Building a Business Plan for Provider Sustainability

							 Building a Business Plan
for Provider Sustainability

  The Center for Substance Abuse Treatment
             National Conference
              Arlington, Virginia
            October 21-23, 2009

        Annette D. Fryman, MBA, RN
      Why Do Business Planning?


   Because you are running a business and to be
    successful you must plan and execute
   If you are a solo practitioner or own a private practice;
    you are a small business owner; an entrepreneur
   Entrepreneur is a loanword from French meaning: the
    type of personality who is willing to take on the risks of a
    new venture or enterprise and accept full responsibility
    for the outcome
   Current economic climate and anticipated changes of
    health care reform and parity will require providers to
    have more business acumen than ever before
      Why Do Business Planning?


   Time to come to terms with any remaining conflict about
    being a clinician and a business person
   This is your livelihood
   No margin, no mission
   If your income does not exceed expenses – you will go
    out of business
   Don’t need to sell your soul; just maintain your high
    ethical/moral standards and apply time honored
    business principals – like business planning
What Will a Business Plan Do For You?


    Helps the business owner see things from a new
     perspective
    Business managers can easily become pre-occupied
     with immediate issues and lose sight of their ultimate
     objectives
    Sets forth objectives and defines the steps necessary to
     achieve them
    Enables an organization to measure its progress toward
     objectives and control the activities of the organization
What Will a Business Plan Do For You?



    Acts as an effective short term management tool
    Provides a guidepost for your employees
    Becomes your business resume; best tool to obtain a
     loan, negotiate with vendors or reassure creditors,
     boards or other parties interested in the firm’s prosperity
    Process of business planning helps reduce risks;
     decreases the odds of failure
       The Value of a Written Plan

   Many small business owners feel that they can keep
    track of everything without the need to write it down

   The structure a written plan provides makes it more likely
    that you will consider all relevant factors and that nothing
    important slip through the cracks

   A blueprint for your business against which you can
    adjust operations in order to achieve your goals and
    increase chances for success
     The Value of a Written Plan

A written business plan can be:
 A modeling tool that forces you to consider
  and evaluate the variable factors that affect
  your business, so you can better prepare to
  deal with situations that may arise as
  conditions change
 A timetable for operations; helping you to
  coordinate all the diverse activities that go
  into running your own business
 A starting point for future planning
Differences Between a Business Plan
         and a Strategic Plan

   Strategic plan is not the same thing as an
    operational business plan
   Strategic plan should be visionary,
    conceptual and directional
   Business plan is shorter term, tactical,
    focused, implementable and measurable
   Strategic plan and business plan do share
    some components
Differences Between a Business Plan
         and a Strategic Plan

   Strategic plan focuses on the creation or
    refining of the company’s values, vision,
    mission statement and key performance
    indictors
   Purpose of the business plan is to improve
    the effectiveness of the organization without
    significantly changing its direction
   Business plan “translates” the strategic plan
When a Business Plan or a Strategic
        Plan is Required

   If the company has unclear direction, if the
    staff do not see the vision or are headed in
    the wrong direction; a strategic plan should
    be written
   If the vision is clear, and your people are
    aligned but a lack of control exists; then you
    need a business plan
       What are the Components of a
              Business Plan?

I.     Executive Summary
II.    Marketing Plan and Analysis
       A.   Product/Service Description – Company Situation
       B.   Environment
       C.   Target Market
       D.   Industry Analysis
       E.   Competitive Analysis
       F.   SWOT Analysis
       G.   Marketing Strategy
III.   Financial Plan and Analysis
IV.    Operations and Implementation
V.     Goals / Objectives / Action Plan
The Components of a Business Plan


   Executive Summary – one page, very important if it is to
    be shared
   Marketing Plan and Analysis –largest part of the plan
   Marketing defined as: the process of planning and
    executing the conception, pricing, promotion and
    distribution of goods/services to create exchanges that
    satisfy individual and organizational objectives
   Product/Service Description - Company Situation –
    describe the company, what you offer and do a brief
    “state of the union” that covers current contracts,
    numbers of clients served, revenue, net income, market
    share, quality of services, etc.
The Components of a Business Plan
               Environment


   Legal/Regulatory – Fraud Enforcement
    Recovery Act
   Economic – Recession, Stimulus funding
   Social – Aging of the Baby Boomer
    generation
   Technological – EHR, CORHIOs
   Governmental/Legislative/Policy – Health
    Care Reform, BH Parity
The Components of a Business Plan
                     Target Market


   Who are my customers (consumers and funders)?
    o   Demographics (age, sex, income, education, race)
    o   Geographics (location)
    o   Psychographics (buyer’s habits, lifestyles, attitudes)
   What do they want or need?
   Who are the decision makers?
   Segmentation – customer groups, their specific
    product needs and marketing approaches
   Positioning – how you want customers to view your
    services relative to your competition
The Components of a Business Plan


   Industry Analysis – health care, behavioral
    health, substance abuse

   Competitive Analysis – your competitors,
    their service array, size, rates, strengths and
    weaknesses
The Components of a Business Plan
              SWOT Analysis



   Company – Strengths, Weaknesses

   Marketplace – Opportunities, Threats
The Components of a Business Plan
                 Marketing Strategy

   Key factors for success?
   Where do you want to go in terms of: revenue,
    market share, expenses, net income, new contracts,
    quality product/service, reputation, etc?
   What areas do you want to improve or grow?
   What is your “Sustainable Competitive Advantage”?
    o   Definition: assets and skills that will result in customers
        choosing your services over the long term
    o   Differentiation: unique products/services, different than the
        competitor, not as price sensitive
    o   Low cost
The Components of a Business Plan
                Marketing Strategy


   Marketing Mix (the 4 P’s)
    o   Product/service (services offered)
    o   Price (rates)
    o   Promotion/sales (advertising, relationship
        building,etc.)
    o   Place/distribution (location, access)
The Components of a Business Plan
         Financial Plan and Analysis


   Financial projections: Income Statement,
    Balance Sheet, Cash Flow

   Financial analysis

   ROI other financial indicators
The Components of a Business Plan
      Operations and Implementation


   Organizational structure

   Infrastructure

   Requirements for implementation
The Components of a Business Plan
       Goals / Objectives / Action Plan


   Overall goals
   Specific objectives
   Proposed activities/tactics/projects
   Assigned responsibility
   Target completion dates
    Resources for Business Planning


   Small business resources

   Books for providers
    Implications of Behavioral Health
           Parity on Providers

   Improved BH benefit packages will increase
    the number of potential clients seeking
    services
   Opportunity to work for many more payers;
    appeal to a larger group of clients
   Increase in consumers will increase the
    number of competitors
   Fee-for-service reimbursement
   Tighter managed care to control costs
Implications of Health Care Reform
           on Providers

   Move toward paying providers for the value of
    their services
   Value = quality/cost
   Fixed, bundled payments per patient
   Bonuses for containing the total cost of
    services patients receive during a year while
    also meeting requirements for quality care
   Possible penalties for substandard care
Implications of Health Care Reform
           on Providers
   Higher cost-sharing requirements for patients
   Patients provided with information about the quality
    of care delivered by different providers
   Will equip providers with more information about the
    effectiveness of different treatments
   Limit or deny coverage for treatments that are found
    to be less clinically effective or less cost-effective
    than other interventions
   Expand the use of preventive, wellness and care
    coordination services
Essential Areas of Consideration for
        Your Business Plan
          Referral/Feeder Networks



   Insurance provider panels
   Process of credentialing
   Contracting; standard provider fee schedules
   Still need to market to get referrals
   Special role or niche in the network
Essential Areas of Consideration for
        Your Business Plan
      Strategic Alliances/Collaborations



   Collaborations with different types of
    providers, other public and private human
    service organizations and competitors
   Grants
   Request for Proposals
Essential Areas of Consideration for
        Your Business Plan
       What services should you offer?


   Continuum: recovery support, prevention,
    outpatient, intensive outpatient, residential,
    inpatient
   Case management
   Evidenced based practices
   Certification/licensing/accreditation
Essential Areas of Consideration for
        Your Business Plan

The mandate to demonstrate performance outcomes

    Collecting pre and post outcome data

    Use of evidenced-based practices

    Performance improvement
Essential Areas of Consideration for
        Your Business Plan
           Reimbursement/Billing

   Capacity building and maintenance
    reimbursement (1/12 payments) not tied to
    specific clients and services is likely to go
    away
   Must be proficient in claims based
    reimbursement
   Claiming
   Coding
   Authorizations
Essential Areas of Consideration for
        Your Business Plan
            Reimbursement/Billing


   Billing types (electronic, manual,
    clearinghouse)
   Billing staff (hire, outsource)
   Lag time in payment
   Fee for service carries a high level of
    accountability with penalties for faulty billing
    and fraud and abuse
Essential Areas of Consideration for
        Your Business Plan
                Documentation



   Accurately recording services: clinical record,
    evidence of services provided

   Trust, then verify

   Federal Deficient Reduction Act
Essential Areas of Consideration for
        Your Business Plan
                Technology



   Electronic Health Record (EHR/EMR)
   Practice management systems
   Collecting data
   Interoperability
Building a Business Plan for Provider
            Sustainability


             Questions?