Physicians tend not to get serious about a business plan until they need to go to a bank and ask for money. But there are plenty of other reasons to have a business plan — starting with the fact that physicians are, after all, running businesses. This article suggests four key elements of a good business plan, such as a marketing plan and a financial budget. By getting professional advice and generating a business plan early — and then revisiting it and restructuring it as the practice changes — a physician will be able to stay ahead of the curve in this rapidly evolving business.
What are the elements of a medical practice business plan?
Physicians typically generate business plans at two junctures in their practice’s development: 1) when they want loans, or 2) when they want start-up capital. In other words, physicians tend not to get serious about a business plan until they need to go to a bank and ask for money. But there are plenty of other reasons to have a business plan — starting with the fact that you are, after all, running a business.
4 key elements
What are the key elements of a good business plan? It typically contains four parts:
1. Business description. Essentially, this is your medical practice’s mission statement. It could consist of a single sentence, such as: “To run a single-practitioner family medicine practice.” Or: “To run a single-practitioner orthopedic surgery practice focusing on sports and athletic medicine.”
But those examples are rather bare bones. It’s a good idea to include more details on your intended practice structure, whether you plan to have a partner and whom you expect your target patient population to be. Include your CV or a paragraph with a few more details on how you expect to fulfill your mission.
2. Marketing plan. Marketing is a never-ending aspect of running a business, though it carries even more weight when you’re starting up your practice. Plan on developing a website and being on social media. Link to professional networking sites like LinkedIn. Make sure you connect with and visit local physicians and introduce yourself as a potential referral doctor. Based on your practice’s focus, you may even want to visit nursing homes or sporting events — wherever your targeted group of patients might be.
In addition, ask any hospital with which you’re affiliated to help you market your practice. Pharmaceutical vendors and/or representatives also often assist with marketing efforts. An open house can be another way to introduce your practice to the community.
3. Financial budgets. Start-up medical practice budgets need a budget for the business and one for the 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’s 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. For example, if you plan to perform surgery, you’ll need a surgery suite. This will require a larger space and a bigger budget that includes equipment and staff. After you decide the appropriate number of staff, you’ll need to determine how much to pay them and what kind of benefits you’ll offer.
A specialized consultant can help with many of these decisions. A pro forma budget covering expenses and income for the first year makes sense — but so does having one that projects funds for two to five years.
4. Staffing strategy. Management includes you, of course, but the biggest part of your job is to see patients. You’ll 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 how many?
· Will some staff be part-time, or will they all be full-time?
Your decisions will affect pay and budget. And you’ll likely need to revisit these questions over time as your practice grows.
That’s a plan
These are just the most basic elements of a business plan. But you can use them to establish the direction of your practice and calculate how much money you’ll need to start operating. By getting professional advice and generating a business plan early — and then revisiting it and restructuring it as your practice changes — you’ll be able to stay ahead of the curve in this rapidly evolving business.