In this episode, we sit down with Dr. Edward Kanara, Founder of Kanara Consulting Group, to talk about the difficulties of unified management, and how businesses can only function optimally if leadership decisions are made with best medical care practices as the priority.
We discuss the challenges of differing goals between management and veterinary medical practitioners, and how with the right approach these spaces can be unified to create thriving businesses that still prioritize patient care.
Welcome to Consolidate That! Ivan, so great to see you after the Thanksgiving holiday and I’m really excited to learn some more from our guest today.
Hi, I’m Ivan Zak and I’m happy to introduce our guest today, Dr. Edward Kanara. Dr. Kanara is currently the managing member of Kanara Consulting Group, which he founded in 2007. His group focuses on management consulting and leadership development with clients that include the human and animal health industries, research organizations, academia of veterinary medical associations, and private veterinary practices.
Dr. Kanara, welcome to the show, thank you for finding the time.
Thank you, my pleasure to be here.
With your background, can you probably open up with, why such a diversification between academia and veterinary medical? What is the main focus and how did you expand into different niches or verticals if you would call them.
Well, a lot of my work has to do with strategy in the animal health space, and so I think that transcends those different stakeholders. The process and the fundamentals of developing good strategy as they apply to animal health and patient care, regardless of whether that patient care may be provided at the grassroots in a veterinary practice, or has to do with the type of products that need to be developed in a research lab by a bench scientist.
The fundamentals of setting goals and putting plans together transcends those different locations but they’re all focused on the same thing which is again, patient care ultimately.
That’s interesting, I agree, you know? Business is business and the strategy is strategy. I’ll throw a curveball of a question here to you. What I’m kind of struggling – when I’m thinking about the veterinary consolidation, all medical consolidation is like dentistry and other small offices, or some people call them med tail, like a retail of medical services.
When they’re consolidated, if you think about any business that is not related to medicine and veterinary, then usually, in management, you have operations. So there’s an arm that is responsible for operations, there’s finance, there’s IT, there’s others, operations is usually the biggest one. There’s no sort of any deviation in the strategy there, or in management team beyond that. When you’re talking about dentistry or veterinary medicine or something else, all of a sudden, you’re building out this other arm, which is your operations, but then there’s medical operations. I think that that’s really confusing. And then the split between the two, I don’t actually know a) who wins? And how do you build out the two and how do you arrive to unified management? Because a lot of the times, when you have those two arms then they either – either one is fake and is just sort of artificial, which is okay and at least, everybody agrees on that. Or there is a constant conflict, we do this for medical reasons, we do this for operational reasons. A bit of a loaded question but what do you think about that?
No, I mean, I think you have hit the – that’s the challenge, you’ve just described the challenge, okay? I believe the solution is sometimes simpler than we believe, and I look at it like this. What you just described is that we have stated business goals, okay? As you say, there’s a lot of consistency that transcends industry if we remove that kind of medical piece around that. There can be alignment there.
What’s the real challenge is the medical operations piece that you have asked about. I look at this as really trying to develop win/win value propositions at the highest level and planning. At the center of that, there has to be agreement with the leadership team that nothing really can happen unless the decisions are ultimately, fundamentally sound for best practices patient care. If we’re making our decisions based on best practice patient care are those then consistent with our business goals and are those plans consistent with an engaged veterinary team.
Let’s look at this maybe from the other perspective of this. Let’s say that the business comes up with some – the operations part of it comes up with an idea that we want to have standardized SOPs that will require these diagnostic tests in every hospital, because the numbers are amazing if we can just do this in every patient that comes through the door, okay?
Well, the question that has to be asked at the highest level, the check step that occurs for that is that goal that has been set, is it consistent with good patient care? And not only is it consistent with good patient care, can we communicate that to the entire healthcare team in a way that they don’t feel they’re now selling that diagnostic test? Do they believe it’s in the best interest of patient care, okay?
If the answer is yes to all of those, now we have done something that will drive more business, provide better patient care, and we have a healthcare team that is bought in and motivated to make it happen. But if at the beginning of that decision-making process, the great idea of this new diagnostic that we can make sure every patient has, if it doesn’t pass the red face test in terms of – is it really in the best interest of that patient and thereby the client that owns that patient that’s not even going to be paying for it? Then the rest of it falls apart and never gets executed at the practice level.
First of all, I know that can all happen, right? It’s much harder to make that happen if you don’t have, at the highest levels of leadership that are putting those types of plans together, if you don’t have a marriage of what you’ve labeled business operations, that truly respect each other, and understand what each of those are trying to achieve, okay?
So, if as the chief medical officer, I don’t fundamentally understand what are the pressures that the operations is really under to deliver on financial objectives and targets – I can’t isolate myself and just say, “All we can do is what’s in the best interest of exceptional patient care.” Because I might want to have an idea that I want a portable MRI in every clinic.
If I don’t get that, and unless that MRI is generating how many X in terms of profitability over what period of time, then I’m just as ridiculous as a business guy coming up with a list of new diagnostic tests that really don’t make sense, okay?
As a business – as the business lead, I have to respect that nothing happens at the practice level in terms of engagement if that practice team doesn’t really believe that they’re doing what’s best for the patient. The employees that work in those practices, especially the technicians and the animal caregivers and so forth, they are not doing it for the money, okay?
They are doing it because they are passionate about patient care and therefore, they have to believe in what they’re doing. And so, first the fundamentals have to be right. And then, there has to be a real emphasis on communication from corporate coming downward as to why we’re doing what we’re doing.
Those teams have to believe really that corporate understands that it really is about patient care. And those veterinary teams really have to understand, at least on a macro basis, what we’re trying to accomplish from a business standpoint.
Now, Dr. Kanara, would you think that a way to go about increasing that understanding across the organization is to have veterinarians at a higher leadership level within the group, whether it’s the chief medical officer but even as the CEO or as the head of operations on the business side or is that – what are the pros and cons do you think on those?
Yeah, I mean, it’s all about the individual skillset of the person, okay? In terms of structure, I think that absolutely, there needs to be a chief medical officer on the most senior leadership team. Because what happens oftentimes is, once a bright idea is hatched, somebody owns that bright idea and now they’re married to it. And now if the senior leadership team endorses it, and now somewhere downhill, the medical part of the team goes “Time out.” Somebody has got to capitulate and go, “Oh maybe it wasn’t such a great idea” and nobody likes to do that.
If again, at the time of those initial discussions, the CMO is saying, “Well hang on a second, I hear what you’re trying to do. What you’ve proposed isn’t necessarily going to get us there but how about this? I understand what we’re trying to achieve from a business standpoint but how about if we do it in this way? The business guy doesn’t care how he got there, as long as the numbers are going to still work, okay? The medical guy cares how we get there. Because all the teams care how we get there.
I believe that absolutely, you can have a DVM in the CEO position but then they truly have to understand business. I mean, they’ve got to be able to have those same discussions with a venture capitalist and the board and they have to be able to talk that talk and yeah. It’s almost nice to have that they’re a veterinarian as well. But in that environment, probably, their business skills are even more important than their veterinary skills.
I usually recommend if that’s the situation, they actually have a CMO as well. Somebody that is only thinking about that for example. I mean, I’m not sure if you’re aware but the CEO of Pfizer right now, Albert Bourla, is a veterinarian. And so, there’s some extremely impressive veterinarians with great business backgrounds out there. And the dilemma I see is, Ivan, something that you had mentioned when you were framing the initial question about business operations versus medical operations, is oftentimes, there’s this chief medical officer and they are purely there for the optics.
They really don’t view themselves as part of the decision-making team, nor are they invited to be a part of the decision-making team for the business. Now, again, that’s a two-edged sword, they need to have that skillset and they need to have that understanding to be respected by the business guys. It’s much more about the individual skillset of the individual.
In my mind, as to the influence and persuasive power they can have. But as a starting point, Ryan, to get back to your question on structure, I believe that there needs to be a respected voice, medical operations at the most senior leadership team, decision-making table from really, day one.
I think – I really like how you describe it because there is actually I think, gave very fine balance between the two extremes of the chief medical officer. One, it’s the public figure. Someone hires this great veterinarian who is a speaker, well known – that’s optics, that’s really just to sell people on joining organizations. But then, you know, that in that organization, if that’s the chief medical officer that is just a public figure, then they’re not going to have operational influence, that’s usually – that’s what I see.
The other part is that if the CMO has a strong operational background and – very strong, and that way, we’ll have the influence on leaning more that there’s medical operations rather than operations. Everything will be medicine, the business will actually suffer because we want MRI in every clinic and we want to perfectionize all our processes and you know, and rewrite the SOPs and rewrite the medicine. Just obnoxious things, they’re just too much for business.
You can’t do that because at the end of the day, it’s a business. I think it’s a very fine characteristic of that person that has to be enough – have enough charisma to be a public speaker, represent the company medically but then have an input and influence at the decision table, on processes that are stood up still by operations but always have a medical subject matter expertise when they have decisions. That’s I think, that’s sort of balance.
You really stated that and summarized it well, Ivan. Because here’s the dilemma that sometimes I see and what you’ve described. Therefore, there may be two people that are required. And here’s the reason, is that sometimes that CMO that is hired because of their name recognition and so forth, they often come out of academia and they don’t want to be dirtied by the business operations discussion, “We’re too good for it.” They’re not interested in it, okay?
Therefore, every – the business guys are kind of like, “Well, we’ve got this CMO and you know, we’re going to do our thing” and now by the time this stuff gets down to the practice level, it’s a mess. And oftentimes a highly visible person from academia has no more clues as to what goes on at the practice level than the business guys, all right?
You need to have a CMO or again, I am not going to get hung up on the title, because you might have that highly visible CMO that adds prestige and so forth and credibility to the organization. Great, but you have to have somebody at the table that understands both the business and the medicine and can have an appreciation for the challenges of both.
You know, for a large part of my career after I was in private practice, I was CMO for Pfizer Animal Health. And our “raison d’etre”, a reason for being for our team, we said that “We were veterinarians first and foremost and our allegiance was to our veterinary oath, but-” and on the slide ‘but’ was put in capital letters, “BUT our marketing and sales colleagues have to believe that we are absolutely essential for the success of this business. So the way that we behave and the way that we interact has to recognize that this is a business. That does not preclude us from fulfilling our veterinary oath.”
So it is that balancing act. It can be done. There are business realities for every practice. There’s the nice-to-have things that we’d like to do, there are the need-to-have things. Life is about tradeoff decisions and prioritization, and we can still provide really good patient care without perfectionism, as you described it. But yet, we better make sure that what we are recommending and what we are doing, is in the best interest of that patient. Or we lose the healthcare team, you know?
This is where, right now in this environment, staff retention is everything, and if veterinary teams don’t feel that they are doing what they signed up to do, they have lots of options down the street. So now more than ever, you know, leadership really has to pay attention to ensuring that we’ve got a really healthy workplace culture. That people feel like they’re appreciated, like they’re being heard, like they’re being valued.
Again, all of this is, like I said, for me, all roads lead to patient care. But that also has to be consistent with sound business practices, and also has to be consistent with a healthy workplace environment for the team.
A hundred percent. I want to throw another curveball. This is the question that I think gets down to the interest of the people that are doing the work. Recently, the more I think about the consolidation – or in general, the world of how we treat the patient, the journey of the patient, let’s say, that is really sick. Let’s say it starts at GP practice and what the general practitioner is trying to do is to, if you’re on commission, squeeze as much as you can – or you’re a practice owner – out of that owner.
Then when you get to the point where the patient is critical and really has to go to emergency, then they send that patient to emergency. And the journey didn’t end, but you squeezed as much as you could from them because this is forced by the management. And then you send them to emergency and then at emergency, they squeeze more. And then there, you know, you have to prescribe x-rays to everybody and more blood work, that magic test that brings that return on investment. Then after that, the overnight guy, ER that did his or her job then sends that patient to specialty, where specialty complains and says, “Well, the ER guys spent all the money so we can’t do anything with the patient.”
So, even if that sequence is not within the consolidation, now there’s other consolidations that offer, for example, a partial acquisition or a joint venture, whatever you call it. And there’s two clinics across the road from each other. They still retain 30%, 40% of their equity. And then their front desk is full of patients. And then they are behind, but they would never send that patient across the road because they are still competing. Even though they are within the same organization. And then even if the ER belongs to that organization, they are still squeezing that patient along the way every time it touches any sort of provider, because they are now commission-based, or were commission-based. And they are trying to produce because the management will come in and say, “You didn’t order enough tests, you didn’t do enough x-rays.”
The final outcome of that is, patient is underserved and overpriced because you can’t do much. And the outcome, which leads to burnout in our industry, is economic euthanasia. That basically is something that we are at fault then for, that we’re all about money, but it’s because we’re having those sort of patterns.
Do you think that, and it is kind of a leading question, but I truly believe that commission-based compensation in our domain is destroying the patient care as well as satisfaction as a veterinarian or technicians because they as you said, they are not here for the money.
Do you think that there is economic validity to canceling completely commission-based compensation, and even if you maximize the market rate that you hire veterinarians for, you will get to better outcomes and better production if you don’t pay commission?
Yeah. I mean, it’s a question that would demand an answer far exceeding the time of this podcast because it’s one of those “Yes, but” or “Yes, maybe.” It really depends. I think that commissions can end up being the tail that wags the dog, to excuse my terrible analogy there but I think there can be a place for what I would call hybrid commission components without a total commission approach, all right?
You know, you face this, these are kind of the age-old questions that you see with, how do you compensate sales force? And how do you try to engender teamwork within a sales force and share best practices if you’ve got a compensation program in place that pits everyone against each other, for example? I think that the commission versus non-commission compensation program is a complex question.
I am not ready to say that I don’t think commission doesn’t have a place, but I think that what has happened is that all too often, it has evolved into the scenario you described, which is counterproductive and it’s counterproductive for everybody. People don’t feel good about doing that.
There is a similar thing going on right now on the racetrack, that hasn’t gone on for years. And on the racetrack – I started my career as a thoroughbred racehorse veterinarian. And veterinarians on the race track are, just as veterinarians in small animal practice, for the most part, they make money by charging for the medicine itself. So if you’re prescribing medication for the horse, the more medication you prescribe, the more money you make, all right? There is an argument, of which I am a proponent, that says to give the vetting public as much confidence as possible, you have a centralized pharmacy of which veterinarians make no money from the medication themselves.
They make money from their professional services of examining and treating the horse, and the money for all the profit from the medications can go back into some type of a general research fund, or whatever, for the betterment of equine care for example, all right? It’s a similar situation that you want to remove any question of motivation for prescribing in a small animal clinic as you described, based on what I’m going to make from those recommendations.
On the other hand, again, there are those veterinarians that will look at a situation and say, “You know what? I am not going to worry about what’s stacking up in the waiting room there. If I spend an hour on this client, so be it. I’ll spend an hour with this client.” And now my colleagues down the next two rooms have to somehow make up for this. Again, I think there’s a way to tackle this based on, you know, a lot of what we do is all based on the evolution of the overreaction of what we’ve learned.
There was a time when compensation-based programs were pariahs. I mean, I’m an old guy so I go back before them. And then what we see is that, “Ah, okay this is good. This keeps even associates now aware, much more aware, of the business realities.” But then, the pendulum swings too far and we get into a situation like you described. I am not necessarily ready to say that I believe commission programs are all bad. I say that you’re absolutely right, the questions you raised say that we should take a hard look at them. And there’s probably some hybrid models that I think would be potentially better.
Kind of a rambling answer for what you asked but I think it’s a complicated answer.
No, I agree and there is a lot of factors there. Because I like that you went towards this sort of you know, how much you’re prescribing in the central pharmacy that donates it into your research fund. We have that now. Unfortunately, medicine went now back from being a sales store or the pharmacy with the help of Chewy and Amazon, it did go back to that fund.
That fund is not researched, it’s Chewy and Amazon and it doesn’t matter how much we prescribe, they are taking the gravy. So I think that medicine is swinging back to focus on services that they provide, and as efficient as they can provide them. Because if you don’t, you know, the pharmacy and food sales were 20 plus percent at some point, you know, maybe 10, 15 years ago.
Right now all of that is taken by those two and creating more to come, so it is interesting to see that right now, it really needs to be focused based on services without consideration of what’s the margin on medication. But that simplifies the calculation of the proceeds and everything else. Because you don’t have to – on Clavimox we commission this much, on vaccines we commission this much, which becomes a nightmare on the accounting. Especially if you merge a couple hundred practices together.
It is interesting how medicine is turning back to that. But we blew through 30 minutes and we didn’t even notice that, so we usually promise 20, 25 minutes to our listeners so I think that we’ll wrap up here. We usually wrap up with two questions and one of them – is there a book, a TED Talk, any sort of movie or video that you’ve seen recently that you recommend to our listeners?
I’m going to answer this like a dinosaur, and that is I try to keep up on kind of the latest in strategy models and strategy development models. And I’m pretty unimpressed on what I see lately. Because I see lots of corporate speak and corporate talk and concise messaging around planning, that I usually say, “What? What do you mean by that?” when everybody is shaking their heads like they are understanding.
I go back to the fundamentals and I love Covey’s The Seven Habits, you know I’m a blocking and tackling guy, and I’m usually surprised how that holds up.
I thought that you’d recommend like a really hot TikTok account for us to follow but –
Yeah, Ryan, you’re going to be surprised but my consulting group does not have a website. I’m not on LinkedIn. I am not on Twitter or Facebook. I am not on, as I call it, Tic-Tac-Toe. My business is 100% word of mouth, so I am not the best guy to talk about technology.
Well then, the last question that we will ask you, which is an interesting one because you were recommended to us to be on the show by Stacy Purcell. And we are curious who you would recommend for us to have on the show? And you can’t say Stacy because she’s already done it.
One of the things that I didn’t get a chance to talk about very much today, was the importance of, I think, that a healthy workplace culture plays now in terms of employer retention. And I believe taking a thoughtful approach to defining the culture that you would like in the business, is essential. And then putting in place the steps to develop that culture and ensure that that culture thrives is just absolutely essential in today’s workplace.
An individual by the name of Randy Hall that I have worked with in the past, who does a really nice job speaking about culture, and has done a lot of work with practice teams on culture. And so given the fact that I think that is probably one of the most important keys for success for consolidators, is the workplace culture, I would recommend Randy.
Well, thank you for finding the time. That was a very interesting conversation and I hope that we’ll bump into each other somewhere at the upcoming live conferences.
Yeah, I know I’ll be at western states because I am moderating, so maybe we’ll see each other there, okay?
All right, thanks guys. I appreciate the opportunity to participate.