1 Financial Analysis | Audiology/Hearing Aids | 2012-2014Cover Title Financial Analysis | Audiology/Hearing Aids | FIVE WAYS TO MAKE UNIVERSTY AUDIOLOGY CLINICS MORE SUCCESSFUL

2 Don Nielsen, Ph.D. Don Nielsen, Consulting, LLCConsultant with Fuel Medical Group as their University Audiology Advisor Consult with Northwestern University and Mayo Clinic Florida on an NIH grant: “Can Consumers or Audiologists Detect Ear Disease Prior to Hearing Aid Use?” Former Chair of Speech an Hearing Sciences, Washington University, St. Louis Former Director Audiology Clinic and Translational Research, Northwestern University, Evanston

3 LEARNING OBJECTIVES Understand the historic causes of chronic problems in university audiology clinics Learn how to address these problems and make your academic clinic more successful Learn what you can do to help assure future success in academic audiology clinics

4 FIVE WAYS TO MAKE UNIVERSITY AUDIOLOGY CLINICS MORE SUCCESSFULBUT FIRST, UNDERSTAND OUR HISTORY BUILD TRUST DEVELOP DISCIPLINE, FOCUS, AND PLANNING DEVELOP AND IMPLEMENT MARKETING UNDERSTAND AND USE THE UNIVERSITY AND NONPROFIT ADVANTAGE HELP EACH OTHER THROUGH NETWORKING AND SHARING

5 History of University Audiology ClinicsUniversity audiology clinics have a legacy that is at odds with the needs of audiology clinics in today’s new world of audiology History of University Audiology Clinics

6 HISTORY SHAPES WHO WE ARE TODAYHow our history has shaped today’s university audiology clinics and put them at a disadvantage HISTORY SHAPES WHO WE ARE TODAY

7 1940s – 1960s Seeds of DysfunctionAudiology was created in response to the growing unmet need for hearing health services created by WWII First audiology clinics were in the VA and at university training sites Medical centers soon had audiology clinics within ENT departments University training sites associated with speech pathology not medical centers VA did not charge veterans for services

8 1940s – 1960s Seeds of DysfunctionUniversity sites considered themselves training centers and rarely charged for services Training was the raison d’etre of the academic clinic University clinics were often only open when training students Universities supported their clinics as part of student education University clinic directors were often Ph.Ds. trained to be scientists Clinic was not a business and the profit motive did not exist except as a concept to be avoided

9 1940s – 1960s Seeds of Dysfunction Take Home PointsThis antibusiness, free service, heritage from audiology’s first three decades runs deep in academia, especially in university clinics started during this era. It has resulted in a paradox in today’s new world of audiology where ironically the audiology clinic and its students are now viewed by administration as important sources of revenue. Free Service Source of Revenue HERITAGE CURRENT EXPECTATION

10 1970s – 1990s Arrival of Hearing Aid Sales Laissez-Faire AudiologyFrom the beginning of audiology through the early 1970s ASHA forbad audiologists to sell hearing aids ASHA threatened loss of professional credentials and possible legal action on those who did. The academic community mostly supported ASHA's position A court ruling in the early 1970s reversed this situation, as a result ASHA decided it was not unethical to dispense hearing aid This change ushered in the dispensing of hearing aids by audiologists Audiologists began to open private practices in an era of Laissez-faire audiology

11 1970s – 1990s Laissez-Faire Audiology“Build it and they will come” attitude toward private practice and hearing aid sales Competition scarce Plenty of patients with moderate to severe hearing loss who needed hearing aids and the move to binaural fits High margins and relatively low cost, so no concern about market penetration Products and services were bundled Audiologists fail to differentiate themselves from HIS in the public eye Marketing was often not used, rarely systematically planned, not very effective, and not monitored for ROI In this era even poorly managed practices could stay in business

12 1970s – 1990s Laissez-Faire Audiology Take Home Points1970s – 1990s Heritage: Business skills and good business practices were not needed Low competition and healthy profit margins drew many into private practice We did not train students in business development and did not employ good business practices ourselves Failure to differentiate audiologists from the competition

13 1990s – 2010 Managerial Era Audiology Profit Era for UniversitiesAudiology changed from primarily a masters degree to the clinical Doctorate of Audiology, Au.D. Universities push to increase Au.D. student enrollment to increase tuition income University administrators begin to view audiology as a professional degree like law or medicine and raise expectations for university audiology clinics to be financially self sufficient or profitable. Most university clinics were slow to change, had no business manager positions, continued to not use good business practices, and to not teach business skills and knowledge. University programs started after 2000 are less likely to be burden with heritage With the advent of new technologies and diagnostic tools audiology broadened its scope of practice and changed from primarily a masters degree to the clinical doctorate of audiology, Au.D.

14 2010 – Present, Entrepreneurial EraRapid disruptive changes: Innovation & changing technologies: Hearables, PSAPs, Internet, Advance in Computer-based technology: smarter, cheaper, faster, and smaller Oldest Baby Boomers turn 65 increasing demand beyond what audiology can handle creating new opportunities for strong competitors like big box stores and large pharmacy chains. Increased strong vertical integration in the hearing aid industry: retiring audiologists owning private practices are bought out by industry

15 2010 – Present, Entrepreneurial EraPCAST and NAM recommendations cause audiologists to reconsider the roles for PSAPs and hearables for mild and moderate hearing loss Increased highly skilled business competition awakens universities to the need for marketing and better business practices University pressure for more students and profits creates need for more patients which requires more clinic open hours and marketing Help clinic and teach business to students In-group referrals

16 3 Barriers to University Clinic Success…History of free service & training focus Resistance to business development Failure to differentiate HERITAGE BARRIERS

17 The Perfect Storm in Academic AudiologyUniversity Pressures Au.D. Professional Education Clinic Increased & Stronger Clinic Competition Changes in Healthcare Pressure to Cover More Clinic Costs Pressure to Increase Student Enrollment Patient Care Student Education & Training Environmental Pressures Traditional Most university clinic directors are not equipped to handle this storm. Enrollment

18 DEALING WITH UNIVERSITY PRESSURESNo clinic is an island. The clinic must be trusted by: Patients Referral Sources Students Colleagues (Faculty & Staff) Administrators BUILDING TRUST Create a new kind of culture in which everyone is aware of where the clinic is going and how we are going to get there.

19 DEALING WITH UNIVERSITY PRESSURESNo clinic is an island. The clinic must be trusted by: Patients Referral Sources Students Colleagues (Faculty & Staff) Administrators BUILDING TRUST Create a new kind of culture in which everyone is aware of where the clinic is going and how you are going to get there.

20 TRUST Trust is the firm belief in the reliability, truth, ability, or strength of someone or something. It is the state you reach when communication is fluid, open, and constant. With trust everyone moves quickly and decisively, because they have the ingrained judgement to know who to consult and when. Trust lies at the heart of every successful clinic. People trust one another to make decisions on behalf of the whole. Absence of trust comes from an unwillingness to be vulnerable: to be genuinely open with one another about mistakes and weakness

21 Key Performance Indicators (KPIs)Current Month Actual Target Prior Year +/- Target +/- Prior Yr. Year to Date Actual Target Prior Year +/- Target +/- Prior Yr. Financial Performance Gross HA Revenue, Net HA Rev., COGS, HA$ Refunded, Gross Profit, Gross Margins, Marketing Cost /Unit Sold, Net Profit, etc. Operational Performance # HA Sold, # HA Refunded, # HAE Appoints, Binaural Rate, ASP, etc. Personnel Performance # Providers, # Staff, Net Revenue/Provider, Net Revenue/Staff Monthly Trend Charts For Current & Prior Year Net Revenue & Profit Trends, Unit Trends, Appointment Trends, Average Sales Price Trends

22 University Hierarchy Complicated decision making processAllocates resources within the clinic Allocates resources within the department Allocates resources to the department Dean Department Chair Clinic Director Tenured Faculty Focus on increasing income Strong control Pressure to increase income Tenured faculty can have great power within the department Pressure to increase income Rarely have contact with dean Problem: Often a lack of trust within the hierarchy

23 University Hierarchy Complicated decision making processHistorically lacks business training but this is changing. May or may not understand the clinic . Lacks business training. May not understand clinics and clinical training. Has access to business person. Dean Department Chair Clinic Director Tenured Faculty Strong control Often consult legal Tenured faculty can have great power within the department Problem: Often a lack of trust within the hierarchy

24 BUILDING TRUST IN CLINIC FACULTY & STAFFAbsence of trust comes from an unwillingness to be vulnerable: to be genuinely open with one another about mistakes and weakness Hold regular clinic meetings Make clinic meetings open and inclusive by including support staff and encouraging participation in discussions Link strategy and execution & clarify everyone’s strategic role Report on current marketing tactics (patient referrals, physician referrals, ads), calls converted to visits, new visits converted to appropriate sales, and summarize ROI Summarize KPIs and discuss trends, fears, and expectations Discuss rumors, problems, and solutions openly The FIVE Dysfunctions of a TEAM – Patrick Lencioni, Jossey-Bass 2002

25 BUILDING TRUST IN THE HIERARCHYAbsence of trust comes from an unwillingness to be vulnerable: to be genuinely open with one another about mistakes and weakness Clinic Director & Business Manager Hold monthly meetings with the department head and the Dean’s office (Guiding Coalition) Discuss monthly new patient count, revenue, and other KPI targets, marketing tactics, progress, and problems Provide Norms: comparison statistics of how other similarly situated university clinics are doing and what is working. Encourage input from department head and Dean’s office Leading Change by John P. Kotter, Harvard Business School Press 1996

26 BUILDING TRUST IN THE HIERARCHYClinic Director & Business Manager At the end of each quarter hold open meetings for all department faculty, staff, students, and send special invitations to the department head and Dean’s office. At the meetings: Explain goals for that quarter and summarizing progress Explain what you will do differently next quarter to improve KPIs Discuss implications for student enrollment and revenue Annually summarize goals and progress for the year and plans for the next year

27 Pressures Become Common CausesClinic Faculty & Dean’s office Both need and want to educate more students Audiology to meet supply and demand problem Dean to increase tuition income Both need and want more patients Audiology to train more students Dean to increase clinic revenues

28 DEVELOP Discipline, focus, planningTOO OFTEN WE TELL OURSELVES WE ARE TOO BUSY TO PLAN THE BUSIER WE ARE THE MORE WE NEED TO PLAN BECAUSE WE HAVE ADVANCED DEGREES WE THINK WE CAN FLY BY THE SEAT OF OUR PANTS PRIDE COMETH BEFORE THE FALL WE MUST HAVE THE DISCIPLINE TO PLAN DEVELOP Discipline, focus, planning

29 BUSINESS PLANNING Private practices use business plans to explain to investors: Their objectives, mission, keys to success What they are selling, Who their target market is and an analysis of that market What strategies they will use and how they will be implemented A financial analysis showing profit/loss and cash flow projections If we want the university to invest in our clinic, we should provide them with the same information Bonus: Use business planning as an opportunity to train students

30 Four Types of Planning Strategic planning Business planningFinancial Planning Marketing planning

31 MARKETING WHO TO MARKET TO WAYS TO MARKET WHAT TO MARKETChapter 7: Marketing University and Other Nonprofit Clinics, in Marketing in An Audiology Practice Edited by Brian Taylor 2015, Plural Publishing

32 Who To Market To Define the ideal patientIdeal patients are those who are perfectly suited for our clinic. Our ideal patient has a frustration, need, or desire that our clinic can solve. What are the characteristics of the patients who are most satisfied with your services, the ones who write testimonials, and refer new patients? Conduct a demographic analysis to know where the ideal patient lives and to identify nearby competition and partners.

33 Ways to Market Patient PathwaysDatabase – Our patient database (Newsletters, TNT, 4+, Seminars, Lectures) Retail – Print (newspaper, magazine), radio, direct mail 3rd Party Referrals – Patients, physicians, senior centers (Most important – Needs planning) Grassroots – Community outreach events Digital & Other Vehicles – Internet, call-tracking, SEO, SEM etc. A Guide to Marketing For Academic Audiology Clinics Fuel Medical Group Booth #35

34 Technology, industry, demographics, regulation, and so onWhat to Market The Strategic Sweet Spot for Audiology OBJECTIVE SCOPE COMPETITIVE ADVANTAGE Compete on service and sophisticated testing, fitting, and rehabilitation, not product or price. Marketing and advertising products and price AUDIOLOGY’S capabilities Differentiates from competition Health Focus SWEET SPOT PATIENTS’ needs COMPETITORS’ offerings Lumps together with competition Technology Focus Where customers’ needs and your company’s unique capabilities overlap is what Rukstad and Collis call “the strategic sweet spot.” This is the creative part of developing a strategy statement: aligning the firm’s capabilities with customers’ needs in a way that competitors cannot match given external factors such as technology, industry demographics, and regulation. CONTEXT Technology, industry, demographics, regulation, and so on STOP THIS! Doctors of Audiology are professionals and their marketing materials should be professional also.

35 The University/Nonprofit AdvantageWhat to Market Building trust with patients is easier if you are a nonprofit university clinic The University/Nonprofit Advantage

36 The Nonprofit Quiz Who owns a nonprofit? Can nonprofits make a profit?Why are nonprofits tax exempt?

37 Good to Great and the Social Sectors by Jim Collins, 2005The Nonprofit Quiz Who owns a nonprofit? The community. A board of community members looks after the interests of the community. Can nonprofits make a profit? Yes, but the profit must be reinvested in its mission. Why are nonprofits tax exempt? Because they serve the public good and perform services that government might have to provide. Good to Great and the Social Sectors by Jim Collins, 2005

38 The Nonprofit AdvantageClinic Type Reason for Being Operations Profits Motavation Public Viewpoint For-Profit Profit Patient Care To Owners Money Suspicion Nonprofit Change a Life Serving More Patients To Change a Life TRUST For-Profits In business to make a profit and they do that by providing patient care. Profits go to the owners. Motivated by money and that creates suspicion among the public. Success is measured by size of profit Nonprofits In business to provide patient care to change people’s lives not to produce profits Profits used to serve more patients not to line owners pockets Motivated by life changing patient care which produces public trust Success is measured by how much you change a person.

39 Authority: The University AdvantageFact: We will have more influence over potential customers if we establish that we are a credible, knowledgeable, authority first. Nonprofit status gives instant trustworthiness The university is a highly trusted source of knowledge and home to experts. Universities educate professionals and other people so we must be the experts Many breakthroughs and innovations come from universities so we must be state-of–the-art or science The university has already spent a fortune on branding so their logo, school colors, etc. are well respected. Take advantage of this.

40 Examples of Trust & Authority in MarketingYou can Trust XXX University Audiology Clinic Audiologist are More Qualified We take the time needed We are a Doctoral Education and Training Site Active Research Program We have a Close Relationship with the Medical Community We Specialize in Tough Cases We Provide Rehabilitation We Never Take a Hard Sell Approach We are Independent of Manufacturers We Will Be Here Tomorrow n comments to the Sydney Morning Herald, Audiology Australia (AA), which represents 2500 audiologists across the country, urged consumers to go to certified members. The organization’s chief executive, Dr. Tony Coles, said that “in accordance with our code of conduct, members must make recommendations to clients based on clinical assessment and the client’s needs, not on the basis of financial gain.”

41 We Take the Time Needed Every ear is different so hearing aids need to be programed to your personal diagnosis and anatomy to maximize performance We spend more time with you then the average provider because we don’t skip diagnosis or treatment steps to increase the number of patients seen in a day or to maximize profits We don’t just sell hearing aids; we provide hearing health care, custom fit devices and provide crucial follow-up care to ensure your treatment is working and is optimum for you Add a testimonial that supports this.

42 We Have a Close Relationship with the Medical CommunitySome hearing difficulties require medical intervention Our audiologists are trained to identify these conditions and to refer you to an appropriate physician Physicians know and trust our professional judgement Physicians regularly refer patients to us because they want them have the best professional care and not be sold something they don’t need We accept self-referrals from patients who want the same wise endpoint of excellent hearing healthcare Add a physician testimonial to support this. A

43 Physician Referrals are Crucial to SuccessFacts: 73% of patients ask their primary care provider first about their hearing loss Over 15% of hearing health care revenues are driven by physician referrals and there is room for enormous growth Physicians want to refer patients to a responsible clinic where they will receive expert care without being sold a product or service they don’t need. Educate physicians on the importance of hearing health and audiology so they want to identify and treat changes in hearing Educate physicians on the nonprofit university’s clinic’s trustworthiness and expertise, so they understand we are different and better Nonprofit university clinics are the perfect place to refer their patients. Establish strong relationships with physicians and become an integral part of their practice Use their testimonials

44 IMPROVING OUR FUTURE THROUGH COOPERATIONACADEMIC AUDIOLOGY CLINICS ARE DIFFERENT THAN OTHER AUDIOLOGY CLINICS THEIR CHALLENGES AND SOLUTIONS ARE OFTEN DIFFERENT THAN OTHER AUDIOLOGY CLINICS THEY ARE RARELY IN COMPETITION WITH ONE ANOTHER ACADEMIC AUDIOLOGY CLINICS SHOULD WORK TOGETHER TO CREATE A BETTER FUTURE THROUGH NETWORKING AND SHARING IMPROVING OUR FUTURE THROUGH COOPERATION

45 Suggestion Academic audiology clinics would benefit from an annual meeting solely focused on the issues of academic audiology clinics as opposed to the larger realm of audiology, speech clinics, private practice audiology clinics, and medical center audiology clinics. Purpose: Meet to identify, discuss, and share ideas that result in improved patient care, better student clinical experiences, enhanced business operations, and improved research opportunities in academic audiology clinics throughout the U.S.

46 Think About IT We have about 75 Academic Audiology Clinics in the U.S. that, in addition to patient care, educate and train Au.D. students, and often participate in clinical and translational research, and have nonprofit status, making them a unique group. But we have no networking/meeting structure dedicated to the needs of academic audiology clinics. Such a meeting could meet in conjunction with CAPCSD or another organization, or rotate among them. (Importantly, CAPCSD offers the best possibility to increase interactions and interdependencies between academic education programs and academic clinics.) The focus should be on meeting, networking, problem solving, and normative data collection, not forming yet another organization.

47 ACADEMIC AUDIOLOGY CLINICS ARE DIFFERENT THAN OTHER AUDIOLOGY CLINICSTHEIR CHALLENGES AND SOLUTIONS ARE OFTEN DIFFERENT THAN OTHER AUDIOLOGY CLINICS THEY ARE RARELY IN COMPETITION WITH ONE ANOTHER ACADEMIC AUDIOLOGY CLINICS SHOULD WORK TOGETHER TO CREATE A BETTER FUTURE THROUGH NETWORKING AND SHARING DISSCUSSION

48 Questions