You own the hot dog concession at the local major league ballpark. Because 50,000 plus potential customers come to the facility several days a week during baseball season, sales, and profits, are good, so good that you pay a hefty fee for the right to operate the hot dog stands.
Later, stadium management wants to increase their ticket sales, so they get you to agree to honor coupons distributed in the community — in varying amounts, they give the holder a discount of up to 70% off. Sales, in terms of volume, is up, way up. But, for each of the many hot dogs eaten by the coupon holders, a large bite is taken out of your profits. So much so that after a few years of operating at a near or actual loss, there’s no way that you can afford to continue operating the stands.
The stadium, realizing that baseball without hot dogs isn’t baseball, decides to incentivize you to keep operating the stands. They pay you a fee to assure that you will make enough profit, as measured by an “expert” as of that day, to keep the stands running. But you’ve got to keep honoring the coupons — and the stadium managers keep printing more and more coupons.
Would you keep running your hot dog stand if business slips back into the red (after all, the public needs hot dogs) or would you either negotiate additional funding from the stadium or find a new venue for your products and your services?
Of course, the stadium is a hospital and your concession stand doesn’t sell hot dogs, it renders hospital-based medical group services. But, the analysis is much the same. Instead of food, you sell anesthesiology, radiology, pathology or emergency medicine services. You hold an exclusive contract, not a concession-stand agreement. But what is it that hot dog vendors know about strategy and tactics that you don’t?
If you’re selling medical services but collecting only peanuts (or even hot dogs) let me know. You need a better agent.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss