# Meet Your New VP of Productivity

Meet Your New VP of Productivity

Byline: TERRY PAGELER

You work more but have little to show for it. You succeed in adding more patients, but it never seems enough. Do you try new things and most prove ineffective? It’s time to have a face-to-face with your “VP” of Productivity.

Don’t have one, you say? My, you have been busy! Meet your office mate, Vilfredo Pareto. He’s been with you from the start. He’s at all your meetings. He’s there at each patient visit. Don’t tell your spouse, but he comes home with you at night.

“VP” largely rules your operation, your production and certainly your profitability. Let’s give him a call. Quick, dial Star-8020.

Buon giorno.

Hello, Vilfredo. It’s Terry and a friend. We’ve got you on speakerphone. My associate here is feeling overworked.

Si.

You’ll have to forgive your VP of Productivity. He’s 150 years old. And he’s a man of few words. Let me explain.

Vilfredo was born in Italy in 1848. An engineer, economist and one heck of a math guy, he was among the first to apply advanced mathematics to economic analysis. About 108 years ago, he figured out that, nearly always, 80 percent of outputs are produced by just 20 percent of inputs. His “80:20” rule rules your daily business productivity.

So how do you make your VP of Productivity work for you?

It’s simple. Just know he’s there. Take a look at your business and be aware of which referral sources drive 80 percent of your business. Determine which products and services account for 80 percent of your revenue. Are they the same products that generate 80 percent of your gross profit? Which customers and products make up 80 percent of your service calls?

Study your business and identify your 80:20 strengths. Learn from your history what you do best, then try to expand those strengths just slightly. Why just a little? The 80:20 rule is universal. Grow twice as large and Vilfredo will be right there. Shrink 50 percent and you won’t downsize him. But while Vilfredo’s 80:20 rule is universal, it’s not absolute. Hey, he’s 150 years old! If you’re clever, you can slip a few gains past him.

Think of it this way. Imagine that 100 batteries power your business. Total, they produce 1,000 volts. But 80 percent of your batteries generate only 20 percent of your power. That’s 200 volts from 80 batteries for an average output of 2.5 volts each.

Your remaining 20 batteries generate 80 percent of your power: 800 volts divided by 20 batteries is 40 volts each. So, don’t lose one. If one of your top batteries goes kaput, it will take 16 more regular batteries to get you back to the same power.

By simply understanding your strengths, or what is referred to as “power core” business drivers, you can achieve significant productivity gains. If you can assess what makes your high-power performers so strong, then use those truths to tweak your 2.5 volters up to 3 volts, you gain 40 volts; a net gain of 4 percent output.

An even better use of your study time would be with your top performers. A 5 percent increase with this small, 800-volt set of referral sources and/or patients would add another 40 volts. Be watchful, too, of the warning systems inherent in the 80:20 rule. If 80 percent of your patients are Medicare patients, get to work diversifying your mix.

By learning from your VP of Productivity’s rule, and tapping it a little here and there, you can achieve a multiplier effect. Work just a little bit harder (you’re doing it anyway) to market more products – particularly those most profitable – to your best customers. Consciously take a look at this handful of advocates and determine what products/services you carry that they are sourcing elsewhere.

Your top customers are those that have already shown they like you. The cost to sell them more is far less than the cost to get new customers. Already have them maxed out? No more volts to be generated? Order a shirt. Yes, order a shirt. Call Lands’ End. And when your shirt comes in, notice what else is in the box. A catalog. Lands’ End knows that those who just purchased a shirt are those statistically most likely to order more. Your patient who just received her concentrator is also most likely to realize, with your timely advice, a need for bath aids or other supplemental aids.

It’s important to know that the 80:20 rule applies not only to current inputs but also to future success. Our analysis shows that current year high-voltage customers will contribute the majority of next year’s growth.

Tomorrow, have breakfast with Vilfredo, your VP of Productivity. Consult him throughout your day. One thing is sure. He’ll caution you to be on alert for guest HomeCare contributors who make articles 80 percent longer than need be to deliver a few productive points.

Terry Pageler is president of Pageler & Companies Inc., a data-driven business development company in Lenexa, Kan., focused on health care product and service providers. Pageler holds a master’s degree in marketing from the University of Kansas, where he also teaches graduate-level courses in strategic management and brand strategy. He can be reached at 913/829-8020 or by e-mail at tpageler@pageler.com .

Born in Paris in 1848, Vilfredo Pareto advanced several concepts of social economics but is best known for two principles: Pareto Optimality, a concept stating that resource allocation is optimal only when it makes people better off, not worse off; and Pareto’s Law of Income Distribution, which explains the relationship between each income level and the number of people who receive more than that income. Pareto declined a Senate seat in Mussolini’s government in 1923, the same year of his death.