With a popular book on parenting, the fit and photogenic French physician Michel Cohen was the 21st century’s answer to Dr. Spock. In the early 2000’s, he had a smart, hip, high-quality-care New York City pediatric practice that catered to smart, hip parents including a lot of downtown celebrities whom he saw in his architecturally iconoclastic office—a cross between Pee Wee’s Playhouse meets Wes Anderson film set. The media loved him. Magazines featured him. And because of his common sense, low-intervention medical approach to raising children writers dubbed him Dr. Laissez Faire.
Things went so well he opened up another office just like it in Brooklyn.
Meanwhile the healthcare industry was in flux with expanding regulations, upheavals in technology, rising pharmaceutical prices and dramatic cuts in insurance reimbursements. Most doctors were abandoning their private practices to join corporate health care systems. (The percentage of U.S. independent physicians has plummeted from 57% in 2000 to 33% today.) But Cohen, who spent his days biking back and forth across the Brooklyn Bridge, managing his growing practice, seemed to have it all. He thought everything was fine. That is until one morning, early in 2008, when he got a very disturbing call from his bank. “They told me I was $400,000 in debt,” says Cohen. “I was in complete shock.”
To make payroll that month he had to borrow $30,000 from a friend.
Despite the fact that Cohen had built up a popular practice for nearly fifteen years, he was broke. To maintain his autonomy and keep his practice independent Cohen realized that he’d have to be more than just a doctor. He’d have to become a systems analyst, a human resources’ specialist, a customer service expert, a real estate speculator, and a construction site manager—in other words, a do-it-all entrepreneur.
Here’s how in less than a decade, focusing on four key aspects of his business, Cohen managed to transform his fiscally failing practice into New York City’s largest privately owned pediatric practice. He has over 30,000 patients and oversees 40 doctors and 250 employees in 18 satellite offices and has expanded to New Jersey and California.
Fix the Systems
Entrepreneurs know that no matter how much business they generate, unless they optimize their operational systems, they might not ever make a profit. Cohen learned this the hard way. The “profit leak” for an independent medical practice averages 10 to 15% percent. But when asked about what he estimates his profit leak to have been back in 2008, Cohen just throws up his hands in a classic gesture of French exasperation: Je ne sais quoi!
In a typical pediatric practice 90% of revenue comes from insurance company reimbursements. When Cohen took a close look at the billing system that his office manager had set up, he was shocked: “Chaos,” he says. “Unpaid insurance claims worth hundreds of thousands of dollars were stuffed into folders and binders.” Essentially, he’d been working for free. When he confronted his office manager her excuse was that she’d become “overwhelmed.” Cohen immediately fired her and half the staff.
“By nature doctors have an autonomous mindset,” says Kaveh Safavi, director for global healthcare business at Accenture, a marketing and consulting firm. “They think ‘I will personally professionalize my own practice.’ But many doctors don’t want to or can’t manage the operational side of their business.”
At his desperate moment Cohen agonized over what to do. Should he sell his practice? Hire a consultant to fix his problems? Or could he possibly professionalize his own business?
Over a grueling year-long period, Cohen was doctor by day, “McKinsey analyst” by night. He studied thousands of insurance claims, one by one, to learn the Byzantine path they’d need to take for him to finally be paid. Using Excel spreadsheets and charts, he plotted the data from his antiquated billing system and invested in off-the-shelf billing software. He surprised himself. He was good at planning, designing and digitizing a system that accurately tracked each and every claim from initial filing to final payment. Rather than using the conventional 30, 60, 90-day cycle of tracking claims favored by most physicians, Cohen supercharged his system to track the status of unpaid claims for every single week. He figured that way, since collecting from insurance companies can be a bureaucratic nightmare, he could discover problems earlier and solve them more quickly. He even designed the system so that he can monitor it from his phone.
Once Cohen was actually reimbursed for his services, his busy and popular practice was finally turning a healthy profit. But Cohen didn’t stop there. Once he got his billing under what he calls “super tight” control, he applied the operational lessons to all of his in-office systems that had been set up with little thought, efficiency or oversight. He attacked one area after another, designing streamlined systems to track and measure his patients’ medical histories, payroll, and drug and medical supply inventory.
Although he’d loved being known as the hip celebrity doctor, after rescuing his practice from fiscal catastrophe, Cohen found a much deeper satisfaction in being a highly efficient systems geek.
Reinvent the Experience
The typical doctor’s office is a cold and clinical place with little regard for the comfort of the patient—the kind of environment that makes people anxious just when they need reassurance the most. Cohen found that unacceptable. His radical solution was to create a space that was the opposite of the generic doctor’s office. He modeled his office on a bohemian artist’s loft (as a matter of fact, he modeled it on the one he’d lived in with his artist wife when he first moved to New York City and had run his practice out of the front). In the office, he covered the walls in paintings, filled the waiting rooms with brightly colored and oddly-shaped furniture and built charming exam room pods covered in boldly-patterned vintage wallpaper. His iconoclastic office design was not just for show. Cohen had reimagined the doctor’s office as a place that would completely change the way kids and parents experienced a visit to the doctor.
When Cohen was wrestling with how to recover fiscal health, he took the design principles of his office a step further and radically “redesigned” his staff. He handpicked his doctors and nurses not just to be good clinicians but for personality. The medical staff who come to the practice mostly by way of referral have to “get our mission,” says Cohen’s Practice Administrator, Leslie Pennypacker. “They understand that the parents who come to our practice are knowledgeable people who do their research. They want our opinions, but don’t want to be dictated to.” To ensure that, Cohen trains the medical staff to relate to patients and their parents with a calm personable intimacy.
Cohen applied this same “culture fit” principle to his non-medical staff. Instead of employing people who have worked at other doctors’ offices, who often have a jaded attitude toward patients, he hires people with experience in the hospitality industry, waiters and hotel staff. Pennypacker, herself a former waitress says, “Having a hospitality background usually means that the person is able to multitask with a smile and is willing to get involved in tasks that might be out of their job description. They also know hospitality’s golden rule: The customer’s always right.”
Cohen has reinvented the experience of the doctor’s office visit to appeal to people who want not just excellent medical care, but a smart, friendly, respectful and even aesthetically-pleasing medical experience for their kids. Much as Apple did when it modeled their brick-and-mortar retail experience and staff on the experience and service one might expect from The Four Seasons rather than Best Buy, Cohen has modeled his experience of a visit-to-the-pediatrician on the warm and friendly environment of his original loft practice. The physicians respond—turnover rate is low—and the practice’s patrons respond with reports of feeling welcome and well taken care of.
Fix the Pain Points
There’s more to seeing the doctor than just “seeing” the doctor. Everyone has their horror stories of navigating the medical system. A lot of doctors don’t give much thought to their patients’ bureaucratic travails. But Cohen does. He doesn’t just care about what takes place in the office. He wants to make every aspect of his patients’ healthcare experience as simple and painless as possible. Instead of assuming that he knows what his “customers” (the parents of his patients) want fixed, he asks them directly, relying on two methods that any business owner can use—customer feedback and email surveys.
Cohen sends out over 300 personal emails a month directly to parents of his patients—across the different offices, physicians and patient age ranges—to get an idea of how the practice is doing. (His client base is so loyal that he gets an astounding 30% response rate.) Cohen personally reviews and responds to each response, following up with a phone call if necessary. What has he found out? Plenty. Including that when people need something from the practice, an appointment, a form filled out, off-hours medical advice, etc., they expect a timely and hassle-free response. And when they don’t get that, they feel frustrated and angry.
To fix these “customer” pain points, Cohen came up with a plan. He simplified parent/practice communication by creating a centralized, responsive, round-the-clock Tribeca Pediatrics communication center analogous to a customer support department. By calling a single number, parents of patients from any of the offices needing medical advice are immediately connected to a registered nurse. And if the issue requires a doctor’s attention, instead of having to worry and wait or play phone tag, the parent is given a specific call back time. When parents run into disputes with their insurance companies the center acts as their liaison. And school and camp forms are easily managed through the website and promised back in under a half an hour. Working with his small but growing tech department, Cohen even designed a website widget, The Wizard of Dose, that calculates dosage recommendations for anxious parents seeking info about over-the-counter medication.
In today’s digital world, easy access is expected. “This is a huge trend for us,” says Cohen, who intends to keep asking for feedback to continue to optimize the services he provides, including a patient medical records’ app he’s overseeing to make patients’ medical histories available from their parents’ phones.
Expand the Plan
As the creative class and urban pioneers move deeper into the boroughs of New York City over the last couple of decades—Boerum Hill, Williamsburg and Park Slope in Brooklyn, Harlem and Chelsea in Manhattan, Long Island City in Queens—Cohen has seen an opportunity. Wherever the creative class with their young families goes Cohen’s practice follows, opening satellite offices. On average, he has opened two satellite offices a year since 2009, typically in neighborhoods next to neighborhoods where there’s already a Tribeca Pediatrics office. “We pull demographic information from our current patients to see what neighborhoods they are coming from,” says Practice Administrator Pennypacker. “Patients reach out asking us to open an office in their neighborhood and we also look into areas where there are only customer-service-poor clinics.” But, she adds, the final decision is made by Cohen, himself, who, “bikes or takes his scooter over to check out the area and have a nice coffee at a local restaurant.”
Since Cohen has found his winning formula, each new office has a unique relationship with its community but it’s plugged directly into the centralized system operations, which keeps down overhead.
To keep down costs and maintain look, feel, functionality and efficiency, Cohen has even opened a fabrication workshop and hired a crew of four to design and make all the furniture and pre-fab interiors of each new office—from the exam room pods to the biomorphic shaped front desks. “Everything’s delivered ready to be installed,” says Cohen. “We even deliver it with the wallpaper on the walls.” The savings, he estimates, are enormous, and it allows him to design everything to his exacting specifications even down to the precise measurements of the storage built-in’s that hold inventory under the exam room beds.
Expanding his customer base was a financial necessity for Cohen. He explains that small doctors’ practices can be squeezed out of business because insurance companies may reimburse them at rates as low as 50% of what a larger practice gets. With 30,000 plus patients, Cohen can negotiate more favorable rates from the insurance carriers. And the bigger his practice, the better his negotiating power with suppliers of medical equipment and drug companies. (He spends $1 million in vaccines every year.)
Like a famous chef with a line of restaurants, Cohen has been able to model the satellite offices of his practice in a way that feels both uniquely part of each particular communities as well as an extension of the Tribeca Pediatrics mothership.
By mastering so many different roles, by knowing the granular details of his business, by always focusing on his customers and maintaining his passion to constantly improve the service he provides, Cohen has kept his autonomy, surviving and thriving in an industry where so many others have been forced out of business. When asked whether he’ll continue his manifest destiny to creative class hotspots nationwide, Cohen shrugs. “Maybe if I find the right partner,” he says. “For now, there are nearly three hundred neighborhoods in New York City. Plenty of room for more Tribeca Pediatrics right here.”