Customer Wise: Core mission helps in managing through uncertainty
Running a small business can be fraught with uncertainty. Just ask Donald and Loraine Sanchez, owners of Paradigm Physical Therapy and Wellness in New Mexico.
The 19-year-old business, which operates three physical therapy clinics, recently had changes in insurance reimbursements that came with the Affordable Care Act. Now it’s bracing for a new wave of insurance billing uncertainty brought on by U.S adoption of the World Health Organization’s global diagnosis coding system, or ICD-10.
But as you’ll see in the interview below, Donald, a physical therapist, and Loraine, who focuses on the business aspects of Paradigm, have an admirable approach of making decisions with the best-available information so they can keep investing and staying true to their mission: serving the health needs of clients.Q: How would you describe your business’s growth in the last 12 months? Donald: I would say it’s been improving. The Affordable Care Act (ACA) really hit us hard, especially in terms of reimbursements and implementation. Insurance plans basically were not able to pay certain types of reimbursements because of the new guidelines, and we couldn’t abide by the reimbursement guidelines because we didn’t know them. It was a sea of unknown for everyone. How did you manage through the uncertainty? Donald: We have a really good team that has some good insight. We just kept asking the right questions. We have a model that has a lot of transparency and letting people have a say. So we would basically have open forums, and then say, “Let’s just go ahead and try it this way. This is the best we know.” And we would play it out, and if it failed we would go to the next suggestion or algorithm. By process of elimination, with some cognition, you figure out what you’re doing. Loraine: One of the things that held us together is that our employees knew where we were struggling. They knew our core values, they were bought in, and they were willing to forgo some raises. Now we’re in a better place, and they are seeing the fruits of that, as are we. Looking to the next 12 months, what’s your outlook? Donald: We’d be really optimistic if it wasn’t for the ICD-10. The whole world has been in ICD-10 for four or five years, but in the United States we’re just getting into it. We have to do diagnosis codes for the insurance, and this has to do with how we bill. I’ve heard we may need to have six months’ worth of working capital to ensure that we’re going to be able to keep our business on track during this transition. What about the aspects of the business you do control? Donald: We have kept our overhead low. We’re not extravagant in our expenses. That’s really helped. Probably one of the biggest factors for us is our payroll, because we spend so much for therapists and our professional staff. These are the things we’ve worked hard at managing. Shifting to investment in your business, what is your strategy? Donald: The number one thing for me is the real estate. I own my properties in two of the sites, and I wish I owned all three. I bought my land when the price was pretty low. Loraine: Technology is also important. We just spent over $40,000 on new servers so we’ll be better able to function. We’re also looking at a new documentation and billing system, and we’re thinking maybe next year we can plan for that to streamline our billing process. It will make things so much easier for the documenting therapist. A lot of small businesses grapple with owning versus leasing space. Can you talk about your strategy to acquire? Donald: The guy I worked for in the ’80s and ’90s mentioned that he owned his building, saying, “I pay myself rent.” And I thought it was smart. Loraine: We get the benefit of having security, knowing we own the property and not having to worry about finding a new location. Given the ups and downs of owning a business, what lessons have you learned in recent years? Loraine: Stick to your core values and mission statement, and know why you’re doing it. Donald: Three years ago, our theme at our strategic planning meeting was “hire right.” We actually fired a physical therapist because she did not fit our culture. That was such a hard decision, but it was the right decision. So I would say hiring right is huge, and make sure you have a mission statement.