Building a Business Plan for Provider Sustainability
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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?