The road map for reaching your dream practice lies in a well-executed business plan
Writing Your Business Plan
Whether you plan to practice medicine on your own, with another physician, or in a large, multi-doctor office, whatever your specialty and wherever you locate, the road map for reaching your goal lies in a well-executed business plan. Your business plan will not only help you steer your practice’s development and keep it on track, but it will also assist you when you are seeking credit, applying for financing, taking on new doctors, building a reimbursement strategy and managing your public image.
Most of the decisions you have to make in starting any business will end up costing you money, so take a critical look at the benefits and risks of each decision. If you make wise and well-informed decisions, you will not have to waste time and precious, hard-earned dollars later undoing problems you could have avoided. An hour spent asking a specific list of questions of a qualified consultant can save you thousands of dollars later on.
A Road Map
If you don’t know where you want to go, any road will get you there.
The process of creating your business plan will help you know which decisions you have to make as you move toward your goal. When you begin, the plan will have a lot of questions and blank spaces, but by the time you have filled in some of the blanks, you will have created something more than an idea: you will have a medical practice.Your overall goal is to build a sustainable, competitive and profitable business.Your immediate goal is to be able to pay the light bill and the rent and your professional liability insurance premium.
Your business plan defines the nature of your business, your customers (patients), your resources, your competition, your short- and long-term financial projections, and your marketing. It should be built on specific and realistic terms—measurable objectives, identified responsibilities and deadlines, and practical budgets. Avoid hype, jargon, superlatives, and pipe dreams. Work toward a plan that is practicable, straightforward and simple, so it is easy to implement and easy to modify as your business grows. Don’t forget to include a few stretch goals and the metrics to determine if you’ve met them. Write this plan for your own purposes, not just to get through bank financing.
There are numerous books on how to write a business plan. I highly recommend Peter Lucash’s book, Medical Practice Business Plan Workbook, 2nd Edition (Digital CPE Press / MGMA).It comes with a CD-ROM (ISBN 0970524412).The second edition has been revised to improve the process and to include HIPAA privacy regulations and disaster recovery planning. I’ve known Peter for more than 15 years and he is a master in this domain. He has my highest personal recommendation. This book is a practical approach to guide physicians through the process of developing a business plan for their practice. This is a workbook that challenges the user with questions to answer, data to compile and a guide to writing each section.
Business Plan Software
In addition, you can find free, downloadable business plan templates at www.score.org/template_gallery.html, provided in various formats by the nonprofit SCORE (a resource partner of the Small Business Administration), and at www.bplans.com, a website devoted to business planning resources.Free is always good!
No matter how you approach your plan development, most business plans have standard components. Below is a list that highlights sections and scope of a typical medical practice business plan.
- Cover sheet: identifies your practice’s name, the date, and your contact information.
- Table of contents
- Executive summary: a brief and simple highlight of your plan—the who, how, when, what, where, and why of your business.
- Overview: describes your practice in more detailed terms,
- In-depth financial plan: provides very specific and detailed information on business capitalization
- A contracted reimbursement strategy: Unless you are going to deal in strictly cash services, you will need a reimbursement strategy which includes both contracted and non-contracted reimbursement entrance and exit strategies and metrics to give form and function to the strategy.
- In-depth management plan: describes how you''ll get the work done and who will do what task
- In-depth marketing plan: details how you plan to grow the business, a detailed competitive analysis, and specifics on how you will establish your pricing. (Calling the guy down the road for his price may not be smart...or legal)
You might think that you cannot write a business plan before you have a business, but you may be surprised at how many ideas you have once you start writing them down. These are the ideas that will help you create the practice you really want. As you begin to gather your thoughts and the necessary data, you may discover that your goals are unrealistic—or more easily within reach than you had anticipated.
It takes time to put together an effective business plan. Take the time to write a functional plan and keep it handy. I can remember arriving at a medical practice and asking to see the business plan.The wife of the physician, an intelligent woman with little experience and great intentions had no idea where the business plan was located, had never read it and therefore was not in lock-step with her husband’s vision for the practice.When I asked him where it was, he told me he had no clue, had not seen it since he used it to acquire a start-up loan with the bank. He confessed that he used a template to create it, got through the bank financing and cast it aside. I wondered two things: (1) Why was I there? (2) Would my report and suggestions also be tossed aside and not followed?
A well-developed business plan serves as an action plan that sets out your priorities—a checklist that will continue to guide your business’s growth even when you are successfully preoccupied with the practice of medicine.
About the Author:
Maria K Todd, MHA, PhD is known around the world for her expertise and generosity in sharing ideas, techniques and practical tools with her colleagues in the industry. She is a leading health care industry consultant and described by clients and peers as a visionary and thought leader. Statistically, she is the leading trainer in managed care contracting worldwide. Since 1989, she has lectured professionally through colleges, universities, seminar companies, publishers and non-profit professional associations as well as on-site private training classes for hospitals, medical groups, offshore revenue cycle business process organizations and pharmaceutical and medical device manufacturers. In total she has delivered more than 2600 managed care training classes and seminars to over 53,000 attendees and participants. Every month the number grows higher and higher!
Maria is the author of The Physician Employment Contract Handbook: A Guide to Structuring Equitable Arrangements. (McGraw-Hill)The first edition is available at numerous outlets, and a 2nd edition is planned for 2009 (CRC Press).
Conflict Disclosure: The author is a professional consultant and derives a substantial percentage of her income reviewing managed care agreements and advising hospitals, physicians and others on matters regarding managed care and contracted reimbursement. The author previously worked for a Health Plan in provider relations as a contract negotiator. The author has no other conflicts to declare. This disclosure accurate as of November 5, 2008.
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