Business plans are like roadmaps; you can go on your journey without one, but it’ll only increase the likelihood of you getting lost along the way.
Whether you’re straight out of medical school or have been practicing for years, owning a medical practice is an aspiration you may want to make a reality. A business plan, therefore, is one of the most important strategic tools for any entrepreneur.
A good plan will not only help you focus on the steps necessary to make your medical practice successful, but it also helps you plan and achieve both long-term and short-term goals.
A study published in Small Business Economics found that entrepreneurs that take the time to create a plan for their business idea are 152% more likely to start their business. Once an entrepreneur has a business plan they are then 129% more likely to propel their business forward beyond the initial startup phase.
17% of small businesses fail because they lack a business model. It’s practically impossible to start and maintain a successful business without a well-laid-out plan.
In this article we discuss:
Benefits Of Creating A Business Plan For Your Medical Practice
Being a great doctor is not enough to open a medical practice. To be successful you need a plan. You may know what you want to do but in order to see your long-term vision clearly you need a roadmap to truly be successful. Here are just some benefits of creating a strategic plan for your practice:
Having clear objectives can help improve the quality of patient care.
Having a strategic plan can help you set well-defined marketing goals. It’ll give a clear direction to your marketing activities, preventing slapdash activities that may work against each other.
Having a plan offers an opportunity for all stakeholders to get involved and collaborate in shaping the future of your medical practice. Active engagement ensures the progress of projects and priorities.
Having a plan helps you better understand your competition and the market you’re operating in, more broadly.
What Goes into making a Great Medical Practice Business Plan?
There’s a lot you need to prepare before you can start treating patients and building a business. Here are some essentials you need to be clear on before you create your medical practice business plan.
1. Get all your credentials and licensing in order
To be able to accept insurance from your patients or the government, you’ll need to go through a credentialing process. You’ll have to show insurers that you have a valid medical license and you may also need to show them malpractice insurance.
This whole process and paperwork can take several months to complete. The specific requirements may vary depending on the type of practice you’re operating and its geographical location. You’ll have to do thorough research to find out everything you need. A few of these items include:
License & Memberships fees based on your province
Credentialing and Hospital Privileges
2. Chalk out the Goals of your Medical Practice
Every profitable medical practice embarks with clear goals outlined in a business plan. This is the most exciting part as you get to draw a vision and set parameters for how you’re going to build a prosperous medical practice.
To get started, here are some questions you’ll need to answer:
How many patients will visit in a week?
What will be your broad weekly income?
How many support staff and doctors will you need to run the practice?
Conducting some preliminary research can help you better answer these questions. To begin:
Find out the volume of practices in your geographical location.
Learn about the overall health of the local population. Are there any chronic diseases?
Once you know what you’re aiming for, it’ll be easier to map out key strategies and basic infrastructure that will help you attain these goals. With your financial goals carved out, you’ll be in a better position to project your profit margins. A savvy entrepreneur gathers and analyses data so they can plan the coming years and track their progress.
3. Be Financially Intelligent
As an entrepreneur, you’ll have to address certain financial questions such as:
What will it cost for you to get your practice off the ground?
What are your expenses compared to your prospective income?
What does a profitable practice look like?
To figure this out, calculate all your expenses, including the initial ones such as technology, furniture, medical equipment, etc. Take into account any ongoing expenses such as staff salaries, licensing money and practice management software, monthly rent, and medical insurance.
To be financially independent, it’s vital to draw out possible challenges and opportunities regarding your practice. Consider factors such as whether your location ha
s a high footfall, as not only will a lot of people come across and learn about your practice, but they may also use word-of-mouth to tell their friends and family about it. This can help build awareness of your medical practice. However, with the same logic, a high traffic location will also entail sizable rent which can impact cash flow in the initial stages of the business.
4. Study your Marketplace
As someone starting their own medical practice, your aspirations are most likely to deliver top-quality patient care. To do so, you must closely study the marketplace on a local, national, and international level. You’ll have to observe and adapt to new trends in healthcare.
A 2020 Deloitte study on the global healthcare sector specified that “technologies such as cloud computing, 5G, Artificial Intelligence (AI), Natural Language Processing (NLP), and Internet of Medical Things (IoMT) can help streamline health care delivery and align it with changing consumer preferences.”
This is expected to continue to grow with the infrastructure and technological upgrades and advancements. Patients are looking for virtual healthcare. It’s a fact that it’s easier to do business and achieve success in certain locations as compared to others. In a crowded and competitive marketplace, one must find their unique selling point to stand out. Smart business owners can identify what’s missing, highlight the demand, and create a riveting argument for why a patient must visit their practice instead of someone else.
5. Know who your Ideal Patient is
In today’s healthcare environment, many practices have started to reduce their range of services and have begun focusing on a specific specialized niche. A broader offering is not always cost-effective and it tends to hamper the quality of care that patients expect. Before writing your medical practice business plan consider the following:
Pick a niche for your practice instead of keeping it broad
Based on that niche, create an ideal patient profile. You want to outline who they are, how old they are, where they live, what their income is and what type of services they expect. You may have one profile or a few.
Creating a patient profile will help target your marketing efforts so you’re always talking directly to your ideal patients.
Putting it all together to Create Your Medical Practice Business Plan
Once you have all the essential details all you need to do is put it together in a business plan. While this may sound dreadful, if you’ve done the work above it can actually be quite fun. Just open a word document and use the following format to create your medical practice business plan. You can fill out each section briefly or in as much detail as you’d like. Remember though, this is for you and your company to stay on track but you can also share it with potential investors.
Write a brief overview of all the important points of your medical practice and why your business needs to exist. This should answer the problem that your practice solves for your patients. Create and add in your company’s mission statement (why you’ve chosen to start your own practice and what you hope to achieve) along with its objections (what you need to do in order to achieve your goals).
Write a blurb about the current market place (you should have this information from your initial research as outlined above). By knowing what other providers in your area are doing it will help determine what your patient demographic is and what services you plan to provide. Include your ideal patient profile in this section.
Outline the opportunity that exists for your medical practice. Also list the services you plan on offering (it should be clear that they tie in with your ideal patient profile).
Here’s a brief example of a good opportunity:
“a recent Salesforce survey found 60% of millennials would be open to telehealth services (like video appointments over in-person doctor visits), while 75% of them would choose a clinic that had online appointment bookings over one that did not. Since millennials are our patient demographic we’ve chosen to offer a variety of telehealth services and an online booking system.”
Projections & Budget
Add in your expected expenses and revenue in as much detail as you currently can. Try to predict at least the first 12 months. You should have a general idea of what to expect based on your market research. Once you know more or less how much earning potential there is, then you’ll need to create a budget. If you can, be forgiving with your budget to take into account any unexpected expenses.
Create a timeline starting from creating your business plan to opening your doors. By outlining this directly in your business plan you’ll know exactly when you need to do things in order to stay on track and on budget.
Do I really need a business plan?
This concise summary of your overall plan and strategy ensures that important stakeholders and potential investors know of all the crucial information. It will also help keep you on track so you remember what your initial goals were when you first set out on this adventure.
Starting a medical practice is never easy but a well-researched and detailed business plan can make things a little easier. To be successful in the industry, remember to keep working on your medical practice business plan by adapting to new and improved trends.
Invest some time in creating a detailed plan as this will form the foundation of your medical practice for the upcoming years and you’ll be in a better position to approach investors and pitch your business as a credible practice to your patients and your staff.
This plan will be better poised to give you a clear vision and growth of your medical practice, helping you set it up for long-term success.