If you’re planning to launch a healthcare practice, there are a million details you need to address. But one of the most important steps you can take is to develop a comprehensive healthcare business plan. It’s so critical that studies show that many businesses without an effective plan don’t survive. (12) Creating a detailed plan not only boosts the odds of a successful initial opening, it can also help to ensure future growth and serve as a guide for all those involved in the practice. (13) Continue reading to learn more about building effective healthcare business plans.
Did you know? Despite its critical importance, few physicians receive training in the business aspects of setting up a practice during medical school or their residency. (5)
What is a healthcare business plan?
Even though caring for patients is the primary goal of any healthcare practice, at its core, it’s a business. And like any business, a strategic plan can help to crystalize goals and define the specific strategies needed to reach those goals. It’s the one document that can make or break your odds of success. In fact, one study that appeared in the journal Small Business Economics noted that those completing a business plan were 2.6 times more likely to build a successful business. (15) But what is a healthcare business plan and what should it contain?
In a nutshell, a detailed healthcare business plan acts as a blueprint to help a practice define its goals including securing capital, developing a strategic budget, marketing its services, building a patient base, recruiting employees, and planning for future growth. (17) It can also reduce risks during the start-up phase and serve as an effective tool for solving future problems. (2)
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According to the U.S. Small Business Administration, a successful business plan contains the following elements:
- Executive summary
- Description of the practice or business
- Market analysis
- Competitive analysis
- Marketing and sales plan
- Management and organizational structure
- Services provided
- Operating plan
- Financial projection and needs
- Exhibits and appendix (20)
Documenting these aspects of a new or existing practice can help to clarify its strengths, weaknesses, opportunities, and threats before the first patient is seen. It can also serve as a benchmark to measure a practice’s future growth and success. (9) What’s more, according to one meta-analysis conducted at the University of Oregon, a well-written business plan can improve the odds of obtaining financing. (7)
Why do I need a healthcare business plan?
As mentioned, a healthcare business plan can tip the odds of succeeding in your favor. More specifically, a comprehensive plan helps you to define clear objectives for the practice, understand your target market and competition, and provide concrete rationale for funding requests. A healthcare business plan also provides a clear roadmap for all those—whether partners or investors—who may have a vested interest in the success of the practice. (5)
Did you know? If a practice plans to accept insurance from patients, providers must go through insurance credentialing, a process that may take several months. Because of this, providers may want to consider including credentialing in the process of creating a healthcare business plan. (3)(8)(16)
5 types of effective communication tools
Medical professionals are increasingly finding that employing technology to consistently communicate with their patients improves care, reduces costs, and streamlines operations. Adopting the following communication tools can help boost patient satisfaction while optimizing your practice.
The 10 elements of a healthcare business plan
The following elements are crucial to a well-written healthcare business plan. Each component plays an important role in the planning process and can guide healthcare providers during the initial start-up phase or when expanding the practice.
1. Executive summary
This section serves as an overview of the entire plan. The one-page summary should include the practice’s mission statement, how and by whom the practice was founded, a brief description of the services provided, a review of the practice so far, and a discussion of how the principal(s) want the practice to grow. (20)
2. Company description
The company description is a comprehensive description of the practice and should include a detailed discussion of its founding, location, and current stage of business. You should also include information on the qualifications of the principal(s), the practice’s specific strengths, and the specific population you intend to serve (i.e., pediatrics or the elderly). (20)
3. Market analysis
Whether you are an integrative medicine practitioner, functional medicine doctor, naturopath, chiropractor, or other type of provider, it’s vital to understand the healthcare industry and how your practice fits into the market. It’s also important to investigate current trends and market projections that may impact your practice and create a detailed strategy for dealing with any obstacles or market changes that may affect your business. This section is also where you discuss your target demographics, as well as the needs of your ideal patient base, and how your practice can meet those needs. (20)
4. Competitive analysis
A competitive analysis takes a critical look at other medical practices in the area and what makes them successful. This section also looks at the competition’s weaknesses and discusses potential ways your practice can fill any gaps or provide better care and more up-to-date services. (20)
5. Sales and marketing plan
This section describes the marketing strategies you will use to attract and retain patients. (20) It may include creating awareness in the community through direct mail, advertising, an online presence, or other promotional activities. This is also the section where you would detail how the practice will measure its return on investment (ROI) for these strategies. (19) In addition, you should include how you intend to obtain referrals from professional organizations like The Institute for Functional Medicine or the American Association of Naturopathic Physicians, as well as local community resources. (10)(11)
6. Management and organizational structure
The legal structure of the practice, office organization and management, and finance and accounting practices should appear here. State whether the practice will be incorporated, form a general or limited partnership, or as a limited liability company or sole proprietorship.
7. Services provided
Describe the services the practice will provide to patients and how it will benefit them. Specialized services such as telehealth, in-office lab tests, or cutting-edge technology should be covered in this section along with a detailed explanation of how these services create added value to both the practitioner and the patient, the cost of providing the service, pricing, any applicable licenses and permissions needed, and potential ROI. (18)
8. Operating plan
This is where you will describe the details of the practice’s day-to-day operations. Who will be in charge of which duties at the practice? How will each person’s unique experience contribute to the success of the practice? The U.S. Small Business Administration recommends using an organizational chart to provide a visual of the organizational structure. You may also want to consider including resumes or CVs of the key members of the practice. (20)
Another element—and one that can be referenced when discussing financial projections and needs—is how the practice will address its finances and accounting. This should encompass payments and receivables, capital budgeting, insurance reimbursement, and a plan to maintain balance sheets, income statements, and cash-flow statements. (4)
9. Financial projection and needs
The financial plan section should detail how you anticipate bringing in revenue and the funding you’ll need to get your practice started. Explain how the practice will be financed, including future financial protections. Provide a prospective outlook for the next five years that includes forecasted income statements, balance sheets, cash flow statements, as well as capital expenditure budgets. If your practice is already established, include actual income statements, balance sheets, and cash-flow statements for the past three to five years. (20)
Use the appendix to provide supporting documents such as credit histories, letters of reference, resumes not included elsewhere, certifications and licenses, legal documents, and any other documentation that may be requested by financial institutions or investors. (20)
Healthcare business plan template
Numerous fee-based companies offer help writing your healthcare business plan. However, the U.S. Small Business Administration provides a variety of resources to guide you as you write your plan. (6) In addition, Microsoft provides a healthcare business plan template at no cost. This free healthcare business template provides step-by-step instructions to help you complete your plan. (14)
How will you know if your healthcare business plan is a success?
Including measurable goals and projections in the plan can help you track its success. These metrics can also help identify weaknesses that can be addressed in a timely manner before they become a lasting detriment to the practice.
The bottom line
When you are ready to embark on a new healthcare venture—or when you’re ready to grow an existing practice—a business plan can help to ensure your success. A comprehensive healthcare business plan can define your goals, strategies, and needs. It can also improve the odds of funding and serves as a roadmap for future growth and success.
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- Velayati, F., Ayatollahi, H., Hemmat, M., & Dehghan, R. (2021). Key components and critical factors for developing a telehealth business framework: a qualitative study. BMC Medical Informatics and Decision Making, 21(1), 339.
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