Medical Practice Management
Jan 26

Strategic planning for physician practices

As you likely know, there are many changes occurring in the health care marketplace.  These changes are coming to pass very rapidly and this in turn is forcing many practicing doctors for the first time to consider where their practice stands and what to do about its future.  Declining reimbursement patterns and heightened competition are fueling concerns everywhere. 

Faced with an uncertain future, medical providers need to begin the process of addressing specific issues within their practices and begin implementing related solutions. With all of the changes to physician reimbursement, the increasing penetration of managed care, and the heightened competition for patients, practices can no longer afford a "business as usual" attitude. Practices need to decide how they intend to position themselves in the future in order to maintain their net income, grow their practice, transition the current owner(s) to other owners, and compete with others for patients and managed care contracts. In many areas of the country where there is a large penetration of managed care, the latter is arguably the most important. This is due to the fact increased competition in these areas have resulted in patients being shifted away from practices to other practices and delivery systems. 

As a result, we feel most medical practices today need to engage in the process of developing a strategic plan. Practices operate today in an industry that is rapidly changing and evolving. These changes are not going to go away any time soon. Each succeeding "change" seems to impact the revenues and operations of medical practices. 

Most medical practices should consider developing a strategic plan. The best forum for this is a strategic planning meeting or retreat. The first step in the planning process is to meet to discuss how the practice intends to address the future and whether or not a strategic planning meeting might be in order. Decide if planning for the future is in fact important and whether this process might get all of the doctors thinking on the "same page." Also, decide if such a process would in fact benefit the practice, not only in the short term, but the long term as well. Strategic plans seem to work very well for those practices that seem to “drift” along year to year. These are the types of practices that run along smoothly without any evident problems, both internally and externally. Everyone perceives there are no problems. However, as soon as there are changes, these practices often fail to react and in the end, are impacted greatly. 

After deciding that a strategic plan would be beneficial, the next step is to set a specific date for the strategic planning meeting. All physicians and administrative personnel should attend. So as to not take away from patient care time, this meeting is usually held on a Saturday or even over a weekend. Some practices want to “get away from it all” and schedule their retreat at an out of town location. You will also need to decide if a facilitator is necessary. If so, this person can be the practice's CPA or an independent consultant can be hired. 

Before the meeting, gather input from all of the people in the practice who are going to attend about those issues they really want brought up and discussed. This is usually given to the facilitator, who then will use this information to develop the meeting agenda. The following is a sample outline that can be used at the strategic planning meeting: 

Strategic Planning Meeting Outline 

  1. Discussion of Desired Outcomes from the Meeting [IMPORTANT TO GET EVERYONE ON THE SAME PAGE ABOUT WHY THERE ARE HERE]
    1. Common understanding of where the practice is today
    2. Everyone needs a cooperative view of “soft spots” and opportunities for improvement
    3. Everyone needs to develop a consensus of where the practice wants to be in the future
    4. Everyone must agree to design an action plan and implement it
  2. Practice Overview and Discussions
    1. Financial Overview
    2. Billing and Collection Benchmarks
    3. Practice Overhead
    4. Accounts Receivable Status
    5. Financial History
    6. Provider Income Levels – Past and Present
    7. Overview of Current Practice Personnel
    8. Other [As determined by facilitator or the participants]
  3. Participant Observations about the Practice – Be specific
    1. Positive points about the practice [ALWAYS EMPHASIZE THESE]
    2. Negative points about the practice
  4. Overview of Local Health Care Service Area
    1. Managed care plans, penetration, and growth
    2. What has been the growth in capitation
    3. Consolidation activities
    4. Who are the practice’s competitors
  5. Review of Key Objectives & Critical Success Factors
    1. What makes practice unique
    2. What makes practice successful
    3. What is the doctors' shared vision
    4. Review key undertakings of past year
  6. Top Issues Now Facing the Practice
    1. How Practice Intends to Address Each Issue
    2. A detailed discussion should follow, including any obstacles that must be overcome to effectively address the issue
  7. Issue 1: ____________________
    1. How practice intends to address the issue
    2. Obstacles to overcome to ensure success
  8. Issue 2: ____________________
    1. How practice intends to address the issue
    2. Obstacles to overcome to ensure success
  9. Issue 3: ____________________
    1. How practice intends to address the issue
    2. Obstacles to overcome to ensure success
  10. Issue 4: ____________________
    1. How practice intends to address the issue
    2. Obstacles to overcome to ensure success
  11. Issue 5: ____________________
    1. How practice intends to address the issue
    2. Obstacles to overcome to ensure success
  12. Goals for Next Period
    1. Strategic undertakings for the practice
    2. Financial goals for the practice
    3. Other key efforts for the practice
  13. Summary
    1. Summarize key successes/challenges
    2. Reiterate key goals
    3. Create action plan committee
    4. Set next meeting to review implementation status
    5. Thank you to all attendees
About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →