Performance Improvement
Case Study #3

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Overview & Background

SCALE was engaged to assess a plastic surgery client’s (had 16 providers with 5 sites across 2 states) holistic provider oversight and compensation program in the context of high provider turnover and provider dissatisfaction despite running a profitable business.  Approximately 10 providers left over the past couple of years and provider compensation as a percentage of revenue was very low (22%). Optimizing provider retention and developing a scalable and sustainable compensation model (to both the providers and the MSO) was critical to achieving the Company’s mid- and longer-term value creation potential.  The ultimate goal is to improve provider entrenchment by exploring in place comp model and opportunities to create longer-term buy in for providers, to avoid high turnover rate.

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Execution & Recommendations

SCALE Consulting developed a holistic approach to understanding current state realities of the business including:

  • Understanding what had been successful and unsuccessful to date in its core business
  • Understanding the provider recruitment process, compensation model, and how these fit into a successful business model at the MSO level

Deployed tactics included: Comprehensive review of financial performance and productivity at site and individual level, Interviews with key stakeholders including current and former employed providers, ,ultiple deep dive calls with the owner to assess willingness to change comp models to improve retention vs. continuing on in current state of 25%-30% turnover each year, Interaction with CMO to obtain insight to provider-level management approach that could influence retention, Market research to obtain comparables to support project insight

Key findings were:  Low pay, high volume in-place model invites young plastic surgeons to join MSO, improve ‘photo books’/gain experience and then leave, physicians paid as 1099’s vs w2, Poor benefits, hard to reach productivity targets due to deep discounting which MDs do not control and Low level of systemic engagement between company and Docs

SCALE created a deliverable that addressed the fundamental flaws in the current business model highlighted by: 1. Poor overall compensation, 2.  Compensation model made worse by deep discounting of services by providers and 3.  No retention tactics in place

The SCALE team presented a deliverable that created a pathway to better provider retention focused on: provider engagement in
decision making, establishment of a ‘career path’ that included mentoring and equity options longer term and improved transparency in the business process.  Key features of the deliverable included market assessment comparing base business to other plastic surgery business with employed provider models and multiple options regarding provider retention strategies (i.e., converting to W2 from 1099, equity buy-in models, profit sharing models, revenue vs earnings vs venture models for future acquisitions and improved provider branding/marketing.  They also recognized Recognition that base pay was not at market parity – being 10-15% under what others in the market were paying employed providers.

Ultimately, the client and backer agreed to work on improving the model and to not duplicate in-place model as they looked to expand MSO nationally

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