October 10, 2018
Written by: Scott Williamson
Recently I was speaking at a state meeting about some of the lessons learned by our MasterMind™ teams. We had a great discussion and one of the people said, “you know, I have realized [during this discussion], that I am ‘flying by the seat of my pants.’ ” It is true that many private practice owners do not have formal business management education, and for many, many years, running an O&P practice really did not require significant business acumen. Times are changing, however, and there is nothing wrong with “listening to your gut.” Even without formal education, you have learned through experience, but now it’s time to apply some science to see if your gut is in fact, correct.
As a small business owner, you wear many hats. One of them is most likely “entrepreneur.” As such, it makes sense to me to try to apply some of the theories of Behavioral Economics to how business decisions get made. Behavioral Economics is a method of economic analysis that applies psychological insights into human behavior to explain economic decision-making. Even though Behavioral Economics is mostly applied to “investment decisions,” the reality is that your business is probably your largest investment. So in addition to the challenges of active management, we have some of the challenges common to investors further complicating matters.
As much as we like to think we are “logical” and “calculating” in our business decisions, there is a tremendous amount of research that might make us think otherwise. It’s also very easy to convince yourself that Behavioral Economics applies to “everyone else.” Read the following and see how much these ideas resonate with you:
- Studies show that people are overconfident. They believe they know more than they do, or they assume their knowledge is more precise than it is. This overconfidence is reinforced with every success.
- Behavioral economists say that confirmation bias leads most people to seek out evidence that supports what they already believe or to ignore data that might disprove their beliefs. “That’s so ridiculous I’m not even going to waste my time refuting it.”
- People tend to get caught up in short-term costs or losses (or setbacks) and lose sight of the long-term goals. “I need to get this done/see this patient/handle this matter now. I don’t have time to strategize or plan for next year.”
- Extensive research documents unconscious biases and other factors that shape our behavior below our level of awareness. Are you kidding me? I can’t think of a single decision I’ve made that was affected by unconscious bias!”
- Many people keep trying to justify a past decision even after it has become obvious that it was a mistake. “We spent so much money on that widget that we have to keep using it, even if it doesn’t fit our current needs!”
My goal here is to raise your awareness of how you may make some key business decisions. We tend to stick with what we know and we become more and more risk averse as we go along. At OPIE Choice, we want to shed some new light on the business optimization part of your entrepreneurial investment. We believe we can help you maximize your investment through business intelligence based on your data.
Part two of this blog will talk about how you can turn this new awareness into a multiplier of your effectiveness as a business owner and leader. Be sure to check your inbox next Friday to read Part 2.
Scott Williamson, MBA, CAE(ret), is the Executive Director of the OPIE Choice Network. He founded and is President of Quality Outcomes, LLC., a company dedicated to establishing a consensus building approach to identify broad-based Orthotic and Prosthetic (O&P) outcomes data to identify and teach professional best practices. Scott was recently certified in Lean Six Sigma.
Scott is a member of the National Quality Forum and is active on the Quality Measures Research Council. In addition, he is a member of the Board of Directors of the Center for Orthotic and Prosthetic Learning, he is a member of the Agency for Healthcare Research and Quality (AHRQ) and is past-chair of the Healthcare Knowledge Taskforce for ASAE. He is the President of OPAF and is Treasurer of the Pedorthic Research Foundation Board of Directors. He has worked in professional certification since 1992, and most recently worked for the American Board for Certification in Orthotics, Prosthetics and Pedorthics, Inc. (ABC) from 2002 – 2010 as the Director of Facility Accreditation. In that position he played a key role in establishing and maintaining the national standards for quality O&P care. Scott has been a key liaison between the O&P profession and CMS during the development of the CMS Quality Standards and their mandatory accreditation program. In 1995, Scott earned his Masters of Business Administration from the University of Richmond and his undergraduate degree is in Management Economics from Hampden~Sydney College. While earning his MBA, Scott worked for MWH MediCorp (a hospital holding company) where he developed and maintained billing and performance data and was responsible for corporate safety and security. In 2005 Scott earned his Certified Association Executive (CAE) credential from the American Society of Association Executives (ASAE). Scott is a frequent speaker on value-based healthcare and its impact on the provision of O&P services, as well as business process improvement and change management in a small practice setting. He has taught DMEPOS accreditation processes and standards and explained the CMS Quality Standards. Scott, his wife, Colleen and daughter Nicole live in Fredericksburg, Virginia.