“… a measure of our ignorance about the causes of economic growth” Moses Abramovitz, economist (1956)
You didn’t go into medicine to run a business. You went into it because you wanted to help people. You endured the education, the residency. the clinical hours, the debt, the years of building. Somewhere along the way, you realized that truly helping people would require owning the practice that lets you.
So you signed the lease, hired the staff, bought the equipment, and opened the doors.
Only, now you’re several years in, and the math doesn’t work the way you thought it would.
You’ve added providers.
Invested in technology.
Expanded services.
Revenue went up.
But the life you envisioned when you signed those loan documents: the calm, the security, the knowledge that what you’re investing your life in is actually worthy of the investment…
…hasn’t arrived. You’re producing more and keeping less. Working harder and sleeping worse.
There is an equation that describes how every practice produces output:
q = A × f(L, k)
Output (q) is a function of labor (L) and capital (k), multiplied by A.
So, what is “A”?
A is everything else.
Economists call it Total Factor Productivity. But what it actually measures is everything the equation compresses into a single letter: the quality of your processes, the depth of your organizational knowledge, the design of how the work gets done. And it raises a question nobody in your financial life has asked you: are you, your people, and your assets working, or just at work?
The associate who shows up, sees patients, charts notes, and goes home is at work. The one who keeps commitments to patient education, clinical excellence, and the kind of trust that produces referrals and retention is working. Same cost on the same payroll report.
Same L, different “A.”
But the compression runs deeper than productivity. Economics also compresses four qualitatively distinct forms of capital into the single letter “k”:
Capital Equipment: the tools that expand your capacity to diagnose, treat, and operate. Capital Inventory: the fresh, uncommon offers your practice can deploy when the situation demands it. Operating Capital: the money invested in sustaining and developing your other forms of capital. Financial Capital: the money invested to produce what doesn’t yet exist.
And then there is a form that does not appear in the equation at all.
Capital Identities: your practice’s identities of Trustworthiness, Value, Authority, Leadership, and Dignity as assessed by the marketplace itself. The assessments made by your patients, your referral sources, your staff, and the future patients, referral sources, and staff who will make their decisions about you before a marketing word is ever written.
The accounting profession has a name for it: Goodwill. But Goodwill is only recognized the moment you sell, when the purchase price exceeds the fair market value of identifiable net assets. You develop it for twenty years, and accounting recognizes it on the day you leave. The profession proved it was real by giving it a name, then designed a framework that can only “see” it when it’s too late to do anything about it.
Every quarter you operate without anyone who can see all six forms of capital and help you assess them, name them, and deliberately develop them is time that increases the distance between the practice you intended and the one you have.
Same L. Same k. Different A.
The practice you intended is not produced by working harder or spending more on the same two compressed variables. It is produced by finding someone who can decompress the equation, see what you actually have, and help you build what you set out to create in the first place.
I wonder if it’s time to ask whether your assets and your people are working, or just at work.
