10 Steps to Create Your Medical Practice Business Plan
- Kiran Agate
Starting a medical practice can be a tough row to hoe. Especially because it needs a big investment, administration takes up a good chunk of your time, and the income isn’t constant. But being your own boss has its merits that no hospital employment can give you. Once you are ready to take this path, having a business plan can help you steer in the clear direction.
In this article, we will simplify medical practice business planning along with insights from some of our amazing clients who are successfully running their practice.
What Is a Medical Practice Business Plan?
A medical practice business plan is a living document for launching and operating a medical practice. It has strategies that give you more clarity and helps you avoid wasteful efforts. You not only write the “to-dos” for your practice but also the “what-ifs” in case something doesn’t work out the way you planned. Instead of being a cookie-cutter document, the plan can help you be agile enough to thrive in today’s fast-changing landscape.
So let’s go through the steps in our medical practice business plan. Shall we?
#1. Set the Practice Philosophy
A practice philosophy is mission, vision, values, goals, code of ethics, and culture. These are mostly based on your beliefs as the founder of the practice. And forms DNA of the practice that can guide you in decision making, patient relationship, and hiring.
The practice philosophy must be short, simple, and inspirational. Here’s an example from Mayo Clinic, one of the top-rated practices in the US:
Mission: Inspiring hope and promoting health through integrated clinical practice, education and research.
Vision: Transforming medicine to connect and cure as the global authority in the care of serious or complex disease.
Primary Value: The needs of the patient come first.
You can read the full version of Mayo Clinic’s mission and values here.
While writing down your company philosophies is not an imperative, following them does lead to seeking continuous improvements in the practice.
#2. Research Business Models
A business model shows the functioning of a business to gain profits. If a business plan is the body, a business model is the CNS of the practice. Business models can be innovative without changing the type of service.
For example, mobile pop-up clinics are an innovative healthcare business model. Kind Body and AskTia are two famous pop-up clinics where women can go for regular checkups and issues related to fertility, IUDs, etc. It favors densely populated cities where healthcare is quickly accessible to patients. The payments are subscription based or fixed for each service.
Similarly, medical practices can have a business model where service is fully online; or deliver services with low-cost high-volume; or can even be as minimal as starting from your home as a part-time venture. Likewise, can explore business models with various delivery modes of service, payments, healthcare niche and so on.
A single change in the model can result in the difference of night and day. So your practice business model is the most important step in planning.
#3. Shortlist Locations
Your practice location is a strategic decision. A good location is one where you are accessible to potential customers. But a great location can give you monopoly in an area.
Parking, building aesthetics, and accessibility for the physically challenged are some important things to consider while selecting your practice location. If you are going to hire staff, you would want to make sure that the location has good access to public transportation.
#4. Perfect Your Business Operations
Business operations is how your practice functions day-to-day. While a plan allows you to come up with strategies, business success is mostly an outcome of quality execution. The scope of business operations span across every function like finance, marketing, HR, and so on. Even though business operations can only begin post launch, you can start learning about operations.
Best organizations aim for process-driven and result-oriented operations. — For instance, you can use methods like Objectives and Key Results (OKRs) — a collaborative goal-setting process that helps you improve organizational performance.
While a general management experience allows you to deal with many scenarios, you can also list down and think how to go about the critical ones. For example:
- What should your staff do to deliver the best experience?
- How can you resolve patient issues quickly?
- How will you conduct monthly performance reviews?
#5. Bring a Financial Discipline
Working capital, billing, rent, mortgage, taxes, insurance, utilities,… there are too many things to account for. Unlike other areas like operations and marketing, you may not be able to make quick decisions for finances. So the earlier you get involved in financial planning, the better is your ability to control the outcomes.
If you don’t have any financial expertise, use basic calculations including investments, recurring expenses, and income. You can consider financial projection for upto three years to get an approximate idea about your finances. To bring financial discipline to your practice, you must use budgeting. Budgeting ensures that you will have enough money for the things you need and reduce overspending on unnecessary things.
#6. Don’t Ignore Marketing
Marketing is more than advertising and brand building. It includes several other things like getting feedback from customers, doing competitor analysis, and pricing correctly. So marketing is not a gimmick, but an important process for growth of any business. If you are not marketing, you could be leaving the growth of your practice to chance.
Even when you don’t want to advertise, there are a few other great ways of promoting your practice. For example, asking your patients for reviews on Google Maps will improve your visibility in local searches. Another great way is to post content like blog articles, videos, podcasts, etc that your patients find useful and get to know about you.
Since every practice has its own unique factors like demographic, location, etc, marketing requirements differ. So the marketing has to adapt to your unique situation rather than going for mainstream ideas. For example, if your patients are of an older demographic in a rural area, radio ads could be the best way to get the word out about your practice.
Marketing deserves special attention in your business plan. Your plan can focus on gaining maximum exposure to your potential patients. Even if that requires additional investments. By prioritizing growth over recouping investments early, you create a long-lasting traction for your practice.
#7. Check Government Laws & Regulations
The US federal, state, and local authorities have rules to protect the public, promote access to care, and to ensure that medical providers adhere to the rules. Laws and regulations are complex. So you need to have a thorough understanding of them before starting your practice.
This is a list of a few important laws and regulations for healthcare providers in the US:
- Healthcare Quality Improvement Act (HCQIA)
- Medicare
- Medicaid
- Children’s Health Insurance Program (CHIP)
- Hospital Readmissions Reduction Program (HRRP)
- Health Insurance Portability and Accountability Act (HIPAA)
- Patient Safety and Quality Improvement Act (PSQIA)
- Affordable Care Act
You can learn more about US healthcare laws and regulations here.
#8. Hire the Best
People are the heart of any organization. Having the right staff relieves you from everything else and let’s you focus more on providing better healthcare. It’s almost like putting everything else on auto-pilot. However, recruiting is not easy. You may have to put more effort than you planned for hiring. Additionally, you must research and plan for competitive salaries, work schedules, and training.
Here are a few websites to find experienced staff for your practice:
#9. List Down Equipment and Other Requirements
The most straightforward part of your business plan is to list down all the equipment and essentials. Here’s a short list you can use:
- Clinic Equipment: Stethoscopes, exam tables, otoscopes, blood pressure monitors, and other monitors
- Office Equipment: Computers, printers, network equipment, phones and payment machines
- Supplies: General medicine, disinfectant, anaesthetic, gloves, scalpels, syringes, gauze, and bandages
- Network Services: Phone networks, internet, utilities
- Clothing: Lab coats, uniforms, and name tags
- Furniture: Tables, chairs, and decor
#10. Perform a SWOT Analysis
SWOT is an abbreviation for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis allows you to have a clear overview of your practice. It will force you to look at your practice from new perspectives. This final step is one of the most crucial ones.
To create a SWOT analysis, you can critically analyse all areas of your practice and list down your conclusions in columns with S, W, O, and T. While strengths and weaknesses are internal factors, the opportunities and threats are external factors to your practice. The conclusions must be simple, objective, and short.
Towards Launching Your Practice
A business plan allows you to define, strategise, and gain clarity through all areas of your medical practice. Remember that a business plan is not set in stone. Planning is a continuous activity, and needs periodic reviews and updates. You are always moving through the plan-execute-review cycles. Though it may seem complicated, investing time for thoughtful planning can make your practice successful.
