There is a reason that physicians typically do not have an MBA. For most physicians, business is far from your primary function — healing is your business. But whether you are obtaining loans to expand your practice or simply setting up operations, generating a business plan makes sense. And with the current economic uncertainty brought about by the COVID-19 pandemic, it is even more important.
Related Read: Staying Solvent — and Maybe Even Profitable — in Tough Times
A good business plan will enable you and your colleagues to operate a successful medical practice based on proven methods, freeing you to provide the excellent health care your patients deserve.
Make it work
The key elements of a good business plan are:
An executive summary of your business plan provides the reader with a snapshot of your company profile and goals. It is often the most neglected element of the business plan, but it may be the most important because it tells investors why your business will be successful in very few words. It may include a table of contents, company background, market opportunity, management overviews, competitive advantages and financial highlights. It is probably easier to write the detailed sections first, then extract the cream to create the executive summary.
This is your medical practice’s mission statement. It could consist of a single sentence, such as, “[T]o run a single-practitioner family medicine practice” or “[T]o run a single-practitioner orthopedic surgery practice focusing on sports and athletic medicine.”
Those examples are rather bare-bones. It is a good idea to include more details on your intended practice structure — for example, whether you plan to have a partner and your intended target audience of patients. Include your resume or a paragraph with more details on how you expect to fulfill your mission.
Marketing is often a never-ending aspect of running a business, though it carries even more weight when you are starting your practice. Discuss your communications strategy as well as how and where you will share your messaging. Plan on developing a website and being on social media. Link to professional networking sites like LinkedIn. Make sure that you connect with and visit local physicians — in-person if possible and virtually if not — and introduce yourself as a potential referral doctor. Based on your practice’s focus, you may even want to visit other businesses associated with the medical field, such as nursing homes or general locations like community events (again, making sure you are observing proper COVID-19 safety protocols) — wherever your targeted group of patients might be is where you will want to market your practice.
Related Read: Getting Patients in the Door
A start-up medical practice needs a budget for the business and the physician needs one for his or her household. Generally, new practices require about six months of working capital for both the business and the household.
The household budget includes how much money you need to live on for six months, including rent or mortgage, taxes, insurance and food. Be generous with yourself, because it is better to estimate on the high end and have more than you need rather than less.
The business budget is more complicated and requires you to make decisions about your practice. You can include expected gross income or other financial predictions, but keep them grounded in reality. This is a good place to include income statements, cash flow reports and balance sheets to outline your assets and liabilities. If you are seeking funding, this section is critical and must be as current, accurate and detailed as possible. A specialized consultant can help with many of these decisions.
Management includes the physician(s), but the biggest part of your job is to see patients. You will likely need someone to manage your office. Thinking this through will help define your practice, which also will affect your budget.
Some questions to ask are:
- Will you hire an office manager or administrator or act as your own — at least at first?
- Will you have one or more nurses?
- Will you have physician assistants or nurse practitioners, and if so, how many?
- Will some staff be part-time or will they all be full-time?
Your decisions will affect pay and budget. And you will likely need to revisit these questions over time as your practice grows.
Make it happen
In these uncertain times, many medical practices are struggling to maintain profitability and at the same time ensure they can respond to patients’ changing needs. ORBA’s financial advisors can help you set up or periodically restructure your business plan to reflect your evolving medical practice.
For more information, contact Antwone Turner at 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.