepreneurial to grow.

The other day I ran into one of my mentors outside of  the operating room. He's 93 years -old- wise and was worried about how the Department of Surgery would approach the recruitment of a new chairman.

My colleague. who was my first boss,  landed on the beaches of Normandy as a young Navy corpsman, rose to the rank of Rear Admiral, was an advisor to Presidents and the Pentagon and served as the Chairman of Surgery at 3 top-ranked academic programs. He's also climbed the tallest mountain on every continent and is beginning to write his next book. He is arguably one of the icons of academic surgery. So, when he talks, I listen.

He proposed that the search committee ask each candidate several important questions and, knowing about my interest in entrepreneurship, wondered what I thought. One question will be:

"Doctor Bigstuff, given dropping basic science research funding, dropping reimbursements, inefficiencies in the practice of academic medicine,  and the ineffectiveness of the current system gettting biomedical innovation to market, how will you fund the Department of Surgery over the next 5-10 years?"

Here's what I said.

Academic departments need leaders who are quadruple threats, not triple threats.

If any of you have served on a search committee, or interviewed for chairman jobs, you know what the job description looks like. "We are seeking a world class academic surgery leader who has won the Nobel Prize, generates a gazillion dollars in clinical revenue, has won every teaching prize known to man, and can leap tall buildings in a single bound." There is rarely any mention of entrepreneurship, ability to work with industry or networks to stakeholders outside of academia. Development and commercialization needs to be the fourth (or fifth) mission of academia along side of research, patient care, service and teaching and department heads should have the knowledge, skills, abilities and networks to get the job done.

Academic entrepreneurship begins with department heads creating an entrepreneurial ecosystem that will take many years to evolve

What do entrepreneurial departments look like? Here are 10 things to look for:

1) They have a top down driven vision and strategy

2) They have clearly defined entrepreneurship learning objectives for trainees and faculty that are diffused throughout the department

3) They have robust internal and external networks to all stakeholders

4) They have an  ecosystem that fosters a culture of innovation

5) The training program includes experiential learning and knowledge transfer opportunities

6) Recruitment, development , promotion and retention policies reward entrepreneurship

7) There are highly valued academic-industry open innovation collaborations

8) Barriers to participating in biomedical commercialization are eliminated

9) They cheer their champions and celebrate success though internal and external communications

10) They are led by someone with some industry experience

The new recruit should present a departmental entrepreneurship plan that defines timelines and milestones

Like any strategic plan, the candidate should take inventory of where the department is now, where they want to go , and how they want to get there. In answer to the question, it should define where non-clinical, non-basic research revenues will come from , how and how much.

Creating an entreprneurial university hinges on creating entrepreneurial departments led by entrepreneurial department heads leading entrepreneurial faculty and trainees. It's not liberating Europe from the beaches of France, but it is a tall but necessary order if stressed academic biomedical departments are to continue to  thrive.

First Things First: Handle Your Finances As A Physician

As a physician wanting to control your career, you're going to need to get your finances in order first.

Over the past few posts we've discussed the idea of taking responsibility for yourself and not waiting for others to come save you.  You've hopefully begun reading the blogs of a few of the adventurous souls who have found ways to live interesting lives, and learned about some of your career options here on Freelance MD.  In this post, we're going to discuss the first and primary means of addressing your confinement in a frustrating career.

If you want to begin living a different life, if you want a new career path and you want to branch out from the doldrums of your current career, the first and most important thing you will need to address is your inability to handle your personal finances.

How do I know you aren't handling your finances well?

Well, I don't mean to stereotype you, but let's face the facts: you're a Westerner living in a very materialistic culture that often defines itself by its material possessions, and you're in a profession that puts pressure on you to look and act in a successful manner.  

There are a few American physicians who have developed patterns of proper financial responsibility, but most have not, and one certainly doesn't develop these patterns by accident. These patterns and habits are developed through many deliberate choices day after day until they become second nature, but they are fought tooth and nail by the culture around us.  As physicians we feel the "need" to drive a certain car, have our kids in a certain school, have a certain type of house in a certain neighborhood, and be members of certain clubs.  The current of life in medicine carries us away from sensible financial decisions, and many, many physicians are drowning in their careers due to bad decisions regarding money.

This toxic financial culture in medicine was discussed in the popular book, The Millionaire Next Door .  In this text, authors Stanley and Danko discuss who the really rich in American society are, and usually it's not the professional class.  They note that there's a difference between looking rich and being rich.  Many physicians look wealthy, but when you scratch beneath the surface they're drowning in debt and working 80-100 hour weeks just to break even.  They overspend because they feel entitled to nice things due to their prior sacrifice of years in school and long hours at work (or are simply very foolish), never realizing until too late that they're boxing themselves in financially and completely undoing their financial future.

Of course, while physicians themselves are mostly to blame for this (remember, personal responsibility...you are not a victim), medical schools could do a lot more to help the situation.  It is appalling to me that we have a medical educational system that takes bright, idealistic students, trains them to be physicians, and then casts them out into this current healthcare world without any sort of training or discussions in financial management, various specialty salaries, billing and coding, practice management and the like.  It's more than appalling really, it's completely unethical, and those leading our nation's educational establishments should be embarrassed by what's happening.  

Dr. Robert Doroghazi, author of the book, The Physician's Guide to Investing: A Practical Guide to Building Wealth , said it this way: 

"I believe the position of the academic medical establishment to deny medical students financial instruction is naive, hypocritical, and indefensible.  They should acknowledge that money is important.  It is never as important as your patient.  It is never as important as your family, your health, your freedom, or your integrity.  But is is important."

Unfortunately, I do not believe this ridiculousness in our medical educational system will change any time soon.  As a matter of fact, I received a phone call recently from a medical student who is torn between a couple of different specialties and called to ask my opinion about his situation.  One of the things he said that stuck with me was, "Every time I try to ask questions of people at my medical school about salaries or financial issues, I'm either looked at in a weird way or people tell me not to worry about it. It's like they're wondering, 'Why would you even be asking that?'"

The naivete of our training coupled with a culture that pushes consumerism and materialism has undone the careers of many physicians.  It's a tragedy. 

The good news is that it doesn't have to be that way. You can make choices that alter your financial future and therefore alter your life.

Here's a project...

If you are serious about career modification and you're serious about making significant changes to your future, then sit down and take a good hard look at your finances.  If you're honest, what you'll find is that a lot of things your money goes towards are "wants" not "needs" and if you're ever going to be free, you need to take that "want" money and use it to pay down debt and increase savings so you can break free of the rat race you're in.  

This must be done.  

There's no other way.

If you cannot take this first step, then all the other steps are superfluous. 

We're going to be talking more about this concept in the future, and we're pleased that Dr. Setu Mazumdar is one of our authors.  In addition to being a board certified Emergency Medicine physician, Dr Mazumdar is a financial planner and the founder of Lotus Wealth Solutions where he counsels physicians on money issues.  Be sure to check out his posts here on Freelance MD and watch for more good counsel from him in the near future.  

For those of you who want to go ahead and begin getting control of your finances, a good place to start is the Money 101 website from CNNMoney.com .  No website is perfect, of course, and we're not unequivocally endorsing any site or any person (please use your head), but the Money 101 site does have a lot of tools to get you started if you need someone to simply help point the way.

So there you go, your first homework assignment on your road to freedom: handle your finances.

It can be really tough at first, but in the end it is absolutely necessary if you want to modify your career and begin living a better life.  

Keep checking back here on Freelance MD since in future posts we're going to be discussing specific things you can do to improve your financial lot and how to move forward with your plan to develop a new, more exciting future.