#196 $112,000 Buried by a Billing Manager Who Was Afraid to Speak Up

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The exact diagnostic we use when we walk into a new practice. Takes five minutes. Results are immediate. 

A billing manager at a family medicine group found an $8,000-per-month denial pattern in her first month. She never said anything. It ran for fourteen months before a billing audit caught it. $112,000 in leaked revenue, not from a system failure, but from a management culture that made staying quiet the safer choice. 

This episode is not about billing. It is about the environment that determines whether your team tells you the truth or buries it. We introduce Douglas McGregor's Theory X vs Theory Y framework and show you exactly what fear-based leadership costs an independent medical practice. 

What Enforcer Culture Looks Like in a Practice.  Fear-based management rarely announces itself. It looks like pointed questions in staff meetings, silent audits, and a billing manager who learned early that flagging problems creates more work for her than absorbing them. A billing team operating under enforcer culture surfaces about 60 percent of the problems it finds. The other 40 percent get absorbed into workarounds, write-offs, and queue backlogs that nobody owns. 

The Four Things Enforcer Culture Destroys.  Innovation stops. Turnover compounds. Truth goes underground. People do the minimum. All four appear consistently in fear-based workplaces, and all four have direct revenue consequences in a medical practice. 

What Theory Y Looks Like Operationally.  Theory Y is not soft management. It is a structural decision about what you are optimizing for. Standards are high, expectations are clear, and the response to a problem is curiosity rather than blame. The information flow is faster, more accurate, and more complete. Problems surface earlier. Fixes run sooner. 

Theory X vs Theory Y — Comparison 

Theory X — Enforcer 

View of work: Inherently disliked. People avoid it. 

Motivator: Paycheck and fear of punishment 

Management style: Micromanagement, control, scrutiny 

Employee role: Avoid responsibility, need supervision 

Practice outcome: Burnout, turnover, hidden problems 

Theory Y — Trust 

View of work: Natural and fulfilling. People seek it. 

Motivator: Purpose, growth, and autonomy 

Management style: Coaching, empowerment, open dialogue 

Employee role: Seek responsibility when given the chance 

Practice outcome: Retention, trust, problems surfaced early 

Three Actions This Week 

• Name the last problem someone brought you and how you responded. That expectation is your current culture. 

• Ask your billing manager one question: what is the one thing in this workflow you would fix if you could fix anything. 

• Change one response. Receive the next problem as information. Ask what caused it. Ask what it would take to fix it. Three times in a row shifts the signal. 

Episode breakdown 

00:00 — The $112,000 mistake 

02:15 — Theory X vs Theory Y 

05:40 — Enforcer culture in a practice 

09:20 — The four destructions 

14:10 — Theory Y operationally 

18:00 — The five principles 

22:30 — Three actions this week 

25:00 — Free resource + close

Resources

👉 RECOVER Diagnostic (free, 5 minutes) : eligibility.natrevmd.com/recover-diagnostic 

👉Website: natrevmd.com 

👉Trusted Resources: natrevmd.com/trusted-resources/ 

Referenced in episode: 

The Human Side of Enterprise by Douglas McGregor 

Forbes / Fierce Inc. — 10 Unmistakable Signs of a Fear-Based Workplace 

Transcript

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SPEAKER_00 0:04

Today we're talking about mistakes. And these are mistakes that are hidden by good people, good employees, because they're afraid. They're afraid to come to you with mistakes because they're afraid they're gonna be ridiculed or put down or insulted. Today we're gonna be talking about the hidden leadership tax. Welcome to Nat RevMD, a podcast where we share tips on optimizing medical billing and improving practice efficiency so you can have the business of your dreams. I'm your host, Dr. Heather Signorelli, founder of Nat RevMD. Let's get started. So there is a multi-thousand dollar mistake that I want to share with you. Now, this was something that was caught on the first month, but it was buried. The manager was afraid. It was at a family practice group that was doing several hundred thousand dollars a month, and she was good at her job. She managed the staff well, she held them accountable, she tracked denials, she even held the front desk accountable for eligibility errors. But she noticed a critical credentialing error that wasn't caught in time. And instead of bringing it to the owner and bringing it to the people who could help manage that is issue, she hid it. She was afraid to bring this up because in past situations, she would bring up issues and was publicly ridiculed in a team meeting. And it made her feel like she had to hide these things. And so instead of bringing these things up, she hid them. And again, she was not being lazy. She was not doing this maliciously. She was just afraid of how to bring up an issue and how to resolve it with the right people. And so months went by where patients were being seen for free, essentially, because we had credentialing issues. And then they we had to have write-offs for the denials that cost the practice tens of thousands of dollars, all because of the fear of bringing those to a leader in the practice. I have spent the last 10 years plus managing people. And I can tell you, management culture rooted in blame or control or micromanaging will never solve the problem. And most issues in any business are typically process related. I'm a firm believer that people show up to work every single day and want to do a good job and want to have an impact in whatever field they're in. But if there's a process issue or process gap, and that individual has found out that that is an issue, but they're afraid to bring that to the leaders or they're afraid to bring those to the people who can truly problem solve and troubleshoot, issues can drag on for months without a decision getting made or without the right people involved. And it can result in over six figures of revenue loss for a practice. So today we're going to be talking about the hidden tax that management style puts on a practice's revenue and the environment that determines whether your staff is going to bring up issues to you, whether or not they can gain the skill set to be able to manage those issues independently, whether you have built a culture around trust and again holding them to high standards, holding the practice to the results that you know the practice deserves, but how to get that with your team. So in the 1960s, uh, there was an MIT professor, his name was Douglas McGregor, who published a framework that basically divided management styles into two different categories. He called them theory X and Theory Y. And the reason this came up to me was because I was actually reading a parenting book. The parenting book is called 10 to 25. So if you guys have teenagers or young adults, it talks about theory X and Theory Y in the con in the in the environment of managing and raising, you know, good humans. And I have some of those good humans in my household. And, you know, when they're younger, right, you can manage them differently. But as they age, your management style as a parent has to evolve. And that's a lot of what the book talks about. It's actually a really good book. But I was thinking about this and thinking about the leaders I've had within my career and the leader that I hope and aspire to be, both within our company, but also in my day job, around how we encourage people to be independent, to be able to take on new challenges, but also to bring issues to you that they no longer can solve independently and fix them together. And again, I'll emphasize that I truly believe that most issues are related to a process gap. Sometimes a knowledge gap. You want to have a culture within your office that if it's a process gap, you come together to fix the process. If it's a knowledge gap, you come together to address the knowledge. Obviously, if it's a people gap and the person isn't qualified for the job or doing the job well, then that has to be handled from an HR perspective. Obviously, it should never be done publicly, should always be something that is taken offline. But today I want to talk about theory X and theory Y in terms of management styles and then how to apply those to your medical practice so that the people around you get better every day, so that they can take on more challenges, they can be successful when delegated tasks, but then they also come to you and give you the updates when there are issues that they can't solve on their own. And that this overall results in revenue that continues to grow for your practice, because I think this is all intertwined. And as we work with bigger practices, this is a theme that I see throughout. And where we have practices really doing well, it often has to do with the team of people around them. And where I see teams struggling, it is oftentimes culture accountability, hiring the right people. Today we're gonna focus on the culture part. Theory X managers believe at their core that people actually don't want to work, that if those people are left out on their own devices, staff are gonna do the minimum, they're gonna avoid responsibility, or they're not gonna do as good of a job as them. I've seen that in in managers or leadership styles. And they believe that people need to be controlled or monitored or micromanaged because they're afraid that the people doing those jobs aren't gonna do as good of a job as they would do. And so therefore, they have to control every part of the process. And they feel that they need to threaten people and to perform or they need to put the fear of God into them in order for them to perform well. And so managers operating from a Theory X become what's called an enforcer. Their job is to assign, to measure, to punish even, and even punish publicly. And sometimes they do it not even meaning to or from a state of awareness, but they believe that the staff's job is to comply without complaints and to do as they are told. And so, Theory Y, on the other hand, these leaders believe the opposite. They believe that actually people are internally motivated, that they want to do good work, that they will seek out responsibility when the environment lets them. And these managers become more of a coach. Their job is to create conditions where people can perform at their best. And then the managers or the leaders can get out of the way so that these individuals can work from a place of autonomy and independence. And obviously, they still need a coach to help teach and and you know provide a knowledge gap if there is one, but those individuals are left to shine. And so you want to hire good people where you believe that either they're more knowledgeable in a certain skill set than you, or they are better at being at the able to accomplish the tasks that you are no longer able to provide the attention to. And so it's it's okay to be the person who's creating the process and delegating, even better if you're hiring the team that knows more about that process. I think as leaders, we want to bring on people on our team who are smarter than us at the tasks that we are assigning for those individuals. I know I certainly feel that with the team that we've hired. And so the gap between these two beliefs, theory X and theory Y, is not just a management philosophy. It does impact your revenue. Whether you are a leader trying to figure out what your style is, or you have leaders within your practice that you can coach to make sure that they are leaning towards the culture you want to set. I think if you provide a culture where people want to show up and do more than they're asked, where you provide a culture where you're, you know, giving shout-outs for the work that they are doing that is above and beyond or the results that are above and beyond, that then it drives other people to want to do the same. And so today we're gonna give three different areas to setting the right culture and then how you can implement this within your practice. So let's talk enforcer culture first, because I think sometimes enforcers come from a place of they feel that nobody else can do it as well as they can. Um I've seen that before, or they feel like they have such a sense of responsibility to control the results that they don't allow the people on their team to help be independent and have autonomy to help address it themselves. So enforcer culture isn't always somebody who does scream or does threaten, but often it's that sneaky little way that a leader asks very pointed questions in staff meetings, or an office manager who audits every single thing, but without explaining what they're looking for, and then tries to have gotcha moments with the staff. Or maybe it's a billing manager who learns on early that flagging problems creates more busy work for themselves. And so then they hide things. And so I think you have to think through what kind of culture do you have in your office today? What kind of culture do you have within yourself? So here's what enforcer culture, I believe, produces in a medical practice specifically. I think when you have a leader who is micromanaging, controlling, blaming, um, creating busy work or not allowing people to do their job, not get out of the way and let people do their job, that it makes people hide problems, right? Not because they're dishonest people, but because the environment has taught them that bringing up a problem puts them at personal risk, whether that's ridicule in a public fashion. So instead of bringing up errors that a team could fix in a week, they hide things for weeks on end because they're afraid. And then they secretly decide this isn't for them and then they quit. And so turnover becomes an issue with this enforcer culture culture. And instead of sitting down going, okay, hey, we need a new workflow around this, they just don't even bring it up. And so that is denials after denials that cost thousands of dollars a month because they're they're just afraid to bring up things. Now, an example in the 10 to 25 book was they they brought up a company that brought up Microsoft, right? And so Microsoft actually had an enforcer culture for over a decade. They had a leader, his name was Steve Fallmer, and they used a performance management system. It was called stack ranking, where basically every team was forced to grade a fixed percentage of employees as underperformers, regardless of their actual performers. They they basically had to rank their employees in terms of performance, which meant somebody's always at the bottom. And so the result was a workforce where the safest strategy was to make sure someone else failed before you did, because you wanted to make sure you were better than your peers so that you didn't end up on the bottom of that list. So then people started stopped collaborating, problems stopped being shared, innovation stopped. And the company that had invented incredible things narrowly became irrelevant because of this. They ended up hiring a new leader and being able to change that culture around, but that took years later to be able to do that. Now, in a practice setting, you could have a manager who has that enforcer culture. And what you set is a front desk who's afraid to bring up that they don't know how to do eligibility, or if their patient AR is creeping up because the patients won't pay, but they don't want to bring it up because they don't want to get blamed that it's their fault. And so they hide these things because they don't want to be the person who's ridiculed when it's a workflow issue. The person's trying to do the right thing. Maybe they know what to do, but it's not working, or maybe they don't know what to do and they've got a training gap, but they just hide it. And so they just sit there hiding these problems. And then six months later, it is surfaced as a much bigger problem or a huge revenue issue. And so key here that these things seem minor. They seem like I'm talking about the soft skills. But the soft skills do impact your revenue and they do impact turnovers or how much people are encouraged to innovate and to focus on the results versus just being quiet and afraid to bring something up. And so obviously, you know, who is going to own this? It is going to be the physician owner or the administrative owner who sets the culture. So culture in a medical practice is a direct reflection of what the owners at the top or the physicians at the top model models and then also tolerates, right? Because even if you, as the physician owner, allow another leader to be the enforcer and you tolerate that, then the team learns to hide errors. They learn that the enforcer culture is okay. Now, that doesn't mean that we're not going to hold our team accountable. That doesn't mean that we're not going to set high expectations. But when problems are met with curiosity and problem solving and the team learns to surface them in a setting of we're going to solve this and then hold those people accountable who've now worked with us to solve them. Then when that pattern is set, then you are going to be set up for success. And there are four specific outcomes that appear in where the theory X is allowed to operate, where that enforcer culture is set. And these can show up in a medical practice or other small businesses. And so I want to talk through these each four. So first, innovation's going to stop. So in a fear-based environment, nobody wants to propose anything because either it gets micromanaged or 100 questions come or they don't, they don't, they're not allowed to bring things up without blame or ridicule. Nobody's going to bring anything up. And so the team may have good ideas or new ideas, but they're they're afraid to bring it up. So the innovation just completely stops. So the second thing that we see is that turnover occurs, right? Turnover compounds. And so obviously in a medical practice, we already have enough problems with turnover and pay and stressful work environments. So then if you're bringing a your team is bringing a culture of this enforcer theory, where I have what I have seen, and even in the own teams that you know I've managed, is that then you have an even higher staffing problem, right? Because people get in, they feel yucky coming to work, they feel micromanaged, they feel like they can't innovate, they feel blamed when stuff comes up. And so in the enforcer culture makes it worse and almost impossible to measure to a degree because the best staff leave first often because they have options, right? The staff who do stay are either too early in their careers to know what good looks like or too settled to move or just don't want to deal with it. But then they become quiet or apathetic, or the quiet quitting term, I think is seen a lot. And so then you end up with a practice full of people who either aren't living up to their potential or those people quit, the good people quit, and then you're left with kind of the leftover situation. And maybe those people are lost, maybe those people have performance gaps. And so you you just end up in this cycle where you're not even sure what is going on, but you know something isn't working. And so the third thing is that an employee who lives in an enforcer culture will see systemic problems and think to themselves, okay, I could bring this up, or I'm just gonna stay quiet. So systemic issues tend to build. So maybe there's a denial pattern that stays quiet. Maybe there's posting errors that stay in the write-off column with nobody actually bringing them up to the leader. And maybe that's, you know, stuff that could have been fixed early and addressed with a workflow change that just sits there forever because people just don't even want to bring it up. And then the last thing that I touched on was people then start to do the minimum, this term around quiet quitting. They show up to work, they clock in, they do the minimum, but they don't really dive into what's the issue or what's the how do they solve that problem to the max, right? So fear-based motivation, then, you know, minimum, they do the minimum necessary to avoid consequences, not the maximum above what people are capable of. And so this could be individuals working to avoid being blamed, and that's their focus every single day, versus I'm going after the results for a practice that I know and deserves the best of me. I do want to call out that in my experience, the difference between these two outcomes is really the leadership style that you set from the beginning. It's whether or not they create an environment of people feeling safe enough to bring issues to their to your full attention. Let's talk a little bit about theory why and what this actually looks like. So, theory Y is not not holding people accountable, it's not this soft management style, and it's certainly not an absence of standards or consequences. You still have the high expectations and the consequences if people don't follow through, but it's really about how you structure those conversations when things are brought up. So, for example, theory Y, that's our coach, our mentor theory. Basically, they have the high standards, they've communicated those high standards, and the expectations are clear. But the difference is what happens when something falls apart, right? When those issues are brought up, they receive it as, okay, this is valuable information. I'm so glad you brought this up. It's not, I'm gonna blame that individual person, but then they start asking questions around, okay, what do we know? What do we need to learn about this issue? And how do we create the team that's gonna help us resolve this together? So instead of blaming Susie at the front desk, it's okay, I understand that that's a frustrating part. I hate eligibility too. We're gonna work on this together. Here's what the process and the policy shows, where is the gap? And then readjusting that workflow and setting the expectation that this is the new workflow we're gonna try and see if that gets better. And obviously, if we know a workflow works and it's been working and we've addressed training gaps and knowledge gaps, then it becomes holding people accountable to the results. You're working through, okay, how do we respond when issues get brought up to us? So problems tend to get surfaced earlier, things get fixed sooner, and the cost or the revenue hit in those practices where this is set up well is going to be much more limited because again, everybody feels safe to say, okay, here are the things I'm concerned about, here are the issues I'm seeing, and let's work on those uh things together. I always recommend when leaders are going, well, how do I implement this? How do I do this within my own leadership styles? I'm a big believer in physicians or owners or business leaders naturally treating staff with curiosity and always believing that in general people show up to work wanting to do their best. But instead of coming at it from a micromanagement situation or you know best or blaming, you build a culture of trust that your employees are trying to do their best, your employees are working hard and trying to meet those expectations that you have set. You are avoiding things like controlling or blaming, especially in a public setting, even if it is someone's fault, you never blame that person publicly. You take that offline. Hey, let's do a quick one-on-one after the meeting and we can kind of go through this. And so, five principles that I believe that you can put into place for a medical practice to help encourage the theory why or that culture of having folks feel safe to bring up issues, that they believe that raising a problem is received as valuable. It's not an evidence of their own personal inadequacy. This is built by how the how the leader responds to when when problems are surfaced. And those responses then set the pattern for years to come. And so if you've had an issue where that hasn't gone well in the past, I think acknowledging that and saying, okay, I've not done this well before, or we're gonna work on this as a team to make sure that when issues are brought up, everybody feels we're gonna take that seriously, we're gonna hear the person out, but we're not gonna immediately blame them or ridicule them or ask them a hundred questions to make them feel nervous. The second thing is autonomy over how to solve problems. Obviously, it's important for us to set the standard and hire the right people and to find what good looks like, even better if it's in a specific measurable term. But then let the team work through how to get there. The other thing is I think it's always important to give people graduated responsibilities, right? So as staff develop, their role should evolve naturally. And so a front desk coordinator who's mastered eligibility verification, maybe give them many projects to where they can have graduated responsibilities to give them a career path to an office manager or a lead. People naturally want to grow. People naturally want to grow both in income and titles and responsibility. Building a practice where you have those career ladders can be really, really critical. Can you give them someone to mentor? Can you give them a new process to fix and own? Those sorts of graduated responsibilities are going to allow your people to feel satisfied. When they come to work every day. Number four is really making sure that your team understands the connection to purpose. So the connection to purpose within a practice obviously has to do with our patients. And so from our patient care perspective, how are we improving the lives of our patients? But that goes down to even denials that we're working or eligibility issues, right? Because that results in patients with bills that maybe are inaccurate. So for us, as a billing company, our connect to purpose is to allow practices to own and operate independently and get the revenue that they deserve, because that is what allows them to take care of their patients and not worry about their revenue coming in every single day. I'm a big big believer in servant leadership, not just this rule of authority. And so the physician who asks, what do you need from me to do your job well? I think is much better received than, well, just why hasn't this been done? Or you need to get this done immediately, or I'm going to ask you a hundred questions and then demand the mechanism by which you deliver the results. I just don't think that that ever goes well. Again, I've I've managed teams, um thousands of people, and it never goes well. And people just start to shut down and you're never gonna get the results that you could have if you had built the culture that you deserve. A servant leader removes obstacles and barriers and understands the challenges. And instead of assigning blame and asking a million questions, the job is to mentor and to coach and to allow these people to live up to their potential. In summary, the management style that runs your practice is going to determine the success of your revenue. And I do truly believe that maybe not on day one, but certainly on year one and year two, the management style that you set up for your practice will determine how well your practice does. So really important to think through, okay, how am I as a leader? I think it always starts with the owner. What do I do as a leader to help enforce this culture? And then next, working with your number two or your leaders within the practice. This is what I believe is the best way for us to get the results, holding those people accountable for the for uh the direction of the practice, but then allowing them to have the authority and feel the safety of bringing up issues. All right, so three things I want you to take away to do this week. So, first, I want you to name the last problem someone brought to you and then how you handled it. And I want this to be not this performance review exercise, but I want it to be something that you really think about what's the culture that both you set and your leader set within your practice. And if you can't remember, maybe ask it to your team. How did I respond? Did you feel safe bringing up issues? You feel like we have a culture where we can bring up issues and resolve them. And if you're secretly thinking, gosh, I don't even want to ask people because you know their response, that's the best place to start. Second, identify one thing your team is not telling you and then ask them why, right? There's always something, and maybe it's a denial pattern, maybe it's eligibility issues, but ask them why they're not bringing that up to you. It could be waiting room times, it could be no shows, whatever it is. What is a problem that we haven't talked about that we need to talk about? And let's get a work plan around that. And then last, I want you to think through one response when something is brought up to you that that you could improve on. It's okay to even bring that up within a team meeting. Hey, I'm really working on improving my response when you guys bring up things or giving you guys the attention you need when we need to sit down and solve these problems together. Really focusing on not assigning blame. How can we work on this together? Start to work on changing that culture to signal to your team that you are operating from a place of understanding. And that doesn't mean you're not holding them accountable. It doesn't mean that you're not setting very high expectations because I have an extremely high level of expectations for our team, but it's the idea of how are we going to solve these together and fix this issue. So, last, we do have a recovery diagnostic tool in the show notes. So go check that out. It's a way for you to answer a few quick questions and understand how your practice is doing. So this will be a topic that we do a few episodes on. I truly believe that culture does impact your revenue. So would love to hear from you guys info at Nat RevMD if this topic resonates with you or if you want to hear more about it. All right, hopefully, you guys have a great rest of your day.