What if you Spent $100,000 on a COO?
Before anyone panics, I am not suggesting that most practices go out and spend $80,000 or $100,000 on a COO tomorrow, or that your manager is due a large raise for 2018. I typically only recommend that type of role for multi-location practices grossing over $2M-$3M per year: practices with the scale to afford such a high-caliber manager and whose operations call for one.
But, every practice owner knows that in the change from being just an OD to being a practice owner – a small business owner, really – there are two new hats you have to wear: you need to manage the operations of your business and you need to make investment decisions for your business.
For at least two of those roles, you can partially replace yourself: you can hire an OD to see your patients and you can hire a manager to help run the day to day operation. A good owner never stops having oversight over the goings-on of his or her practice, from a clinical or management standpoint. But you can pay someone else to shoulder most of the load and free up your time to do other things.
If you are a large multi-site practice looking for some serious help in keeping your arms around your business, here are the skills, roles and responsibilities I would look for in a true COO-type person. Most practices owners don’t need or want every one of these ask yourself: which of these responsibilities would you love to give up? Pick two or three, and you can probably find a good manager to take those off your plate for closer to $25 per hour, depending on their background and your local market.
- People Management. This is a must for any manager. A COO will manage managers and make sure the whole team is performing as they should. But the first role any manager must play is to manage the front-line staff, so the OD owner doesn’t have to. A COO will also coordinate staff meetings.
- Operations Management. Set the staff schedules, including ODs, manage patient flow and recall protocols, keep office supplies stocked. Manage service contracts for equipment, software licenses and compliance issues.
- Financial Management. At the $80,000 or more level, a COO will typically have full visibility of the P&L, Balance Sheet and Cash Flow Statements, with responsibility to work with the owners to achieve their income goals.
- Project Management. Will see projects, like website re-designs, marketing campaigns, or EHR changes through to the end.
- Receivables. Oversee billing and collections, ensure the practice IS getting paid for the work it does. Make recommendations on strategies to maximize revenues from third party payers.
- Optical Management. Set sales goals, manage vendors, and provide oversight for inventory management.
Especially if you’ve reached or surpassed $800,000 or so in annual collected gross revenue, consider which of these things you would like to give up, to focus on the things that you’re best at (like being a doctor(!) or setting a strategic vision for the practice), or the roles only you can play as the owner of the practice.
As always, feel free to set up some time with me to discuss what to look for in a manager and what you personally ought to delegate. My phone number is 678.322.3751 or you can set up a meeting with me at www.meetme.so/NathanHayes.
Nathan graduated from Vanderbilt University in three years, with a degree in Spanish and a minor in mathematics. After graduating, he spent a year working abroad. During that time, he worked for two firms in San Jose, Costa Rica. He interned with Grupo Juridico de San Jose, working in environmental policy to protect a threatened parcel of land, then he worked as a project manager for a US-owned precision machining shop, Olympic Precision Machining. Nathan then spent 6 months working with street children and orphans in Mexico. Before getting into the healthcare industry, he was an Assistant Store Manager and completed the Corporate Training Program with Haverty's Furniture Company in Atlanta, GA.
Nathan serves on the advisory board for the Hayes Center for Practice Excellence at the Southern College of Optometry.