Date: September 15, 2016

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Natural Constituency – Podcast 



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Podcast Transcript


  1. Natural Constituency

Hello, this is Scott McDonald and welcome to the Perfect Place to Put a Practice Podcast. 

 

As you know, my company, DoctorDemographics.com provides demographic data and analysis regarding sites for practice.  And while you absolutely need to have that information, there are other factors that will determine how well the practice will perform, especially in its early period of establishment.  One of those key factors is called the “Natural Constituency.”  This is a term I coined in order to describe a customer or client-base that is unique to the professional.

 

The issue came up when I was asked to evaluate the likelihood of success of a great young doctor in a community in Orange County, California.  I had looked at the demographic character of the population and found that a new practice was possible but pretty marginal.  In these circumstances I will call the Client and try to get a feel for what might tip the balance in their favor or out of their favor. When we find very young professionals with limited management experience, I usually favor having them get some experience before undertaking the risk of owning and operating a practice.  So often the professional may know how to produce well but when it comes to managing employees, understanding the nuances of a lease or payroll, inventory control, and practice promotion, they can put their new practice at risk particularly at the beginning.  Sure, the area might be terrific demographically but when the case is marginal, things can go either way.

 

In this case, the young professional told me that his father had practiced in this same area in a different but related field and had many friends.  Further, he had grown up just a few blocks from the proposed office.  He had gone to high school here as well and was literally the captain of the winning football team. He was very active in a large, local church where his parents were still attending. My recommendation was for him to purchase the practice.  About five years later I found that his efforts had paid off and the practice was expanding. 

 

I should state emphatically that the success of the practice was probably not due to this being a perfect site.  As I mentioned, my examination said that it was possible to practice here but that it was somewhat marginal because there was lots of competition.  But this fellow defied the odds and won.  True he was bright and he was motivated.  That helps.  He also had winning personality and that is another big advantage.  But I think even more important was his natural constituency.  He was able to call upon both formal and informal networks of people to come into to his practice because people knew him, his family, and his personality.  They were not a large body of strangers who had to be motivated to come to him or to refer. 

 

Now, I will tell you that he had some problems with a couple of the employees he inherited.  Being much older than this young professional, they dug in their heels and used the mantra, “But the old owner never did things this way!”  His father, a professional himself, and his mother, who managed her husband’s practice for years at the start, were able to give him solid advice that he could trust.  While not part of the natural constituency, they were a strong support network that was worth more than many consultants.  As a quick aside, the reason you have consultants is to tell you what you don’t know.  It is not to chide you for mistakes but instead to help you overcome the hurdles, particularly those you don’t see coming.  Every single professional has challenges that they cannot see coming and that is why having someone with experience can increase your survivability rating. 

 

In a perfect world, everyone would have a loving friend or relative who can serve in this supporting role.  My young client had parents who could help and they did.  But they also gave to him access to a constituency of potential patients or clients to keep cash rolling in when everything was challenging.

 

The point that I am making is something that my grandfather used to say, “It is easier to run down-hill.”  He meant by that it is best to have a little wind at your back when it comes to a patient or customer base IF POSSIBLE. By the way, it may not be possible.  Then again, there is no reason to find locations that are going to be MORE challenging than others or at least not more challenging than they need to be.  Against this background, I have seen many young professionals actively seek places where competition ratios are bad or where there is no growth or the population is not likely to seek care unless the is a threat of dismemberment.  I suppose this is the equivalent of running up hill or swimming against the tide.  Experience tells me that this is not necessary.  There are locations that will tend to be better for YOU as a professional.  And these advantages may be extremely personal.

 

But what keeps professionals from choosing those places that will lend to them a natural benefit? Honestly, you have ask yourself to answer that question but I have seen a few cases worth sharing.  One is pride.  They don’t like to be seen using their parent’s reputation or their family and friends.  They want to “get away from home” with the same urgency that a wild animal will chew its own leg off to get out of a bear trap.  There are some who will refuse to consider that just because a place is familiar, it is not undesirable.  That is pretty counter intuitive but the feeling that they have “been there and done that” is not a reasonable excuse for giving up a location that will help them establish a successful career. 

 

I have seen other professionals who are on fire to move to a location that they consider “cool” or romantic.  Being near ski slopes or sea-shore with a lovely vista may be great for its own sake but it will not help you succeed.  I had a client who wanted with his whole heart to practice in a ski resort town.  It seems his trophy wife loved the idea.  Another client considered being in “wine country” was as good as it got.  A location that is cool is fine. But if that is all that it has going for it, keep looking.  Your purpose is not to find a location that will be perfect.  Such places don’t exist outside of fiction and university lunch rooms.  What you want is a place that will give you some advantage and help you build a strong practice in a place that is pleasant and has promise.  In short, keep your eye on the ball.

 

This is Scott McDonald.  Thanks for listening and visit us at DoctorDemographics.com.


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