One obvious observation: you want your office to look nice. Patients want to spend their appointment time in a comfortable, inviting environment. Not only does this enhance the patient experience, but it also encourages patients to want to come back and refer their friends for appointments. On top of that, you and your staff spend a lot of your waking hours in that office and for purposes of morale and energy level, you don’t want to walk into a dump every day.
The overriding question is what constitutes “nice.” For some that means Herman Miller chairs, fountains and chandeliers in the waiting room and Italian marble wherever you can put it. For others, that means clean carpets and a minimum of fingerprints on the walls. The best solution usually lies somewhere in between those two.
A number of practices operate under the notion that “if you build it, they will come.” That only works in the movies and only if you build a baseball diamond that people can visit for free. An uber-fancy office does not necessarily mean that patients will flow in. This is because patients need a reason to come to the office BEFORE they see the fine interior. It’s not like a retail store where some great signage and buzz is going to generate walk-in traffic. For most practices outside of malls, walk-in traffic does not exist.
For some evidence of what I am discussing, a story:
Back when OCA first went public and raised funds to build offices, we were charged with building, remodeling or relocating 50-75 offices per year. Given the number of offices required and not wanting to overspend on staff or facilities, we had to have a system to get new facilities built and running. As a result, the building package was very streamlined and organized. As an affiliated doctor, your office could be any color you wanted as long as that color was lavender. Each office had a choice among 3 different artwork packages to choose from. All other aspects were very much systematized. Total cost for an office usually came in around $250,000 at the high end excluding the need for working capital.
The result was that while none of our offices would have made the cover of Architectural Digest, they all looked very professional and were very comfortable for patients. For purposes of modeling, the costs were very easy to estimate and coming in on budget was usually not an issue. Our publicly stated goal for new patients back then was 22 new patients signed per office per month. Most offices hit that goal.
As we moved further into the existence of the company, we had several situations evolve where doctors wanted to go “off the plan” to build new offices. Generally, these doctors had been successful and either needed or coveted a better set of digs in which to service a larger patient load. Here’s what happened in a few cases.
In one situation on the east coast, the doctor’s patient load was simply too large for the facility in which he worked. During a visit to the office, I saw patients waiting in the hallway and even outside for their appointment even though the appointment day was running on time. He simply needed more space. On top of the additional space, this doctor requested the Herman Miller chairs (I had never heard of those things before this episode), curved walls and Italian marble. Total cost was about $800,000 with about $725,000 of that being leasehold improvements. After much internal debate, we decided to get the office built. Before the construction, his office started 45-50 patients per month which was certainly excellent. After moving, that number fell to 40-45 patients per month. And now we had an additional $800,000 of construction cost weighing on the return on the practice. So for almost $1 million, we got a drop in profit. Not a smart move on our part with unpleasant results for the doctor.
The point of this story is that even with a solid patient base, a new location does not guarantee an even larger patient base. On top of that, fancy features do not guarantee a new patient flow. Again, you have to get them to the office first.
In a second case in Washington, DC, we had a moderate performer with 2 offices. We decided to build a third office for this doctor. After building in the archways, curved desks and the like, the office went substantially over budget, but it looked great. You could have fit an NBA basketball court into the waiting area and it was so mellow and comfortable that you wanted to stay for a while. As far as performance goes, the office generated the same number of new patients as his previous 2 lavender-dominated locations.
The moral here is that things like marketing, the office team and competitive factors contribute much more significantly to new patient flow than archways and a great color scheme. Those need to be stressed, especially when results aren’t where you want them to be.
After writing this (or discussing this), I usually get a response along the following lines: “In this day and age, there’s just no way to build an office for less than $500,000 without it being a roach motel.” I don’t agree with that notion and in our next post, I’ll give you some specific tips on how to keep the cost of the office in line while creating a positive experience for your patients.
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