Strategic Planning of a Medical Practice

April 3, 2012

To download this article, click here: Strategic Planning

Strategic Planning – A Real Key to Success

How does a medical practice respond to competition? How does a medical practice respond to a decline in patient visits and decreased revenues? How can a practice grow? Medical practices everywhere are struggling with these questions as they work to position themselves for the future. In other words, if they are to grow and prosper, medical practices need to think strategically and formulate a plan.

Where to Begin

Like all businesses, medical practices should develop an annual business plan. Along with goals for growth, the business plan typically includes a financial projection or budget with targeted goals for revenues and expenses. Typically, the annual plan focuses on reviewing the current year and projecting operations into the next period. Strategic planning includes the basic components of the annual plan, but also includes goals that go well beyond the next fiscal period. Strategic planning goals are “futuristic.” The strategic plan anticipates what the practice must do to adjust to new modalities and breakthroughs in technology, meet the needs of the practice’s current and future patients, respond to competition and enable growth.

Strategic planning begins with a work session involving physicians as well as top managers. The planning session works best if held at an off-site, convenient location in a facility that will provide for uninterrupted interaction by the stakeholders. An independent, experienced and knowledgeable facilitator should be selected by the practice to guide the process to ensure impartiality and inclusiveness. Prior to the planning retreat, accumulate practice data. The data should include comparative financial statements (compared to prior year, budget, and median for the specialty); comparative analysis of charges; accounts receivable aging information; computation and comparison of the gross collection percentage, net collection percentage, and accounts receivable ratio; practice payer mix information; practice fee schedule; and comparative analysis of charges by referral source for at least a two year period.

In addition, all physicians should identify issues that they want addressed. Before the retreat, analyze the data and summarize results by compiling the answers to the physician survey and highlighting areas of concern, such as equipment needs or low morale.

Strategic Planning Session

An interactive planning session provides the time and structure for listening to, discussing, and understanding each person’s views and perspective. Through open discussion, consensus and commitment to a course of action and desired outcomes are achieved. First, consensus should be established for commonly held values. For example, a practice whose providers value time with their families may set a different course than a practice that seeks revenue at any cost.

The next step is to identify where the practice is today. The practice must understand and agree on the current status of the practice before considering strategies for future direction. In this phase, the financial data gathered prior to the planning retreat is introduced. The practice can use this data to identify strengths and weaknesses and to identify areas that require immediate attention for improvement. Once the current situation is summarized, the practice can develop its vision for the future. This last phase of the planning retreat includes development of goals, objectives, strategies and action plans.

It is time to answer the question, “How do we get there?” It’s important to do more than simply outline long-term strategic goals. Specific plans and measurable tactics must be established. In addition, these plans and tactics must be accompanied by reasonable guidelines and timelines, and assigned to an appropriate individual who has the resources and knowledge to complete them.

Implementation and Monitoring

Put the strategic plan in writing so there is a blueprint for implementation and monitoring. It is important to include each of these elements:

• Introduction — mission statement
• Practice summary — current situation analysis
• Vision for the practice and practice goals
• Strategies and objectives
• Assignment of responsibility, and monitoring and evaluation techniques

Once the plan document is completed, it must be clearly communicated to all the stakeholders. Everybody must understand their roles in accomplishing the strategic plan. Monitored follow-up is critical to ensure that the practice moves forward. The practice should review — at least quarterly — the progress toward accomplishing the action plan. Additionally, a progress report should be provided at all physician meetings.

Strategic planning is a process that will assist a practice in identifying the forces that drive change, analyzing the effects of those changes, and developing action plans for navigating changes while moving toward goals. Strategic thinking — supported by strategic planning and action — will help a practice be successful.

To download this article, click here: Strategic Planning

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