Staff Turnover and Falling Profits: How We Increased Branch Revenue by 115% Through HR Strategy

Case Study: How I boosted profits at a major medical center by 115% and built a high-motivation staffing model.

To be blunt, it wasn’t an easy journey. The owner firmly believed that the business processes were solid and couldn't understand why profits had been declining for several years running. The center had hired experienced doctors and staff, and state-of-the-art equipment was in place, but something just wasn't clicking.

The first and most critical reason, in my opinion, is that the owner forgot that it is the employee who drives sales, cuts costs, and ultimately satisfies the customer's needs. Sales, costs, and service quality depend entirely on the people doing the work.

An owner needs to understand that 60–70% of a company’s performance and productivity depends on its internal work environment. If employees aren't loyal to their company, any initiative the owner takes will die on the vine.

Context

A medical center specializing in ophthalmology, operating for over 20 years in a major Siberian city. The business became particularly high-margin after the abolition of income tax for private healthcare providers.

The services provided by the center are considered high-quality by consumers and are based on three pillars:

• World-class medical equipment;
• Top-tier doctors with extensive experience;
• A focus on post-treatment adaptation.

Challenges facing the medical center

Since the owner prioritizes the professionalism of the doctors above all else, they go to great lengths to ensure "everyone lives together happily ever after."

However, there was no organizational structure, responsibilities were poorly defined, and all major authority was concentrated entirely in the hands of the owner—who had become a "bottleneck" in the organization’s day-to-day operations (leading to delays in decision-making). Internal workflows within the center were not established. The incentive system for the center’s manager and several key employees did not support the organization’s goals. Yet, the owner had made significant, well-informed investments (capital, equipment) in building the center.

The company's reputation in the labor market was such that despite the owner's repeated attempts to expand the medical staff, no one stayed on board.

As a result, any changes proposed by the owner were blocked, and a toxic team environment led to high staff turnover and an extremely poor reputation for the medical center as an employer. Ultimately, this resulted in a significant and, more importantly, consistent decline in revenue, despite the owner’s expectations for exponential growth.

Project Objectives

In 2018, I was hired as a business mentor with a consulting focus to solve two major challenges:

1. Increase and stabilize revenue at the flagship medical center.
2. Leverage the systematization, documentation, and implementation of the flagship center's 20-year operational experience to launch a branch in a new region.

Process Overview

Conducting a management diagnostic (a "clinical approach") and analyzing the company as both an ophthalmology service provider and an employer yielded the following results:

1. Change Management Plan. A change plan was developed, approved by the owner, and put into execution. This plan was based on the findings of the management diagnostic (the "clinical method"). It consists of a four-column table — problem, proposed solution, expected impact, and waste type based on lean manufacturing classifications — and covers all areas from management to facility location, including root cause analysis (identifying the specific cause which, when addressed, prevents recurrence) and remediation strategies. A separate plan was also developed for the new medical center, which includes replacing the executive director and hiring additional physicians.

2. Employee Relations Strategy. We introduced a framework for viewing employees as INDIVIDUALS with their own personal goals. These personal goals are achieved by fulfilling professional tasks to meet company objectives (co-vectoring), following a "useful — profitable — achievable" formula.

3. Task Transparency. We clarified employees' individual roles in achieving company goals, the necessary actions to get there, and the specific criteria used to evaluate their performance.

4. Organizational structure of the new medical center. We have developed an organizational structure for the new medical center, which includes four new departments: urology, rehabilitation, trauma and orthopedics, mammology, and otolaryngology, with a gynecology department planned for the future.

5. Performance-based pay. All employees have been transitioned to a commission-based pay structure.

6. New Executive Director. Organizational changes primarily affected the executive director position. A new executive director was hired following a selection process involving over 40 candidates.

7. Daily business mentoring. Daily work with the executive director through business mentoring has led to meeting revenue targets and successfully managing the search, hiring, and onboarding of staff. Key actions taken include:

• Training and standardization of soft skills;
• Planning, budgeting, task delegation, and performance monitoring;
• Preparation and facilitation of staff meetings;
• Objection handling;
• Creation and management of management reporting;
• Conflict resolution with staff;
• Sourcing, hiring, onboarding, and mapping out career paths for employees, including explaining the importance of these processes;
• Fundamentals of Lean Production and their application in the work of the manager and the medical center;
• Oversight of all business processes on my part, including providing the executive director with feedback on administrative staff performance (analyzing client calls, setting KPIs, etc.).

8. A healthy team culture. A healthy atmosphere—built on mutual respect, trust, and productive competition—began to take root. Training is now viewed as an essential tool for improving patient satisfaction and achieving personal career goals. "Self-" processes (self-reliance, self-learning, and personal accountability) have also begun to take hold.

9. Management reporting. A list and format for management reporting were developed and approved, and implementation is now underway.

Project Results

Phase 1 (2018–2019):

1. Service volume in the flagship medical center increased by 18.3%.
2. A new regional branch was launched, reaching the break-even point within 3 months.
3. Custom software was developed and implemented to automate patient encounter documentation, minimizing time loss and the risk of data inaccuracies.

Phase 2 (2021):

1. Revenue in the flagship medical center increased by 12%.
2. Conversion rate for inbound calls to the contact center improved by 35%.
3. Branch revenue increased by 115.6% (without raising service prices).
4. Initial groundwork for a new branch location was completed.

Summary

I believe that employee loyalty (and satisfaction) is the most critical element of business efficiency, which is why you must constantly strive to improve it. It is precisely this loyalty that enables you to reduce turnover, significantly boost motivation, and, ultimately, elevate the quality of service for your clients.

The core principles I successfully implemented in this project were:

1. Clear definition of tasks.
2. Transparency in communication.
3. Clarity and fairness in compensation.
4. Consistency in training and professional development for staff.

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This case study was written by Aleksandr Bachinskiy, a mentor at United Mentors, a turnaround and interim manager, and co-owner of 10 businesses. From 2018 to 2021, he provided consulting services for the medical center in Siberia described in this case.