Best Practices: Strategic Planning for Medical Practices – A Means to an End

It is easy to understand why many physicians aren’t particularly interested in strategic planning.  Some of them have never done it and some just don’t see the need. It seems they have enough on their minds just trying to keep the practice on firm ground today, let alone thinking about what should be done next year. Some see it as a low priority or a waste of time and resources. In my opinion, they are missing out on a powerful opportunity to protect and guide their future.   If you are part of the management team of a medical practice, clinic or ambulatory surgery center  or run a medical billing service, I hope this information will inspire you to begin 2012 by creating and implementing a formal strategic plan that positions your business for a brighter future.

Why strategic plan?

It’s similar to a professional basketball game.  Coaches have a clear vision of the team’s strengths and weaknesses.  They also find out as much as they can about the opposition. Effective coaches draw on the team’s capabilities and plan a series of strategies to outsmart the competition. The coach intends to win the game and makes sure the quarterback leads the team, never straying from that objective. This same approach applies to the business of medicine.

The medical practice environment is so complex and changing so rapidly that a practice must have a strategic plan in order to survive. The larger, busier and more complex the practice, the more critical this becomes.  It’s reasonable to expect that every medical enterprise is faced with different issues within its walls and in the community where it resides. How we will respond to these critical issues, the decisions we make and the results we achieve, are directly related to how well we understand our business and how well we prepare for the future.

What is involved?

The technical elements of the strategic plan start with gathering demographic data about the community, the competition and the practice.  This includes analyzing both objective and subjective information to better understand the practice’s strengths and weaknesses, exploring opportunities and identifying potential threats to our business future. It also requires an examination of key performance indicators (KPIs) that measure and report the state of your business in terms of growth, market share and financial stability.  The basic KPIs include:

• Productivity: charges, receipts and adjustments;
• Accounts receivable performance, days in A/R (DAR) and aging by payer class;
• Income and expenses;
• New patient and attrition statistics;
• Full time equivalent employees per provider;
• Overtime costs;
• Staff turnover;
• Missed appointment trends;
• Referral patterns; and
• Patient satisfaction scores.

This is certainly a lot of information, but it is key to understanding your position.  It can be advantageous to recruit a consultant to review and analyze this important information.  Once these data are collected and analyzed, a clear picture emerges that reveals the organization’s strengths and opportunities, as well as weaknesses and threats that must be overcome. This is critical information hat will guide leadership in developing realistic goals and planning strategies to accomplish those goals.

If the leadership team is on the same page, the staff will get on board.  If the staff gets mixed messages, the plan will be compromised. Think of the practice as belonging to everyone who works there – they have a vested interest in its success and will feel the impact of decisions that are made. Without everyone’s support, the practice is likely to experience unexpected problems or poor results.  Frustration mounts and there is a tendency to give up.

Of course, new challenges are always emerging on the scene. Preparing for this relies on a careful investigation of demographic and competitive factors the present either an opportunity or a threat.

Even a well crafted strategic plan can’t predict the future. But it helps the practice do a better job of preparing for the future and developing a road map to lead them where they want to go.

What if there is no plan?

Without a plan, clinics and ambulatory surgery centers may not be prepared for growth or unexpected circumstances that affect how they perform (survive or thrive) in the future.  They will not recognize the opportunities or take steps to overcome obstacles to protect their future, improve their market share or help them become more profitable.  There’s a chance they will be blind-sided, because they didn’t see a potential threat and take proactive measures to overcome it and protect the practice. This could result in eroding your market share, causing a decline in revenue and deterioration in staff morale.   If the practice experiences these types of changes, there is tendency to hit the panic button and a solid foundation can quickly feel like quicksand.

The strategic advantage

Strategic planning provides a blueprint for the medical business to follow and get it where it intends to go. It will result in better decision-making when it comes to expanding services, adding providers, investing in equipment or preparing for inevitable retirement.

Strategic planning is a proactive process rather than taking a reactive approach to making decisions that can affect the future of your medical enterprise and provides a concrete plan to protect, and even flourish, in times of uncertainty.

Many medical businesses recognize the need to hire a skilled consulting team that can dedicate the time necessary to examine your position, provide an objective analysis and conduct a strategic planning retreat to guide the process and develop an effective  plan.

A solid strategic plan will examine the marketplace, the community and the competition, and take a critical look at your past and current business performance.  It will clearly address challenges and provide an opportunity to develop an action plan that focuses on business strengths and potential opportunities, while overcoming potential threats. It will be the powerful source that helps you accomplish impressive achievements in a competitive and economically challenging environment.  So what are you waiting for?

Judy Capko is a healthcare management and marketing consultant, speaker and author or the best-selling book: Secrets of the Best-Run Practices. She is based in Thousand Oaks, CA, and can be contacted at www.capko.com. In November, Judy wrote on Collections – 3 Steps to Do It Better. You can hear Judy and Joe Capko speak now on Guarding Your Revenue: How to Prevent and Uncover Embezzlement in an archived webinar.