Welcome to the Healthcare CEO podcast. Join us as Daniel Fernandez, healthcare leader and patient experience advocate, leads dynamic one-on-one discussions with healthcare executives, consultants, and other industry experts. Listen in as they share actionable insights and unique perspectives in the day in the life of a healthcare CEO.
*The following has been adapted from our full-length interview, which can be found here.
Meet Doug Badertscher
Doug has more than 25 years of experience in the healthcare sector, providing financial, business, and practice management services to hospitals, surgery centers, ancillary healthcare providers, physician groups, and individual physicians. He’s also been credited with co-founding the second-generation affiliation model, which has been widely regarded by both physicians and Wall Street as the most successful model for physician consolidation.
Building Trust and Creating Collaboration in a Competitive Industry
Daniel Fernandez (DF): Over the years, you’ve had the opportunity to work with many other executives and physicians. What are some of the mindset differences and variances between them?
Doug Badertscher (DB): It’s an interesting space. As a healthcare executive, you’re interacting with very intelligent people who are mostly competitive, who are in a world of change. Sometimes they’re looking to be led, and sometimes it’s like nailing Jell-O to the wall. At the core of that is building trust. Trust is the building block for everything we do and for building relationships. It comes in many forms and flavors, but it has to begin with truth and integrity and honesty. So I convey that to the physicians, and I ask them to treat me the same way. From there we can begin to build a relationship where we can communicate back and forth. Remember — they went to medical school not as a team effort. They’re not about a team sport. They do this in the singular. They’re very competitive. They incur a lot of hours and debt getting through medical school, yet they didn’t really touch the business part of healthcare. So as an executive in an independent world of thinkers, I’m trying to bridge the gap and bring business to them. I’m a firm believer that without engaging physicians in the business of healthcare, we can’t collaborate together and work to move the organization forward.
DF: Are you seeing any generational variations between younger and older physicians?
DB: I’ve been doing this for 25 years and have children who are millennials who are now in healthcare. So I’ve had the opportunity to work with people across generations. The millennial generation has its challenge because they’re feeding from a firehouse now that’s full of change and that can be full of fear. We were racked by Covid — they’ve never seen that before. I’ve never seen that before. So how do you react to that and to the political culture that’s out there that affects healthcare? It’s about building trust with them and building communication. Every generation in healthcare has seen changes and will continue to see changes. How we manage our way through the change and how we go through the journey together and how we work through it will determine the outcome. It’s not the change that will kill us. It’s the inability to communicate and cohesively plan together.
My perspective as a leader is, I’ve got to put forth a plan and to believe in it when I tell them about it. I believe as a leader you can’t be caught sitting still. You’ve got people and forces working against you every day, so you have to put a plan together that’s modifiable, that can move with the changes. But it’s got to be built around respect and solid business principles and is flexible. What I’ve learned, especially in the last 10 years, is that change just keeps coming. 2020 has been a perfect teaching ground for everything I’ve learned in the past 20 years.
DF: Have you seen changes in how people approach these things?
DB: Let’s take that from the physician’s standpoint. Physicians are different in personality but also in the lanes in which they practice (e.g. dermatology, orthopedics, ophthalmology, etc.). And each personality type can be found in every kind of practice. You can assume mentally that they’re above average and that they’re hard workers for the most part, but what you see is that some face these challenges with fear, some never will trust, some can’t cohesively work in a group. And you’re left with trying to figure out how to get multiple personalities in a room, around a table, looking at a business plan — most of them have never built a business before — trying to build trust and relationships in an ever-changing world when it’s all about economics. Even though it’s about quality of health care, at the end of the day, most of us — especially those who have sat in a CEO role — are going to be measured by the economic growth of the organization. Not how much somebody liked me. So that’s a challenge.
Regardless of the different generations or personality types, you’re trying to quell those who fear change. And we live in a time when fear is sold in many different ways. It’s sold on social media, through news outlets, or even through patients. As a leader, I’m trying to say that despite all of those things, we’re here to provide quality health care in a consistent environment on a challenging day in time. Now, will you join me?
Leadership and Planning for the Future in an Uncertain Political
and Economic Environment
DF: You mentioned how Covid is unlike anything we’ve ever seen. What are some things that CEOs listening to this should be thinking about but maybe aren’t?
DB: My plan style has always been to incorporate into the boardroom a healthy relationship with the banker, a healthy relationship with the company lawyer, and a healthy relationship with the company accountant. So as soon as 2020 and Covid hit, I wrote a Covid-related plan, and actually my bank took it and wanted to share it with other people, because none of us had a planning mechanism in place for that. None of us had medical supplies stocked up or knew how to furlough employees or how the Cares Act money was going to impact us. So sharing a plan and bringing in bankers, by providing stability, by being able immediately to reach out for forbearance from banks and financial institutions until we could steady the ship — all of that was crucial. If you waited until Covid hit to make those relationships, you waited too late. I had those relationships all along, we reacted early, and those people helped us get our Cares Act money and granted us forbearances. They have an interest in our financial stability as well, but I talked to many executives who didn’t have that banking relationship or a steady hand with that accounting relationship to get the Cares Act money.
DF: On the topic of money, it seems that most people are being cautious. Where should people be spending their money? One example might be telehealth services, but are there others?
DB: Telemedicine has been out there for a long time. And the question for a long time was, how do you do telemedicine for orthopedics or for pain, when in-person treatment seems so important? Well, once Covid hit, we all learned really quickly. The government eased up some restrictions they had, and fairly balanced the reimbursements, and we all adopted telemedicine platforms in record times. From the orthopedic/pain space, it’s still not the singular best way to practice medicine, but it’s serving a need for those people who are unable to come in for in-person appointments due to Covid or other reasons. Personally, I don’t see there being a total replacement for that personal relationship with the provider any more than there can be a replacement for the person who cuts my hair. There is still this desire for that one-on-one relationship because it builds trust and a relationship. So I think telemedicine will continue to grow, but not at the rate that it’s been at for the last five months.
DF: Are there any policy changes that healthcare leaders should be aware of that are being discussed?
DB: With an election less than two months away, we are in a lame-duck political environment for the most part. What leans in the balance is unknown. Leaders need to be prepared to react to whatever comes out of Congress. What comes out of Washington will impact us, but if we are still running a quality practice at the core, why do we fear it? They’re still going to need providers, and they’re still going to have to pay at a fair rate of income. So let’s focus on what we can do and not on what they’re doing right now. Let’s be locally prepared.
Prioritizing Patient Experience Like Your Survival Depends on It
DB: I have my board of directors reading a couple of books right now, one of which is Beyond Bedside Manner. I have both private equity principals and doctors reading right now, because I’m trying to bring doctors to the boardroom so that we’re all speaking the same language. It’s not all about what happens in the OR. There are metrics we have to go by, and there has to be a healthy balance. Covid has tested every person in the healthcare industry like none other, and we have not yet seen the failures in the healthcare industry. Those smaller practices just got rocked, and we don’t know if their patients will come back to them. Did they get their telemedicine up fast enough, or did those patients go to someone else down the street for care?
DF: These days, with the internet, everyone has a voice online. How important do you think it is for doctors to manage their reputations online?
DB: Reputation management is everything. Today doctors can be scored positively or negatively, and doctors have to be able to get a handle on that and manage that. From the orthopedics/pain/spine point of view, if you have people coming in who are already in extreme pain, and they need meds to help them get through it — if the doctor doesn’t give them meds, I’ve seen their reputation get trampled with 1-star reviews or even false information because the doctor said no to a prescription , and the doctor was right. It happens often that doctors in this space get targeted by people seeking a medication or immediate gratification for their healthcare needs. But doctors don’t want to be in the opioid distribution business. They want to manage that, and it’s a target in the United States. Unfortunately that directly interacts with how rankings have gone on social media and elsewhere. And once someone has put it out there, I haven’t found the magic sauce to cover it up. So unless you’re out there managing your patient surveys regularly and taking every customer complaint seriously and handling it within 24 hours directly, you’re going to lose this battle. Doctors want to believe some of the ratings patients give them, because they want to believe everyone comes to them because they’re a great doctor. But I’ve proven to doctors through surveys over the years that — for the most part — patients come to physician offices based on close proximity to home/office, and the ability to get an appointment at a favorable time slot that they want.
Another book I want to promote here is Raving Fans. Raving-fan customer service is about everything from the toilet paper in the bathroom to the parking situation. It’s the person at the front desk and the cleanliness of the environment. It’s how the bills and statements look when they go out. So we need to know what raving-fan customer service should be. We all know what it is to go somewhere with great customer service, but somehow when it comes to healthcare, people treat it like average is ok. But average is not ok. And coming out of Covid, average won’t be ok — average won’t survive.
Four Principles for Success As a Healthcare CEO
DF: Is there anything else you’d like to share with other healthcare leaders?
DB: Being a CEO can be the loneliest job in the world. Who do you go to talk to when you’re in the struggle? These pressures can come from the economic realm, from staffing decisions, from things that happen in normal lives, but who can you go to talk to about these things? I would say to all CEOs: you’ve got to develop a couple of people you can go to and unwind to. That’s been the toughest thing over the years. It’s a fast-paced job, and you’re never off the clock. Even if I have a vacation, I’m not off the clock. I don’t mind that, but there has to be a time you can share with someone you trust — and you have to be sure you can trust them. And you can’t buy trust. You have to earn trust. And that comes from integrity and truth. For young CEOs that I mentor, I share with them four principles:
- They’ve got to stress unity in their practices. The physicians have to be on the same page and not be fractured. If you don’t have unity, you have to bring them together and deal with it. Maybe you have to hire a psychologist to work with them — it’s that critical. Being ununified will not work today.
- You have to agree as a group to practice quality healthcare at every point. You’re not going to cut any corners along the way for any purpose.
- Recruiting — you have to recruit the very best, and you need them to be sticky. Doctor turnover will kill a practice, so you need to know they’re going to stick around. They need to be compatible so that you can help them build their practice. They will immeasurably provide more to you than you provide to them.
- Teach them how to understand EBITDA, a term they don’t want to talk about. How do you get profit in a margin that’s very narrow when you want to be paid a lot of money? Allow me to teach you the metrics and the variables, because growth is one of those journeys we have to be on. Without growth there is no EBITDA.
Learn More about How Doug and Other Healthcare Leaders Are Shaping the Future of Healthcare
Watch the full interview with Doug Badertscher, and be sure to subscribe so that you don’t miss future shows where we interview other industry-leading healthcare CEOs and executives as they look to shape the future of healthcare.