Executive Summary

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					                                                Sample Business Plan


   This business plan is an actual plan, developed and implemented by a doctor in the Midwest.
   It provides the fundamental components of a business plan and accompanying financial
   spreadsheets.

   Please use it as a template or as a springboard, for the development of your business plan.

Table of Contents

 Executive Summary..................................................................................................................... 4
   Company Description ............................................................................................................... 4
   Mission Statement .................................................................................................................... 4
   Services .................................................................................................................................... 4
   Strategic Opportunities ............................................................................................................. 4
   Target Market ........................................................................................................................... 4
   The Competition....................................................................................................................... 4
   Strategic Position...................................................................................................................... 4
   Risk Assessment....................................................................................................................... 5
   Marketing Plan & Sales Strategy ............................................................................................. 5
   Operations ................................................................................................................................ 5
   Management and Organization ................................................................................................ 5
   Development & Milestones ...................................................................................................... 5
 Company Description .................................................................................................................. 6
   Mission Statement .................................................................................................................... 6
   Management ............................................................................................................................. 6
   Location .................................................................................................................................... 6
   Development to Date ................................................................................................................ 6
   Services .................................................................................................................................... 6
 Industry Analysis ......................................................................................................................... 7
   Current Status of the Health Care Services Industry................................................................ 7
   Industry Trends ........................................................................................................................ 7
   Strategic Opportunities ............................................................................................................. 7
 Target Market .............................................................................................................................. 8
   Market Description ................................................................................................................... 8
   Market Size and Trends............................................................................................................ 8
   Target Customers ..................................................................................................................... 8
   Market Readiness ..................................................................................................................... 8
 The Competition .......................................................................................................................... 9
                                                                Page 1 of 23
                                               Sample Business Plan
  Local Competitors .................................................................................................................... 9
  Other Competition .................................................................................................................... 9
  Advantages Over the Competition ........................................................................................... 9
Strategic Position ....................................................................................................................... 10
  Professional Competence ....................................................................................................... 10
  Quality .................................................................................................................................... 10
  Customer Service and Operational Advantages ..................................................................... 10
  Price........................................................................................................................................ 10
  Convenience ........................................................................................................................... 10
  Technological Advantages ..................................................................................................... 10
Risk Assessment ........................................................................................................................ 11
  Market Risk ............................................................................................................................ 11
  Competitive Risk .................................................................................................................... 11
  Technology Risk .................................................................................................................... 11
  Execution Risk ....................................................................................................................... 11
  Capitalization Risk ................................................................................................................. 11
Marketing Plan & Sales Strategy............................................................................................... 12
  Marketing ............................................................................................................................... 12
  Sales ....................................................................................................................................... 12
Operations .................................................................................................................................. 13
  Facilities ................................................................................................................................. 13
  Inventories .............................................................................................................................. 13
  Customer Service ................................................................................................................... 13
  Research & Development....................................................................................................... 13
  Financial Control .................................................................................................................... 13
  Contingency planning ............................................................................................................ 14
Technology Plan ........................................................................................................................ 15
  Software ................................................................................................................................. 15
  Hardware ................................................................................................................................ 15
  Internet ................................................................................................................................... 15
  Phone Communications.......................................................................................................... 15
Management and Organization .................................................................................................. 16
  Physician ................................................................................................................................ 16
  Practice Manager .................................................................................................................... 16
Development & Milestones ....................................................................................................... 17
  Long-Term Goals ................................................................................................................... 17
  Development .......................................................................................................................... 17
  Milestones .............................................................................................................................. 17
  Exit Plan ................................................................................................................................. 17
                                                               Page 2 of 23
                                                Sample Business Plan
Sample Financial Spreadsheet ...................................................................................................... 18
  Financials Permanent Working Copy ........................................................................................ 18
    Start Up Costs......................................................................................................................... 18
    Operating Income Statement .................................................................................................. 18
    Evaluation & Management (E&M) Revenue ......................................................................... 19
    Total Revenue ........................................................................................................................ 22
    Break Even ............................................................................................................................. 23




                                                               Page 3 of 23
                                      Sample Business Plan
                                          Executive Summary
Company Description
Happy Valley Family Medicine exists to provide primary care medical services to the residents of Lincoln
and surrounding counties. It is organized as a Limited Liability Company under the laws of the state of
Missouri.

Mission Statement
Our mission is to provide competent and compassionate care for the patients of Lincoln and surrounding
counties. Our business focus is delivering excellent primary care medical services while raising the
standard of customer service and patient satisfaction in Family Practice. We will endeavor to protect the
physician-patient relationship from outside forces that would erode it. We exist as a model of Hippocratic
medicine, reminding our profession of its foundational principles as stated in the Hippocratic Oath.

Services
The business provides a range of ambulatory diagnostic and treatment services. Office consultations are
the cornerstone activity, augmented by ancillary services such as EKG, pulmonary function testing, office
surgery and referrals to specialist physicians. Patients will be seen in other settings including the
emergency room, hospital, nursing home and in their own homes. Technologies such as electronic
medical record (EMR) and practice management software will be utilized to assess quality and maintain
efficiency, allowing the costs of our services to remain commensurate with the local economy.

Strategic Opportunities
Given the current status and trends in the health care industry of Lincoln and surrounding counties,
significant opportunity exists for a new medical practice. For instance, the area has recently lost several
physicians, the local hospital is recruiting physicians to the area and community perception of the need
for physicians is high. Likewise, barriers to entry into the business are few.

Target Market
The target market for Happy Valley Family Medicine includes the residents of Lincoln and its 7
surrounding counties in southwest Missouri. These counties have grown 16 % over the last 10 years and
are expected to grow an additional 13% over the next 25 years. The business will target patients of all
ages in need of primary care medical services. Local employers will also be made aware of the business
and its ability to serve employee’s health care needs.

The Competition
The recent changes in physician turnover in Lincoln County have had a distinctive impact on the level of
competition for Happy Valley Family Medicine. While the impact of these changes should be positive for
the practice, we intend to aggressively compete in the local market on all fronts. Two separate physician
practices currently operate in Lincoln County. One has two independent physicians and a nurse
practitioner that have been practicing in the area for many years. The other practice has two physicians
and a nurse practitioner. Happy Valley Family Medicine will continue to relate to these competing
physicians in a cooperative way, in so far as it does not interfere with the business plan. Additionally,
Memorial Hospital has taken an active role in recruiting new physicians to the area. We believe the
current number of providers is historically low for the area and that this recruiting, if successful, will have a
positive impact on the local medical community as a whole.

Strategic Position
Happy Valley Family Medicine’s business focus is delivering excellent primary care medical services. The
competence in diagnostic and procedural services essential to deliver such care will be maintained.
Patients will perceive quality in our services through observed competence, ongoing participation with
medical schools and family practice residencies, and computer technology allowing for efficient
information management. Our patients will see their physician the same day they call for an appointment.
                                                  Page 4 of 23
                                    Sample Business Plan
Because overhead expenses will be kept low compared to national and local averages, our costs will be
lower than the competition. Our location will be convenient.

Risk Assessment
We believe the market will respond favorably to Happy Valley Family Medicine for several reasons
including the recent loss of several physicians from the area. We do not foresee significant numbers of
new providers entering the market in the near future. Extensive experience has been gained over the last
three years working with two separate EMR systems. The capabilities and advantages of an EMR are
well known and have been a major motivation for re-entering practice in the Anytown area. This sharply
reduces our exposure to risk in this area of technology. The basic operational components of an
outpatient medical practice are well known to us, but we do plan on implementing several new work flow
techniques. These include open access scheduling which allows patients to be seen the same day that
they call for an appointment, utilizing only one staff person and limiting the number of insurance plans we
participate in. There exists the possibility that expenses have been underestimated, although all
reasonable effort has been expended to avoid such error.

Marketing Plan & Sales Strategy
Traditionally, medical practices have depended on word of mouth as their primary means of attracting
new patients. We expect patients to respond favorably to several aspects of our business plan, and to
communicate this enthusiasm to others in the community. Nonetheless, we plan on having several
marketing strategies in place prior to the opening of the business. These include signage, newspaper
announcements, telephone directory and other activities.

Operations
Happy Valley Family Medicine will be located at 475 Lonely Road, Anytown, within the newly renovated
medical office building owned by Memorial Hospital. The cornerstone of our customer service effort will be
the process of Open Access Scheduling. We will open early each morning in order to serve those patients
who need to be seen before their workday begins. Saturday and evening hours will be considered. The
electronic medical record will be fully utilized for information management. Patients will be seen in a
professional, relaxed atmosphere, where they are cared for by people truly concerned with their well
being. Fewer employees (compared to similar medical practices) will allow meaningful relationships to
develop quickly between employees and patients, adding to the focus on personalized service. Payment
will be expected at the time of service. Timely and accurate submission of insurance claims will be key.

Management and Organization
Our business plan calls for two personnel, Dr. Welby and Betsy Welby, the practice manager. These
individuals will perform all operational tasks. We believe the traditional physician office organization
inflates overhead expenses beyond what is sustainable for our business model. We believe personnel
can be kept to this minimum without sacrificing customer service or quality of medical care.

Development & Milestones
To this point, development of Happy Valley Family Medicine has consisted of understanding those
activities necessary to write this business plan. These include business accounting, supply management,
Medicare regulations, information management and risk assessment. Happy Valley Family Medicine
plans to grow steadily over the first 18-24 months of operations. After this two-year period of growth the
business should achieve its long-term goal of sustainability. We believe signs of a vigorous medical
practice include the ability to see patients quickly, see them on time, and maintain the capacity to see
new patients. We plan on assessing several indicators of business success on a regular basis. These will
include a rolling 3-month average of the number of patients seen and income from operations. We will
also match our performance against the Break Even Analysis contained in the Financials section of this
plan.



                                                Page 5 of 23
                                     Sample Business Plan
                                        Company Description

Happy Valley Family Medicine exists to provide primary care medical services to the residents of Lincoln
and surrounding counties. It is organized as a Limited Liability Company under the laws of the state of
Missouri.

Mission Statement
Our mission is to provide competent and compassionate care for the patients of Lincoln and surrounding
counties. Our business focus is delivering excellent primary care medical services while raising the
standard of customer service and patient satisfaction in Family Practice. We will endeavor to protect the
physician-patient relationship from outside forces that would erode it. We exist as a model of Hippocratic
medicine, reminding our profession of its foundational principles as stated in the Hippocratic Oath.

Management
Marcus Welby, MD
Betsy Welby

Location
The practice is located at 475 Lonely Road, Anytown Missouri.

Development to Date
This plan outlines a new business entity scheduled to begin operations in April 2003. Significant time has
been spent performing research for the writing of this business plan.

Services
The business provides a range of ambulatory diagnostic and treatment services. Office consultations are
the cornerstone activity, augmented by ancillary services including EKG, pulmonary function testing,
office surgery and referrals to specialist physicians. Laboratory and X-ray services will be obtained by
utilization of Memorial Hospital. Patients will be seen in other settings including the emergency room,
hospital, nursing home and in their own homes. The business will support the local hospital by admitting
patients, providing coverage of the emergency room and by utilizing its outpatient services including
laboratory, radiology, dietary and therapy services. Arrangements for admission to tertiary care facilities in
the region will be made for those patients whose medical condition warrants such care.
Technologies such as medical record and practice management software will be utilized to assess quality
and maintain efficiency, allowing the costs of our services to remain commensurate with the local
economy. Employees work in a peaceful and compassionate environment that allows for mentoring,
personal growth and service to others. Close ties to the community will be maintained through personal
relationships, geographic location, and support of the local health care industry. Financial goals are based
on stewardship and sustainability.




                                                 Page 6 of 23
                                     Sample Business Plan
                                           Industry Analysis

Primary care medical services have been provided in Lincoln County for generations. An analysis of this
business sector helps to place Happy Valley Family Medicine and its business plan in the context of these
services.

Current Status of the Health Care Services Industry
Health Care services in and around Lincoln County are varied and reflect the needs of the different
communities. There are two hospitals in the county: Memorial Hospital in Anytown and Jones Memorial
Hospital in Orange City. Hospitals also exist in several surrounding counties including Hank (Silver Valley
Hospital, Bergman), Salet (Patient’s Memorial Hospital, Simon), and Pine (Pine County Memorial
Hospital, Hot Springs). Physician practices exist in these and other surrounding communities such as
Mansville, Hermit, Poland, Wheatville, and Stockpond.
Additional health care services found in the area include outpatient therapy services, Hospice
organizations, nursing homes, assisted living facilities and state programs such as WIC, Head Start,
mental health services and local health departments.
Traditionally, family practice physicians in Anytown have been successful in their businesses and a
stabilizing force for the local health care services industry. As a general rule, they have not been
employed by hospitals or health systems. The two exceptions to this rule have both left practice since
March of 2001 as described below. However, turnover of physicians has not been high compared to the
industry as a whole. Growth of the industry has mirrored that of the local population and economy, which
has shown modest but stable gains. The current status of these businesses will be discussed below.

Industry Trends
Since March 2001, Memorial Hospital has lost 3 of its 6 active staff physicians. One physician retired
while another left to pursue an Endocrinology Fellowship in St. Louis. Dr. Welby left to join the teaching
staff of a Family Practice Residency in Springfield after practicing in Anytown full-time since 1991. This
was the most rapid decline in physicians this community has ever experienced. During this same time,
Memorial Hospital experienced a change in administrators. This too was a change not anticipated and
had not occurred for many years prior. These factors have caused somewhat of a crisis in access to
primary care services in Anytown and the surrounding area. It is anticipated that the remaining physicians
on staff at the hospital will retire over the next 10 to 15 years. Meanwhile the larger hospitals in Simon
and Bergman show signs of growth and expansion.
The business of health care in Lincoln County has also shown interesting trends. This area remains
relatively high in the number of residents who have their health care costs paid through either state or
federal health care programs. Managed Care remains at a stable but low percentage of the market.
Consequently, those businesses that provide health care plans for their employees have not seen much
change in the availability of health care providers.

Strategic Opportunities
Given these factors, several opportunities for expansion of the ambulatory medical services industry exist
in the area. The simple fact that half of the local physicians left practice recently has created a real need
for physician services. Memorial Hospital seems very willing to pursue new and innovative ways to
support physicians as it looks to quickly and permanently increase its medical staff. Community
perception of the need for physicians is at an all-time high. The remaining physicians are very interested
in cooperating with new physicians interested in coming to the area. Very few barriers to entry into the
business seem to exist as costs for setting up and maintaining a practice remain below average for the
region. Long-term considerations remain favorable for any physician who opens a practice in the area.




                                                 Page 7 of 23
                                    Sample Business Plan
                                            Target Market

Market Description
Happy Valley Family Medicine is located in Anytown, Missouri and consequently draws patients primarily
from Lincoln County. Historically however, physician practices in Anytown have also attracted patients
from those counties that border Lincoln County. Each of these counties has physician practices and all
except two have local hospitals. Nonetheless, patients from the border areas of these counties do travel
to Anytown to see their physician and for hospital care. The target market for Anytown Family Medicine
therefore includes the residents of the following counties in southwest Missouri:
 Lincoln
 Salet
 Chips
 Bent
 Hank
 Botes
 Vermillion
 Pine

Market Size and Trends
The total population of these counties stood at just over 135,000 in 2000. Locally, the population of
Lincoln County is 9652. These counties have grown 16 % over the last 10 years and are expected to
grow an additional 13% over the next 25 years, according to U.S. Census Bureau statistics.

Target Customers
Ultimately, patients are the target market for Happy Valley Family Medicine. On the other hand, given the
current trends and patterns in health care economics, businesses and other entities should be seen as
part of a larger target market. Both public and private employers choose healthcare plans for their
employees that determine patterns of use for local health care services including Worker’s
Compensation. For this reason, the businesses in Anytown and the surrounding area are thought of as a
target market. Business from these entities will be actively pursued.
Patients are often identified by their health insurance plan. Health care is expensive enough that most
patients will utilize providers who accept their insurance. This is especially true of patients covered by
government health plans. Historically, medical practices in Anytown have an average of 60-65% of their
patients covered by government health insurance. Consequently Happy Valley Family Medicine will
position itself to serve these patients.
Private health insurance, while covering a smaller number of patients in the area (15-20%), remains an
important source of income for physician practices in the Anytown area. Unlike government health plans
that tend to be uniform in billing and claims procedures, private insurance plans can each have different
requirements. Collecting payment for services from these companies can be very expensive for the
practice, inflating overhead expenses out of proportion to the money collected. Happy Valley Family
Medicine will use innovative approaches to attract private insurance patients while assisting them to file
their own claims and obtain reimbursement for their health care costs. This will include helping patients
efficiently manage their deductibles, co-payments, in & out of network benefits, etc.

Market Readiness
Due to the recent decline in the number of physicians in the Anytown area the residents, the board and
administration of Memorial Hospital, community leaders and business leaders seem very interested in
attracting and retaining new physicians to the area. Many former patients have strongly encouraged the
opening of a new practice in the area and presumably will become patients of Happy Valley Family
Medicine.


                                               Page 8 of 23
                                     Sample Business Plan
                                           The Competition

The recent changes in physician turnover in Lincoln County have had a distinctive impact on the level of
competition for Happy Valley Family Medicine. While the impact of these changes should be positive for
the practice, we intend to aggressively compete in the local market on all fronts.

Local Competitors
Two separate physician practices currently operate in Lincoln County. They are in different buildings
across the street from each other. One has two independent physicians who have been practicing in the
area for many years. They employee a family practice nurse practitioner. Their facility is 25 to 30 years
old, clean and conveniently located near the hospital. Their current space is fully utilized and expansion
would be necessary before they could recruit an additional physician. The other practice has two
physicians and a nurse practitioner in a newer, larger facility recently purchased by the local hospital from
a large health system in Springfield. It should be noted that the relationship among different providers in
Anytown has always been one of healthy and not intense competition. Happy Valley Family Medicine will
continue to relate to these competing physicians in a cooperative way, in so far as it does not interfere
with the business plan. Patients in Anytown are generally loyal to their personal physicians. Nonetheless,
we expect a good number of previous patients to return once we open for business.
Memorial Hospital has taken an active role in recruiting new physicians to the area, and it is expected that
these efforts will be successful over the next 3 to 5 years. We believe the current number of providers is
historically low for the area and that this recruiting, if successful, will have a positive impact on our
practice as it draws more patients to the local medical community. Nonetheless, new physicians to the
area have usually taken 2 to 3 years to build a successful practice, and this fact stands as a barrier to
entry into the local market. We believe our situation is fundamentally different from a new physician to the
area opening a business, since it has only been 18 months since Dr. Welby left practice in Anytown.

Other Competition
Regional competition for patients exists from physicians practicing in the communities around Anytown.
Local hospitals and/or larger health systems from Springfield and Kansas City own or support some of
these practices. Patient drift between these practices and local physicians has always occurred and can
be expected to continue.

Advantages Over the Competition
We fully intend to bring a new perspective on personal service to the practice of medicine in Anytown and
the surrounding area. This is the cornerstone of our competitive advantage. The practice will follow a
policy of open-access scheduling, where patients are allowed to schedule their own appointments and the
vast majority of patients are given appointments the same day they call. Office hours will begin earlier
than other practices in the area and will be flexible to meet the needs of patients.
Every task that occurs within the office will be analyzed to change the overall workflow to one of
simplicity. This will allow us to use a small number of employees to run the business. It is our belief that
overhead costs in family practice have historically been the factor that limits profit margins. These costs
have traditionally been 55-60% in most family practice offices. We feel this is too high. Expenses at this
level cause behaviors that are detrimental to the physician-patient relationship. They force physicians to
see too many patients, spend less time with each patient, work longer hours and form relationships with
health systems and other interests whose profit motives are not compatible with excellent patient care.
The electronic medical record, described more fully in the technology section of this plan, is one of the
tools we will use to keep these costs low.




                                                Page 9 of 23
                                    Sample Business Plan
                                          Strategic Position
Professional Competence
Happy Valley Family Medicine’s business focus is delivering excellent primary care medical services.
Competence in diagnostic and procedural services is essential in order to deliver such care. For this
reason, Dr. Welby will maintain certification with the American Board of Family Practice. This is obtained
every seven years through examination. Membership in the American Academy of Family Physicians,
which requires continuing medical education on a yearly basis, will also be maintained. These measures
of competence are considered a strength, as not all of the physicians in Anytown or the surrounding area
are members of these organizations.

Quality

We believe patients will perceive quality in our services as we maintain competence as mentioned above.
Happy Valley Family Medicine will maintain ongoing relationships with medical schools and family
practice residencies, training future family physicians in rural practice. Historically, patients have
recognized this activity as a quality indicator. Computer technology will allow us to manage patient’s
diseases with efficiency, thus furthering the perception of quality.

Customer Service and Operational Advantages
We are interested in providing a level of personal service that has been missing from family practice for
decades and is lacking in the Anytown area. Our patients will be able to see the physician the same day
they call for an appointment, will not wait once they arrive at the office and will enjoy the undivided
attention of the physician in the examination room without interruption. We believe patients will respond to
these and other sincere attempts at personal service. These types of strategies will be considered unique
in the area.

Providing a broad range of medical services will be an advantage, as patients in the Anytown area tend to
utilize physicians they know can take care of them in the office, their home, the emergency room, the
hospital, and the nursing home. Providing these services has always been a part of the local physician
culture and patient expectations.

Price
Because overhead expenses will be kept low compared to national and local averages, our costs will be
lower than the competition. Because our business plan calls for long-term financial sustainability without
requisite business expansion, we believe costs can be maintained at lower levels for the long term. We
also believe patients will respond favorably to these lower costs for their health care.

Convenience
Our location will be convenient to the Anytown and outlying communities, located adjacent to Memorial
Hospital at the junction of Missouri Highway 14 and its business route through Anytown. Our hours will be
set so that patients will be able to access our services before, during or after their workday begins.

Technological Advantages
A computerized electronic medical record (EMR) will be a cornerstone of operations. It will allow us to
eliminate time looking for paper charts, maintain a minimum of personnel, access patient information and
perform clinical inquiries instantly from every examination room, quickly and efficiently communicate with
consultants and many other functions. Were the competition to change their charting system to an EMR,
they would face very significant time and cost barriers. Starting a new practice with an EMR is
tremendously easier than converting an existing practice.



                                               Page 10 of 23
                                      Sample Business Plan
                                            Risk Assessment
Market Risk
We believe the market will respond favorably to Happy Valley Family Medicine for several reasons. Due
to the recent loss of several physicians from the area, there is a significant need for primary care medical
services. Personal contact with many patients in the area reveals an urgent readiness for Dr. Welby’s
return to medical practice. Therefore, we believe the market exists and is ready for our services.

Competitive Risk
We do not foresee significant numbers of new providers entering the market in the near future. Memorial
Hospital is recruiting physicians for the area, however experience shows this to be a long process. The
local medical community would actually benefit from the addition of one or two new physicians to the
area, as the number of providers has dropped in the last 18 months to levels historically low for the area.
With respect to existing providers in the area, we do not anticipate significant changes in the services
they provide in response to our business. Their practices have been stable for many years and should
remain so after we enter the market.

Technology Risk
Extensive experience has been gained over the last four years working with two separate EMR systems.
The capabilities and advantages of an EMR are well known and have been a major motivation for re-
entering practice in the Anytown area. This sharply reduces our exposure to risk in this area of
technology. We do face risk with respect to practice management software we plan to implement without
experience in this area. Our software vendor plans on extensive implementation training to help reduce
this risk. Site visits to practices actively using this software will provide us with experience in the day-to-
day use of these tools. While our business would be adversely affected if one or more vendors stopped
supporting the software products we are using, we do not think this will pose a serious threat to our
viability. The practice management literature contains many such stories. Incorporation of practice data
into new software products seems to be the rule and occurs with relative ease and modest expense.

Execution Risk
The basic operational components of an outpatient medical practice are well known to us, but we do plan
on implementing several new work flow techniques. The first of these is open access scheduling, allowing
patients to be seen the same day that they call the office for an appointment. Difficulty is not anticipated
with regard to opening the schedule to same day appointments. A system similar to this was used when
practicing previously in Anytown and worked very well. Several physicians who are currently enjoying
success with open scheduling will be used as resources after the business opens. Secondly, utilizing only
one staff person is another technique very important to the success of the business. Additional staff can
be added if necessary, but this is not anticipated. Simplification of basic workflow components will allow
tasks to be performed with minimal effort. The EMR is an important component of these capabilities.
Third, limiting the number of insurance plans we participate in could limit the number of patients we will
see from any particular plan. We believe doing so allows us to hire fewer business office personnel, which
in turn keeps overhead costs low. We also believe most patients with insurance are experiencing
increasing deductible and co-pay amounts, so that there is less advantage for the patients to see
physicians who participate in their plan. If we are able to keep our overhead costs and consequently our
fees at lower levels, we will stay competitive in attracting those patients to the practice.

Capitalization Risk
There is always a chance that expenses have been underestimated. Conversely, income from operations
may have overestimated. The best information available has been utilized to write this business plan.
Standard margins of error have been included and are felt to be adequate.



                                                 Page 11 of 23
                                     Sample Business Plan
                                 Marketing Plan & Sales Strategy
Marketing
Traditionally, medical practices have depended on word of mouth as their primary means of attracting
new patients. Practices in the Anytown area are no different in this respect. We expect patients to
respond favorably to several aspects of our business plan, and to communicate this enthusiasm to others
in the community. These include the comprehensive range of medical services we provide, the level of
customer service we achieve and the convenience of accessing our business. Consequently, we expect
patient satisfaction with these areas to be the primary means of marketing Happy Valley Family Medicine.
Nonetheless, we plan on having several marketing strategies in place prior to the opening of the
business. This will help us to minimize the time it will take for patient volume to reach adequate levels. We
also recognize that one measure of the vitality of a medical practice is whether or not the practice
continues to attract new patients. For this reason marketing will be an ongoing priority for Happy Valley
Family Medicine.

The medical office campus surrounding Memorial Hospital is a high traffic area, daily attracting a large
number of people. For this reason, signage will be significant and visible. A newspaper article in the local
paper announcing the opening of the practice is anticipated. Advertisements will also be utilized for the
opening announcement in newspapers from each of the surrounding counties. Consideration will be given
to running a small weekly advertisement in the local paper on a long-term basis. Business cards and
brochures with complete contact information will be utilized to promote the opening of the practice as well
as for long-term marketing activity. An appropriate but modest telephone directory advertisement will be
maintained. Additional marketing activities, which will be considered but not included in the initial
marketing budget, will include sponsorship of local youth sports teams, radio advertising and the
maintenance of an informational Internet website.

Sales
Although medical practices have not traditionally been involved in soliciting patients, we think there is a
place for initiating a dialogue with business leaders in and around Lincoln County. Many of them will have
employees covered under the Worker’s Compensation Plan, and we are interested in serving this market
segment. They may also benefit from knowing our hours of operation, since they will be convenient for
their employees who might need to access medical services during the workday. It may also benefit the
practice to inquire concerning the type and nature of health insurance plans available to employees of
businesses in the area. Consideration could then be given to enrolling in such plans as a means of
attracting and serving these patients.




                                                Page 12 of 23
                                     Sample Business Plan

                                               Operations
Facilities
Happy Valley Family Medicine will be located at 475 Lonely Road, Anytown, within the newly renovated
medical office building owned by Memorial Hospital. It will operate within 1200 sq.ft. of space leased from
the owner. As stated elsewhere in the plan, we believe this location provides a competitive advantage in
the local medical community.

Inventories
Medical supply inventory will be kept at a level that allows for continual service to patients while avoiding
expensive stores of supplies. We will utilize several medical supply companies, all of which guarantee
delivery in 1-2 business days. A 30-60 day operating inventory will be kept on hand for most supplies. We
believe streamlining of this process will occur, as we become more familiar with supply consumption.

Customer Service
The cornerstone of our customer service effort will be the process of Open Access Scheduling. This
scheduling plan assumes patients will be seen when it is most convenient for their schedules; most are
seen the same day that they call for an appointment. This technique has been used for many years by
family physicians, but has recently been re-discovered as a way of eliminating excessive “time to
appointment”, a major component of patient dissatisfaction with medical practices. Experience with this
technique in my previous practice in Anytown showed very favorable results. This virtually eliminates
those patients who fail to keep their appointments, which has historically been a costly thorn in the side of
medical practices. Patients tend to access their physician sooner in the disease process, leading to better
medical outcomes. Staff satisfaction in such a system where patients are not refused appointments when
attempting to see their physician, is very high.

In addition to patient-centered scheduling procedures, we will open early each morning in order to serve
those patients who need to be seen before their workday begins. Saturday and evening hours will be
considered, and have been popular among patients in the Anytown area in the past. Urgent calls from the
hospital or emergency room, which often interrupt office visits, will be kept to a minimum through call
arrangements, adding to the patient’s perception of a thorough and relaxed encounter with their
physician. Patients will be encouraged to call Dr. Welby directly after hours, avoiding the cost of
answering services and the risk of errors in communication. Patient charts can be accessed from the
physician’s home or from any Internet browser, adding to the convenience with which patient calls can be
handled. Patient satisfaction surveys will be designed and distributed on a regular basis with attention
given to those areas of most concern.

Patients will be seen in a professional but relaxed atmosphere, where they are cared for by people truly
concerned with their well being. Fewer employees (compared to similar medical practices) will allow
meaningful relationships to develop quickly between employees and patients, adding to the focus on
personalized service.

Research & Development
Trends in the private practice of family medicine are documented in several trade and professional
publications, available through Dr. Welby’s professional organizations. These have been a great help in
the preparation of this business plan and will continue to be a source of information and in the future.

Financial Control
Except where determined by third-party contractual arrangements, patients will be expected to pay at the
time services are provided. Timely and accurate submission of claims to insurance companies will be a
key component of the financial vitality of the practice. The Electronic Medical Record (EMR) assists the
                                                Page 13 of 23
                                     Sample Business Plan
physician in accurately coding an accurate level of service and subsequent fee for each service provided.
Practice Management software provides for timely submission of these claims, and allows delinquent
accounts to be easily identified and dealt with. Patient accounts will not be sent to a collection agency as
long as the patient makes a good faith effort to make payments towards the balance on a regular basis.
Bartering will be used as a means of settling accounts.

Contingency planning
To prevent an emergency or natural disaster from permanently affecting the business, offsite storage of
medical record and financial data will be performed daily. Several acceptable sites for relocating the
practice exist in and around Anytown, should such tragedy occur. Business insurance will be utilized to
replace equipment in such an emergency. Qualified persons with the skills to operate such an office can
be found in the Anytown and surrounding area, and will be considered for employment if necessary
secondary to illness of primary staff, etc. For instance, several people with such skills recently left
employment at the office previously operated by St. John’s.




                                                Page 14 of 23
                                      Sample Business Plan
                                            Technology Plan
The outpatient medical practice is becoming increasingly dependent on technology to perform even the
most basic tasks. While many see this change as a burden, we see it as a tremendous opportunity.
Happy Valley Family Medicine will take full advantage of these technologies, and others, to augment
medical decision making, enhance customer service, and improve profitability.

Software
Electronic medical record (EMR) software enables us to perform multiple essential tasks with ease and
accuracy. Some of these tasks include scheduling of appointments, electronic prescribing, and disease-
specific patient education materials. EMR systems allow other benefits to the practice not possible with
paper charts including practice profiling, disease state management, collection and analysis of patient
demographic information and internal communication. Experience in two different EMR systems has been
gained over the last 4 years involving both private practice and residency faculty settings. Practice
management software will allow us to bill patients and insurance companies easily and accurately. Claims
can be filed electronically and checked for accuracy before they are filed. This eliminates the refiling of
claims, a frequent source of frustration and personnel expense in medical practices. Voice transcription
software will be used to transcribe office notes as well as letters to patients and consultants. This will
eliminate the need for transcription services, an increasingly significant source of overhead costs in
medical practices. Accounting software will be utilized to monitor financial operations, tax payments and
other accounting procedures.

Hardware
A private computer network will be the backbone of the technology plan for Happy Valley Family
Medicine. It will house and maintain all of the software products. Personal computers (PCs) will be
located in each exam room, at the nurses station and in the physician’s office. This will allow access to
both patient information and all of the software solutions from any location in the office. Data backup will
occur daily and be stored at an off-site location to protect practice operations from loss of data due to fire,
etc. A fax server will be utilized to reduce the paper-handling tasks associated with fax communications.
Electronic documents will be faxed directly from the computer screen, with no need to print the
documents. Documents received from outside sources will be directed by the fax server to the EMR,
annotated, and faxed back to the sender without ever being converted to paper and handled by
personnel. A document scanner will convert paper documents to digital images that are then stored in the
EMR, eliminating the need for storage of these documents. This will also serve as a copier. Printers will
be used when necessary to generate paper documents such as prescriptions and other forms.

Internet
High-speed Internet access will enhance several aspects of the practice when combined with the
practice’s computer network. Medical information including clinically pertinent medical research can be
obtained immediately in the exam room during the patient encounter. Access to the practice’s EMR
system over the Internet will allow the physician to view patient records from any location with Internet
capability including the physician’s home, the local hospital, emergency room, and local nursing homes.

Phone Communications
A telephone system that incorporates adequate incoming/outgoing lines for phone and fax
communications will be used. Practice personnel will carry cordless units to insure phone calls will be
answered live during regular business hours. An answering machine will be used after hours, directing
patients to call the physician’s home, cell phone or the local hospital. This will add a unique aspect of
personal customer service and will eliminate the need for an answering service and associated costs.
Experience shows that patients do not call for unnecessary reasons after hours; such a policy therefore
should not be a burden on the physician’s lifestyle.

                                                 Page 15 of 23
                                     Sample Business Plan
                                  Management and Organization
Our business plan calls for two employees, the physician and the practice manager. These individuals will
perform all operational tasks. The traditional model seen in most medical practices consists of 4 to 6 full
time employees for each physician in the practice. We believe this model inflates overhead expenses
beyond what is sustainable for our business model. Through the use of technologies described elsewhere
in this plan, we believe personnel can be kept to this minimum without sacrificing customer service or
quality of medical care. This arrangement allows for immediate and direct feedback regarding all aspects
of the business operations of Happy Valley Family Medicine.
Please see Appendix A for CVs of personnel.

Physician
Marcus Welby, MD practiced family medicine in Anytown for 10 years beginning after graduation from
residency in 1991 until 2001, leaving to join the faculty at Cox Family Practice Residency in Springfield,
Missouri. Extensive experience in practicing rural family medicine was gained during these 10 years in
many patient care settings including office, hospital, emergency room, operating room, delivery suite,
intensive care unit, nursing home and patient’s home. By all measures, this practice was successful in
delivering comprehensive medical services to the people of the Anytown area.

Dr. Welby graduated from Box Springs Baptist University in 1984 with a Bachelor of Science degree in
biology and chemistry. He earned his M.D. degree at St. Louis Cardinals University School of Medicine in
1988. He graduated from Uncle Lester’s Family Practice Residency in 1991. He is a diplomate of the
American Board of Family Practice.

Although Dr. Welby was very involved in the business aspects of his medical practice in Anytown, this will
be his first attempt at operating a private practice. He has been actively pursuing the thought of re-
entering practice in the area since terminating employment with St. John’s Health System in Anytown in
2001. This business plan reflects the results of that time of preparation and self-education.

Practice Manager
Betsy Welby completed her undergraduate education at Box Springs Baptist University in 1984 with a B.
A., graduating Summa cum Laude. She received a master’s degree in Communication Disorders from St.
Cardinal University in 1986.

While Mrs. Welby has been engaged full-time as a homemaker since 1992, she brings to the practice
experience gained in medical settings prior to this time. These include direct patient care responsibilities
as a dental assistant and Speech-Language Pathologist, and budget and personnel management for a
head-injury prevention program serving 15 counties in southwest Missouri. She recently re-entered the
work force and gained customer service and retail experience while employed at a local business in the
Anytown area for several months.

Since their marriage in 1982, Betsy Welby been fully involved in making decisions crucial to her
husband’s career as a physician. These include, but are not limited to, the initial decision to pursue a
career in medicine, where to attend medical school and residency, choosing a medical specialty, where to
initially live and work after residency, whether to leave practice, and whether to enter teaching. For the
last two years, she has been fully engaged in the conceptualizing and planning of Happy Valley Family
Medicine.

Both Dr. and Mrs. Welby are likely to be challenged by the areas of inventory management, insurance
billing and business finances. Resources such as software products and relationships with qualified
professionals will be utilized to assist in these processes.

                                                Page 16 of 23
                                      Sample Business Plan
                                      Development & Milestones

Long-Term Goals
We plan to grow Happy Valley Family Medicine steadily over the first 18-24 months of operations. By that
time it is expected the practice will reach a level of productivity adequate to maintain its profitability for the
remainder of Dr. Welby’s career. After this two-year period of growth the business should achieve its long-
term goal of sustainability. Happy Valley Family Medicine has been conceptualized and planned with the
following goals in mind: Providing the Welby family with stable income for the foreseeable future, fulfilling
professional goals of delivering excellent quality medical care and personal goals of owning a business.
We believe signs of a vigorous medical practice include the ability to see patients quickly, see them on
time, and maintain the capacity to see new patients. We do not give credence to conventional wisdom,
which says a successful physician’s earliest appointment is in 6 weeks. This is neither good medical
practice nor good business.

Development
To this point, development of Happy Valley Family Medicine has consisted of understanding those
activities necessary to write this business plan. These include, but are not limited to, the following:
Business accounting and financial statements
Medical office supply management
Medicare regulations regarding contractual agreements and provision of medical services
Electronic Medical Record and Practice Management software product demonstrations
Business, health and medical liability insurance products
Assessment of target market, population demographics and the local health care economy
Business risk assessment

Milestones
We plan on assessing several indicators of business success on a regular basis, in addition to the Break
Even Analysis contained in the Financials section of this plan. These will include:
Rolling averages of number of patients seen and income from operations
Number of day’s collections in Accounts Receivable.
Self-Pay collection percentage
Percentage of denied claims

Exit Plan
Currently there are no plans for expansion of the business beyond one health care provider, since our
plans for growth do not extend beyond long-term sustainability. Nevertheless, contingency plans for such
development will be considered as opportunities present themselves, and will be scrutinized with the
same diligence as this original business plan. In fact, we know of one or more family practice residents
who could potentially join the practice after graduation from training. Otherwise, we would expect the
business to terminate operations by one of the following mechanisms: Sale to a physician or health care
institution, merger with a locally or regionally located medical practice, relocation to another area, or
closure at Dr. Welby’s retirement.




                                                  Page 17 of 23
                                  Sample Business Plan
                                  Sample Financial Spreadsheet


Financials Permanent Working Copy

Start Up Costs


Medical equipment    22000
Office Supplies      1100
Computer hardware    18000
Computer software    36400
Legal costs          0
Signage              0
Marketing            600

Total Costs          78100


Operating Income Statement


          Fees collected:
          Expenses:
          Salary, staff                         3000
          Payroll Taxes                         300
          Professional Services: CPA            240
          Medical License Fees                  370
          Continuing Medical Education          40
          Loan                                  900
          Dues and professional subscriptions   75
          Insurance: Business                   20
                        Malpractice             1521
                        Health                  538
          Medical supplies                      400
          Office expense                        150
          Outside Services                      55
          Postage                               200
          Rent                                  500
          Repairs and maintenance               100
          Telephone                             300
          Utilities                             250
          Practice development                  150


          Total                                 9109




                                            Page 18 of 23
                                                 Sample Business Plan

Evaluation & Management (E&M) Revenue

2003 MCR Area 99 Fee Schedule x 1.0 rounded up ($1 plus change)

                                                                     Weig
  E&M         Weight   Charge     Contribution        E&M            ht      Charge    Contribution
  99201       0.19     35         $6.65               99211          0.03   20         $0.60
  99202       0.3      60         $18.00              99212          0.22   35         $7.70
  99203       0.35     85         $29.75              99213          0.58   50         $29.00
  99204       0.14     120        $16.80              99214          0.15   75         $11.25
  99205       0.02     155        $3.10               99215          0.02   110        $2.20
              1                                                      1
  New
  Patient                                             Established
  Average                                             Patient Avg
  Charge                          $74.30              Charge                           $50.75

  Number
  new                                                 Number
  patients:            2,318      $172,227.40         established:          1,546      $78,459.50

  Total                                                                      Total
  number                                                                    E&M
  pts                  3,864                                                revenue    $250,686.90

                                                      per visit revenue
                                                      additional
                                                      services
                                                                            Additional
                                                                            revenue    $-
                                                                            Total
                                                                            office
                                                                            billings    $250,686.90


                                                          Page 19 of 23
                                                      Sample Business Plan


Other Professional Revenue
                             2003 MCR                    Est #
Site            Codes        Area 99 Fees     MCR fee    pts/mo        Est $/mo
Hosp            99217        Obs disch        59.35      2             118.7
                99218        Init obs         59.35      2             118.7
                99219        " "              98.96      2             197.92
                99220        " "              138.52     2             277.04
                99221        Init hosp        59.96      2             119.92
                99222        " "              99.57      4             398.28
                99223        " "              138.53     2             277.06
                99231        Subs hosp        29.83      4             119.32
                99232        " "              49.29      7             345.03
                99233        " "              70.09      4             280.36
                             Obs/hosp:
                99234        Adm/disch        119.3      2             238.6
                99235        " "              158.01     1             158.01
                99236        " "              197.56     1             197.56
                99238        Hosp disch       62.7       4             250.8
                99239        " "              85.12      4             340.48
                             Crit care: 1st
                99291        30 mins          190.93     1             190.93
                             " " : each
                99292        add 30           97.74      1             97.74

                             Comp NF
NH              99301        assess           63.87      4             255.48
                99302        " "              86.92      3             260.76
                99303        " "              107.81     3             323.43
                99311        Subs NF care     36.33      5             181.65
                99312        " "              56.01      7             392.07
                99313        " "              76.98      4             307.92

Home            99341        Home: New        53.3
                99342        " "              80.15
                                                             Page 20 of 23
                                                Sample Business Plan
Other Professional Revenue
                             2003 MCR                 Est #
Site                Codes    Area 99 Fees   MCR fee   pts/mo         Est $/mo
Hosp                99217    Obs disch      59.35     2              118.7
                    99343    " "            119.27    2              238.54
                    99344    " "            155.4
                    99345    " "            190.32
                    99347    Home: Est      41.89
                    99348    " "            66.86     2              133.72
                    99349    " "            103.91
                    99350    " "            151.76

Total encounters
per month                                             75

Total
Professional non-
office charges
per month                                                            5820.02
                                                      12
                                                      months/yr      12
Total
Professional
non-office
charges per                                                                     Note: Will leave this
year                                                                 69840.24   at MCR x 1.0




                                                           Page 21 of 23
                                                   Sample Business Plan

Total Revenue
                                                              Avg
    Revenue description           # Patients   Charges        charge / pt
    Office New E&M                2,318        $172,227.40     $74.30
    Office Est E&M                1,546        $78,459.50      $50.75
    Other Prof                    900          69840.24       77.6        NB: Will leave this at MCR x 1.0
    Totals                        4,764        $320,527.14     $67.28

    75% collection rate *         0.75         $240,395.36     $50.46

    Add: SOH ER
    ($56/hr x 72 d/y x 24 h/d)                 $96,768
    Add: NP Collaboration fee                  $6,000
    ($500/mo x 12 mo/yr)

    Total Revenue                              $343,163.36     $72.03        NB: Does not include lab or procedures.

    Expected Collection Rate:
    (assumes fee sched set at
*   MCR fees)
     Payor                        Pts          Reim/Chgs
     MCD ($ from kids > adults)   45%          50%            22.50%
     MCR                          35%          100%           35%
     INS                          10%          100%           10%
    Self                          10%          50%            5%
                                  100%                        72.50%




                                                             Page 22 of 23
                                                Sample Business Plan


Break Even
             # Patients                                                                              Yearly Net based
  Month      All Locations   Avg $ per pt   Revenue      Expenses        Monthly Net Cum Net         on month 12

  1          80              $72.03         $5,762.61    $9,109.00       $(3,346.39)   $(3,346.39)
  2          120             $72.03         $8,643.91    $9,109.00       $(465.09)     $(3,811.48)
  3          170             $72.03         $12,245.54   $9,109.00       $3,136.54     $(674.93)
  4          210             $72.03         $15,126.85   $9,109.00       $6,017.85     $5,342.91
  5          250             $72.03         $18,008.15   $9,109.00       $8,899.15     $14,242.07
  6          290             $72.03         $20,889.46   $9,109.00       $11,780.46    $26,022.52
  7          320             $72.03         $23,050.44   $9,109.00       $13,941.44    $39,963.96
  8          350             $72.03         $25,211.41   $9,109.00       $16,102.41    $56,066.37
  9          370             $72.03         $26,652.07   $9,109.00       $17,543.07    $73,609.44
  10         380             $72.03         $27,372.39   $9,109.00       $18,263.39    $91,872.83
  11         390             $72.03         $28,092.72   $9,109.00       $18,983.72    $110,856.55
  12         400             $72.03         $28,813.04   $9,109.00       $19,704.04    $130,560.59   $236,448.53



                                                                          NB: Does
                                                                         not include
                                                                         lab or
                                                                         procedures.




                                                         Page 23 of 23

				
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