Publisher’s Note: A Cautionary Tale

Home Depot built its reputation, and a multibillion-dollar business, on providing great service to do-it-yourselfers. Refinishing a basement? Installing a new toilet?

Home Depot’s staff, many of them former tradesmen, would explain the “how-tos” while selling you the products you needed.

But once it established itself as the gold standard in the home improvement business - as well as a darling of Wall Street - Home Depot’s executive management steered a new course: To cut costs and raise its bottom line, it replaced many of those helpful staff with inexperienced floorwalkers. And it began directing its new employees to conduct what the company itself now admits were “mind numbing” tasks. Among these, according to The Wall Street Journal: counting the number of pallets offloaded from supply trucks per hour, per store.

The result? Disaster. Earlier this year, Home Depot reported its first-ever full-year decline in annual earnings. With its stock price under pressure, the company replaced its top executive.

Not that you asked, Home Depot, but here’s some free advice: Measure just a few key metrics of you business performance, such as customer satisfaction, not everything under the roof.

As a practice owner or manager, you are probably searching, as Home Depot was, for ways to boost your bottom line. And you, too, may be tempted to cut expenses by cutting staff or hiring less experienced employees. But you must remember the lesson that the giant retailer forgot: You are in business to provide service, not to measure things.

That is not to say you shouldn’t measure things; but it does mean that you should focus on those things that truly matter to your core objectives.

One metric that does matter, as Senior Editor Pamela Moore explains in April’s cover story on scheduling, is patient flow. Improving in-office patient flow, Moore argues, can help you provide quality care while improving financial performance - the two big objectives of any practice.

In fact, good patient flow is one of the few key metrics to success. Your exam room is “like an airplane seat; you need it full to make money,” explains one practice consultant Moore quotes. And the way to keep those exam rooms optimally full starts by properly measuring patient flow, and then creating schedules that accord with the reality of how each physician in your office practices.

Just how important is good patient flow?

Peter Drucker, hailed as “the greatest management thinker” of the 20th century, during a career that spanned over 60 years, helped executives realize their most ambitious objectives. He profoundly shaped American management, inventing such concepts as the “knowledge worker” and “managing by objectives.”

Among Drucker’s teachings is the simple concept that underlies all organizations: Effective management of processes arises from effective management of time. The first step is accurately measuring how time is spent. Get started right away better managing your time and that of your patients with our April cover story: Staying on Time.

Ken Karpay is the publisher of Physicians Practice. He can be reached at kkarpay@physicianspractice.com.
This article originally appeared in the April 2007 issue of Physicians Practice.