Getting Your Money’s Worth: 10 Benefits Your Management Company Should Deliver

There’s a lot of misleading information when it comes to management companies and the results that you can expect for your medical fitness center business. Some over promise results without first assessing your business environment. Others may promote their recruiting ability, but then find it difficult to hire in the marketplace. Or perhaps the company is able to recruit personnel, but their corporate culture doesn’t focus on training, which in the high-turnover field of fitness leads to an even greater rate of turnover.

When it comes to evaluating existing services, your primary consideration should be whether you are getting your money’s worth. At MedFit Partners, we believe a valuable management company provides 10 major benefits:

1. Profitability. As an operating business, it is critical that net operating income consistently exceed financial expectations of comparable investments.
• Look at your medical fitness center as another stock in your portfolio: What long- term return do you expect to achieve?
• Are you generating cash returns of 10 percent or greater?

2. Revenue Maximization. To achieve superior financial results, productivity must be high for the many selling areas in your center. Programs, service mix and effective pricing strategies are important in achieving the performance you want. As membership numbers mature and stabilize, real dynamic growth over time must be found in other areas such as ancillary businesses.
• Picture your center as a department store: what kind of productivity are you getting from each space?
• Are you getting a minimum of 25 percent of gross revenues from fee-based programs, such as personal training, spa services, retail, parties and rentals?

3. Effective Expense Controls. Producing net operating income requires effective expense controls tied to business standards. Personnel costs, marketing/advertising and real estate are the top three expense areas. Your payroll, including management fees, should not exceed 45 percent of gross revenues. (Benefits for fitness management staff are typically half those of the hospital’s personnel.) For a mature center, marketing/advertising should be approximately 5 percent, while real estate varies depending on numerous factors.

• Can you consistently depend on proper budgeting and codifying of expenses, accurately reported on a regular and timely basis, to immediately pinpoint and address any potential problems?
• Are solutions presented for seasonal business cycles and readjusted for growth?

4. Dynamic Integrated Communication. For a consumer-based retail business, the competition for customers’ attention is daunting. Physicians within your organization and in the community are a key target audience.
• Do your communications and public relation strategies focus on creative, informative and professional promotions of your activities and services–as well as the medical fitness difference?
• Are there different messages for the different mediums as well as key consumer segments?
• How effectively and frequently do you communicate with physicians? Are they involved in programs at your facility? Do they recommend your programs and services to their patients?

5. Property Management. Skilled property managers and operators must have the experience to know what works within the physical environment and what doesn’t. The ability to participate early in the design/development stage can identify cost-effective solutions and provide checks and balance during both the design and the construction phases. Experienced operations managers have the ability to rectify existing design issues and recommend solutions during renovation and expansion planning.
• Does your management company provide a regular interior design review?
• Are purchases of equipment and replacements consistent with the design scheme?
• To maintain a state-of-the-art facility and consumer appeal, does your management company budget for regular renovation and updates?

6. Innovative Business Development. The definition of health care is broadening to include businesses once perceived as beyond the scope of traditional services. Spa and integrative medicine businesses are in high demand by consumers and are a logical business extension of wellness fulfillment, but they may not initially seem like a good fit.
• Does your management company have the knowledge and experience to successfully introduce integrative medical practices and clinically oriented spa services in the context of your organization’s culture?
• How do they win the support of established health care providers?
• How do they evaluate real estate for expansion or mixed use?

7. Productive Training. Wellness center personnel require continuous training to be effective at delivering service to members.
• Does your medical fitness team participate in regular group training on a broad spectrum of topics ranging from customer service standards to business practices?
• Are training tools provided to front-line managers for their daily interactions with their team, as well as department meetings?

8. Satisfying Solutions. Utilizing a management company to operate your medical fitness center follows standard business practice for not-for-profit entities, including hospitals, to contract with outside firms to manage non-core operations.
• Is your management company focused on creating a culture unique to your organization? Or is it applying cookie-cutter solutions?
• How do they work with health care leaders to provide clinical integration and employee programs consistent with the medical fitness service mix?

9. Measurement and Evaluation. Since “what gets measured gets done,” it is important that your management company measures what matters for your business.
• What performance indicators are important to your organization?
• Given that most not-for-profits monitor expenses, what adjustments are made for evaluating this retail business?
• Are results for your center in line with other like-sized, similar market projects?

10. Research and Development. Keeping abreast of the latest in consumer attitudes and spending trends in key business categories isn’t an end in itself. Applying this information to your center and testing new programs and services are critical in maintaining and attracting new members.
• Does your center consistently introduce new products and services geared to your market demands?
• Does your model support continuing education for key managers?

When your management company provides all 10 benefits, you know that your business partner is focused on you. Hands-on responsibility means implementing solutions before potential problems have the opportunity to blossom. The best client-focused management firms provide answers before you even think of the questions.