Too Close To See

Jerry started his own business supporting children and adults with mental illness in the late 1980’s.  He went through the trials that most health care entrepreneurs experience as they grow – under-capitalization, illogical regulatory requirements, staff turnover and unpredictable reimbursement rates, to name a few.  Yet, his company grew, steadily improved the quality of their service, and began making a modest profit.  He took greatest pride in his quality ratings by external sources, which was one of his best marketing tools.  From Jerry’s view, this was due to his attention to detail.

His longer-term plan included an exit strategy for selling his company, but he had a problem.  Jerry had hit a growth plateau, despite 60-hour work weeks, which he attributed to a lack of enough committed managers.  His managers saw it differently.  Jerry lost a connection to them and a significant management “rift” developed. After a meeting with an outside consultant, Jerry realized there was at least some basis for the complaints about his management style.

The unwillingness to establish a consistent management structure with accountability and incentives for senior and middle managers, is one of the biggest obstacles for owners of health care-related companies.  The reasons can be many.  An owner may have a personal preference for the detail of operation compared to broader, strategic thinking.  The principal may also lack the experience of supervising and training managers, and may be somewhat overwhelmed about how to proceed.  The owner may simply fear the next step.  Or all of the above.

In a situation like this, it’s worth taking the time to sketch out a long-term exit strategy with some detail, including the use of an experienced consultant or peer.  While the initial expense may be a concern, the ultimate value will be factor of 10 or more times the fee.  All you have to do is plug that into your external quality ratings or EBITDA to estimate the value for you and your company’s future.