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Healthcare Business Plan Template
Written by Dave Lavinsky
Healthcare Business Plan
You’ve come to the right place to create your Healthcare business plan.
We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Healthcare companies.
Below is a template to help you create each section of your Healthcare business plan.
Executive Summary
Business overview.
Riverside Medical is a family medical clinic located in San Francisco, California. Our goal is to provide easy access to quality healthcare, especially for members of the community who have low to moderate incomes. Our clinic provides a wide range of general and preventative healthcare services, including check-ups, minor surgeries, and gynecology. Anyone of any age or group is welcome to visit our clinic to get the healthcare that they need.
Our medical practitioners and supporting staff are well-trained and have a passion for helping improve the health and well-being of our clients. We serve our patients not just with our knowledge and skills but also with our hearts. Our clinic was founded by Samantha Parker, who has been a licensed doctor for nearly 20 years. Her experience and compassion will guide us throughout our mission.
Product Offering
Riverside Medical will provide extensive general care for all ages, creating a complete healthcare solution. Some of the services included in our care include the following:
- Primary care: annual checkups, preventative screenings, health counseling, diagnosis and treatment of common conditions
- Gynecology: PAP tests, annual well-woman exam, and family planning
- Pediatrics: infant care, annual physicals, and immunizations
- Minor procedures: stitches, casts/splints, skin biopsies, cyst removals, and growth lacerations
- Health and wellness: weight loss strategies, nutrition guidance, hormone balance, and preventive and routine services
The costs will depend upon the materials used, the physician’s time, and the amount designated for each procedure. Medical bills will be billed either directly to the patient or to their insurance provider.
Customer Focus
Riverside Medical will primarily serve the community living and working within the San Francisco bay area. The city is diverse and growing and includes people of all ages, ethnicities, and backgrounds. Everyone is welcome to visit our clinic to receive the health care they need.
Management Team
Riverside Medical’s most valuable asset is the expertise and experience of its founder, Samantha Parker. Samantha has been a licensed family doctor for 20 years now. She spent the most recent portion of her career on medical mission trips, where she learned that many people are not privileged to have access to quality medical services. Samantha will be responsible for ensuring the general health of her patients and creating a viable and profitable business medical practice.
Riverside Medical will also employ nurses, expert medical staff, and administrative assistants that also have a passion for healthcare.
Success Factors
Riverside Medical will be able to achieve success by offering the following competitive advantages:
- Location: Riverside Medical’s location is near the center of town. It’s visible from the street with many people walking to and from work on a daily basis, giving them a direct look at our clinic, most of which are part of our target market.
- Patient-oriented service: Riverside Medical will have a staff that prioritizes the needs of the patients and educates them on the proper way how to take care of themselves.
- Management: Samantha Parker has a genuine passion for helping the community, and because of her previous experience, she is fully equipped and overqualified to open this practice. Her unique qualifications will serve customers in a much more sophisticated manner than our competitors.
- Relationships: Having lived in the community for 25 years, Samantha Parker knows many of the local leaders, newspapers, and other influences. Furthermore, she will be able to draw from her ties to previous patients from her work at other clinics to establish a starting clientele.
Financial Highlights
Riverside Medical is seeking a total funding of $800,000 of debt capital to open its clinic. The capital will be used for funding capital expenditures and location build-out, acquiring basic medical supplies and equipment, hiring initial employees, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Clinic design/build: $100,000
- Medical supplies and equipment: $150,000
- Six months of overhead expenses (rent, salaries, utilities): $450,000
- Marketing: $50,000
- Working capital: $50,000
The following graph below outlines the pro forma financial projections for Riverside Medical.
![business plan for healthcare organization financial projections for Riverside Medical](https://planbuildr.com/wp-content/uploads/2023/01/Healthcare-Business-Plan-740x515.png)
Company Overview
Who is riverside medical, riverside medical history.
Samantha Parker started the clinic with the goal of providing easy access to good quality health service, especially to those members of the community with low to moderate income. After years of planning, she finally started to build Riverside Medical in 2022. She gathered a group of professionals to fund the project and was able to incorporate and register Riverside Medical with their funding support.
Since its incorporation, Riverside Medical has achieved the following milestones:
- Found clinic space and signed Letter of Intent to lease it
- Developed the company’s name, logo, and website
- Hired a contractor for the office build-out
- Determined equipment and fixture requirements
- Began recruiting key employees with previous healthcare experience
- Drafted marketing campaigns to promote the clinic
Riverside Medical Services
Industry analysis.
The global healthcare market is one of the largest and highest-valued industries in the world. According to Global Newswire, the global healthcare services market is currently valued at $7548.52 billion and is expected to reach $10414.36 billion in 2026. This growth is expected to continue for the foreseeable future.
The biggest drivers of industry growth throughout the next decade will be a continual increase in illnesses and diseases as well as a quickly aging population. With more people aging and needing daily/frequent care, hospitals and medical clinics are bound to be in even more demand than they already are.
One obstacle for the industry is the rising cost of care. Though this results in greater profits, more and more Americans cannot afford basic medical care. Therefore, they are opting out of procedures they believe are unnecessary or unimportant.
Despite the challenges of the next decade, the industry is still expected to see substantial growth and expansion.
Customer Analysis
Demographic profile of target market.
Riverside Medical will serve the residents of the San Francisco bay area as well as those who work in the area.
The population of the area experiences a large income gap between the highest earners and the lowest earners. Therefore, it is hard for middle and lower-class families to find quality care that is affordable. As a result, they are in need of the services that we offer and are looking for accessible medical care.
The precise demographics of San Francisco are as follows:
Customer Segmentation
Our clinic is a general family practice and will treat patients of all ages, incomes, physical abilities, races, and ethnicities. As such, there is no need to create marketing materials targeted at only one or two of these groups, but we can appeal to all with a similar message.
Competitive Analysis
Direct and indirect competitors.
Riverside Medical will face competition from other companies with similar business profiles. A description of each competitor company is below.
City Medical
Founded in 2008, City Medical is a membership-based, primary-care practice in the heart of the city. City Medical offers a wide range of primary care services for patients who subscribe to the practice for an annual fee. Patients enjoy personalized care, including office visits, as well as the diagnosis and treatment of common health problems. The patient membership fee covers the services listed below, and most care is received in-office. However, some additional services, such as lab testing and vaccinations, are billed separately. Furthermore, though the annual fee is convenient for some, it is too high for many families, so many are priced out of care at this facility.
Bay Doctors
Bay Doctors is a primary care practice that provides highly personalized medical care in the office or patients’ homes. Bay Doctors includes a team of dedicated healthcare professionals with dual residency in Emergency Medicine and Internal Medicine. The practice offers same-day/next-day appointments, telemedicine, office visits, and home visits. Some of the medical care services they provide are primary care, urgent care, emergency care, gynecology, pediatrics, and minor procedures.
Community Care
Established in 1949, Community Care is a non-profit regional healthcare provider serving the city and surrounding suburbs. This facility offers a wide variety of medical services, including 24-hour emergency care, telemedicine, primary care, and more. In addition to their medical care, they have a wide variety of fundraising activities to raise money to operate the hospital and help families cover the costs of their care.
Competitive Advantage
Riverside Medical enjoys several advantages over its competitors. These advantages include:
Marketing Plan
Brand & value proposition.
The Riverside Medical brand will focus on the company’s unique value proposition:
- Client-focused healthcare services, where the company’s interests are aligned with the customer
- Service built on long-term relationships
- Big-hospital expertise in a small-clinic environment
Promotions Strategy
The promotions strategy for Riverside Medical is as follows:
Riverside Medical understands that the best promotion comes from satisfied customers. The company will encourage its patients to refer their friends and family by providing healthcare benefits for every new client produced. This strategy will increase in effectiveness after the business has already been established.
Direct Mail
The company will use a direct mail campaign to promote its brand and draw clients, as well. The campaign will blanket specific neighborhoods with simple, effective mail advertisements that highlight the credentials and credibility of Riverside Medical.
Website/SEO
Riverside Medical will invest heavily in developing a professional website that displays all of the clinic’s services and procedures. The website will also provide information about each doctor and medical staff member. The clinic will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.
Social Media
Riverside Medical will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.
Riverside Medical’s pricing will be lower than big hospitals. Over time, client testimonials will help to maintain our client base and attract new patients. Furthermore, we will be able to provide discounts and incentives for lower-income families by connecting with foundations and charities from people who are interested in helping.
Operations Plan
The following will be the operations plan for Riverside Medical.
Operation Functions:
- Samantha Parker is the founder of Riverside Medical and will operate as the sole doctor until she increases her patient list and hires more medical staff. As the clinic grows, she will operate as the CEO and take charge of all the operations and executive aspects of the business.
- Samantha is assisted by Elizabeth O’Reilly. Elizabeth has experience working as a receptionist at a fast-paced hospital and will act as the receptionist/administrative assistant for the clinic. She will be in charge of the administrative and marketing aspects of the business.
- Samantha is in the process of hiring doctors, nurses, and other medical staff to help with her growing patient list.
Milestones:
The following are a series of path steps that will lead to the vision of long-term success. Riverside Medical expects to achieve the following milestones in the following twelve months:
3/202X Finalize lease agreement
5/202X Design and build out Riverside Medical location
7/202X Hire and train initial staff
9/202X Kickoff of promotional campaign
11/202X Reach break-even
1/202X Reach 1000 patients
Financial Plan
Key revenue & costs.
Riverside Medical’s revenues will come primarily from medical services rendered. The clinic will either bill the patients directly or their insurance providers.
The major cost drivers for the clinic will include labor expenses, lease costs, equipment purchasing and upkeep, and ongoing marketing costs.
Funding Requirements and Use of Funds
Key assumptions.
Below are the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.
- Year 1: 120
- Year 2: 150
- Year 3: 200
- Year 4: 275
- Year 5: 400
- Annual lease: $50,000
Financial Projections
Income statement.
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
Revenues | ||||||
Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
Expenses & Costs | ||||||
Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
Balance Sheet
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
ASSETS | ||||||
Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
LIABILITIES & EQUITY | ||||||
Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
Share Capital | $0 | $0 | $0 | $0 | $0 | |
Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
Cash Flow Statement
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
CASH FLOW FROM OPERATIONS | ||||||
Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
CASH FLOW FROM INVESTMENTS | ||||||
Investment | ($180,950) | $0 | $0 | $0 | $0 | |
Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
CASH FLOW FROM FINANCING | ||||||
Cash from equity | $0 | $0 | $0 | $0 | $0 | |
Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
Healthcare Business Plan FAQs
What is a healthcare business plan.
A healthcare business plan is a plan to start and/or grow your healthcare business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Healthcare business plan using our Healthcare Business Plan Template here .
What are the Main Types of Healthcare Businesses?
There are a number of different kinds of healthcare businesses , some examples include: Nursing care, Physical home health care, or Home health care aides:
How Do You Get Funding for Your Healthcare Business Plan?
Healthcare businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Healthcare Business?
Starting a healthcare business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Healthcare Business Plan - The first step in starting a business is to create a detailed healthcare business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your healthcare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your healthcare business is in compliance with local laws.
3. Register Your Healthcare Business - Once you have chosen a legal structure, the next step is to register your healthcare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your healthcare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Healthcare Equipment & Supplies - In order to start your healthcare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your healthcare business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Other Helpful Business Plan Templates
Nonprofit Business Plan Template Non-Emergency Medical Transportation Business Plan Template Medical Practice Business Plan Template Home Health Care Business Plan Template
How to Create a Profitable Healthcare Business Plan for Your Medical Practice
![How to Create a Profitable Business Plan for Your Healthcare Practice Healthcare Business Plan](https://www.practicebuilders.com/blog/wp-content/themes/pbblog/postimg/2017/may/How-to-Create-a-Profitable-Business-Plan-for-Your-Healthcare-Practice-BIG.jpg)
Marketing is crucial for any industry, and healthcare industry is no exception. Whether you are a big hospital or private practice, creating and implementing an effective marketing plan will help to attract new patients, retain the existing ones and maintain relationships with your staff and patients. An effective marketing strategy will play an integral role in increasing revenue, building patient trust, improving online reputation and expanding your reach.
A healthcare business plan can help you define and identify the target audience and key prospects. It can also assist in evaluating and comparing your practice data against your industry. Clearly, a business plan is necessary, so does your practice have one? Here are some more benefits of creating a strategic plan for your medical practice:
- Physician business plan provides clear direction to your marketing initiatives, preventing random activities that may work against each other.
- The process of developing a strategic plan offers an opportunity for everybody involved to collaborate in shaping the future of the practice. Active participation of all the stakeholders ensures the success of projects and priorities.
- A strategic healthcare business plan helps the physician set marketing goals and priorities for the medical practice.
- Clarity of aims and objectives can improve the quality of patient care.
Strategic business planning offers great long-term value. After the initial planning is done, a practice can use it as the benchmark for measuring progress and monitoring areas of improvement.
The process for preparing a strategic business plan is not clear-cut, but it is one of the most important things you should do for the strategic growth of your practice. A well-defined marketing plan will outline how you will retain existing patients and attract new patients, retain staff and communicate your message in the most efficient manner.
![business plan for healthcare organization How to Create a Profitable Healthcare Business Plan for Your Medical Practice](https://www.practicebuilders.com/blog/wp-content/themes/pbblog/blogad/Ad-1.jpg)
You do not need to hire expensive consultants to create a marketing plan for your healthcare practice. All that you need is the willingness to put in time and effort. An ideal healthcare marketing plan should address every aspect related to promoting your practice, and to effectively plan, you must do some research.
![How to Create a Profitable Business Plan for Your Healthcare Practice Business Plan for Medical Services](https://www.practicebuilders.com/blog/wp-content/themes/pbblog/postimg/2017/may/strategy-mid-insert-1.jpg)
Identify your target audience
The first step in any business plan is to figure out who is going to seek your service. If you have a specialty practice, you probably know the answer. According to industry experts, your marketing efforts will be effective only if they are targeted. So to identify your potential patients, start by defining the common characteristics of your current patients. Always remember, your marketing plan is all about reaching your target audience and adjusting your approach to fit their preferences. Beyond demographics, try to learn the reasons why your potential patients will come to your practice, know your competition and understand your competitors’ approach in reaching the target audience. Examine how your competitors market their practice and then compare their approach, services and marketing strategies with yours. You must also determine your unique selling proposition and understand what makes you different from your competition.
Marketing is all about keeping up-to-date. So make sure while doing your research, you stay updated on current affairs. The idea is to keep up-to-date with financial, political and marketing trends that influence the medical community so you can create an effective business plan that responds to changing market conditions.
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Time for some brainstorming sessions
After you have identified your potential market and patients, you will need to categorize and address critical operational questions about your medical practice. You may need to set up brainstorming sessions with people you trust, including family, friends, team members or other professionals. During these sessions, try to find answers to these basic but critical questions:
Question: Which marketing platforms will make be most suitable for promoting your services?
Pro tip: You will need to think regarding how to present or sell your services. For instance, consider offering packages that are generic in nature and offer value for money.
Question: What is the best time and frequency of marketing your service?
![business plan for healthcare organization How to Create a Profitable Healthcare Business Plan for Your Medical Practice](https://www.practicebuilders.com/blog/wp-content/themes/pbblog/blogad/Ad-3.jpg)
Pro tip: Too much promotion can create a negative brand image in the minds of potential patients. Too much advertising tends to make patients suspicious. So depending on your target audience, determine the best time for promoting your practice.
Question: What are you trying to achieve from your business plan? How do you plan to measure these goals?
Pro tip: According to experts, your marketing plan should include basic tasks that have short-term goals so that you do not end up compromising on the patient experience. You can consider using big data to evaluate and measure results and their impact on ROI.
Penning the business plan
Now that you have completed the groundwork, it is time to put all your facts and figures into words. Here are some basic steps for creating a business plan for your medical practice:
![business plan for healthcare organization How to Create a Profitable Healthcare Business Plan for Your Medical Practice](https://www.practicebuilders.com/blog/wp-content/themes/pbblog/blogad/Ad-4.jpg)
- Define your mission and vision: This is where you need to determine your goals. You have to understand where you want your practice to be in five to seven years. You will need to prepare a list of all the marketing techniques and tactics and determine what options will work best for your practice. Some of the effective marketing tactics are networking, direct marketing, print advertising, training sessions, media, open houses, social media, blogs, third-party websites and much more.
- Identify your team: In order to build support and generate enthusiasm, you should determine the outgoing personalities in your organization. Find people who will help support your marketing efforts by hosting open houses, patient training sessions, interviews and other public relations initiatives.
- Market segmentation: Consider potential patients think outside the box. Look within your organization first – you may find some of your best customers and marketers there. You must understand where your patients come from and dive deeper into your business model. Is your practice mainly run by physician referrals, or do patients refer directly? You need to create an extensive list of potential patients and categorize them.
- Create patient personas: Patient personas are representations of your ideal patients. You must create patient personas based on your research and reflect on their needs and issues. For instance, if one of your buyer personas is a diabetic, his or her needs will be different from a flu patient.
- SWOT analysis: SWOT matrix is another important component of the business plan. You can use this analysis to assess your practice’s strengths, weaknesses, opportunities and threats. This study will help you understand your market situation better and discover growth opportunities. For a successful SWOT analysis , you must be specific, realistic, compare different situations and keep your business plans and goals updated.
- Prepare a budget: Now that you have all the market information you need and have established the best way to reach your potential patients, focus on your budget to support your marketing campaign. To begin with, it is advisable to stick with the 80/20 rule. According to this rule, 80 percent of your business volume will often come from 20 percent of your patients.
- Share your vision: The first step is to make sure the plan is received and understood by your organization’s leadership. Next, make sure your plan becomes a part of the organizational culture. You must encourage employees to come up with ideas that will support your idea. Always share your plans with physicians, volunteers, employees, board members and top leadership.
- Plan the rollout: To begin with, introduce your campaign internally. Your organization’s leadership and staff are often your best support. If they get the message, your marketing efforts will be successful.
- Measure and evaluate: You should regularly track new patients, physician referrals, leads, website hits and procedure volumes in order to assess the success of your business plan.
![How to Create a Profitable Business Plan for Your Healthcare Practice Physician Business Plan](https://www.practicebuilders.com/blog/wp-content/themes/pbblog/postimg/2017/may/strategy-mid-insert-2.jpg)
Don’t forget the 7Ps
Even the most insightful services, supported by the best business plan, will not survive on the market if they are unable to reach potential patients. That is why practices need to invest in strategies that will bridge the gap between them and the target audience. For your marketing initiatives to be successful, you must address the 7Ps in order to evaluate and measure your business activities. These seven Ps are product, price, promotion, place, packaging, positioning and people. These 7Ps will help you review and define key issues that impact your marketing activities.
- Product: When was the last time you took an unbiased look at your products, service, facility or value proposition? Do your products meet the needs of the patients? Do your products and services deliver value? Is your medical practice properly presented? The ‘product’ for your healthcare practice is the happiness and satisfaction of your patients, which is intangible and cannot be quantified. The only way is to know that customers receive value and comfort by way of your medical practice.
- People: Healthcare is all about people – your current patients, potential patients, staff and management – everyone delivers or receives a service plays a significant part in the product category. Your patients will evaluate the service and satisfaction based on assumptions and interactions. Usually, patients do not have much insight to your medical skills, but they will know if they are pleased based on how you deal with them. Your reputation and your image are not yours alone – it is teamwork.
- Price: It is the amount people pay in exchange for the product received. Therefore, the price must be competitive, enough to generate profit, but may vary when bundled with promotional offers. Sometimes, price is the biggest factor. Therefore, as a practice owner, you must take a serious look at those areas where there is flexibility and be open to adjusting and reducing prices to meet your patients’ needs.
- Promotion: This refers to all the direct and indirect ways of communicating about your product to your people or potential patients. This may include personal and mass interaction. In all instances, promotion should always be carried out in a professional manner. The objective of promoting your practice is to examine how, when, what and where you can offer your service to your target audience.
- Place: This points to presenting your products or services to your target audience in the right place and at the right time. Needless to say, the ‘place’ will be your office where the product will meet the user. However, in healthcare, a change in location can impact the user’s decision to buy.
- Packaging: Take an unbiased look at the appearance of your office, front office, waiting area, brochures and website and the appearance of your medical staff. You might be surprised to see what patients are observing when they walk through your front door.
- Positioning: This refers to the way your brand, products or service are perceived by your target customers. If you could get the opportunity to create the ideal impression in the minds of your patients, what would you want it to be?
For successfully growing their practice and attracting new patients, many practices are working with medical marketing agencies. As a medical marketing agency , Practice Builders knows what is suitable for different medical specialties. We can introduce you to the best marketing tactics that will draw new patients to your practice. Moreover, we know how to develop effective business plans that will lead to significant growth in your medical practice. To find out more, contact us today.
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Sharon Mason Parker
Sharon has spent 25 years building teams and developing people to work together to help improve the client experience in the markets we serve. This ultimately benefits both customers and staff equally. Sharing best practices and ideas helps clients and team members envision new alternatives, which is quite fulfilling when positive change results. Sharon enjoys working closely with clients to understand the true drivers that are affecting their business environment. By engaging clients in meaningful exploration of their goals and challenges, she often discovers that an issue they asked for help in solving is merely a symptom of something else or something greater. Solving the real issue through truly listening and not just addressing the symptoms helps create true partnerships with clients.
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Ultimate Guide to Creating a Sample Business Plan for Healthcare Services
Creating a healthcare services business plan requires strategic organization and clear objectives. A sample business plan outlines your vision, operational strategy, and financial projections.
Crafting a business plan for healthcare services can be a formidable task, yet it’s a vital step toward launching and managing a successful operation. Before delving into the intricacies of your services, market analysis, and financial forecasts, a well-structured plan prompts you to streamline your healthcare concept into a workable model.
It acts as a roadmap, guiding entrepreneurs through each phase of business development, from ideation to execution. This introductory framework sets the stage for stakeholders and potential investors to grasp the essence of your healthcare endeavor. It should convincingly convey why your services stand out, how you intend to meet the needs of your target market, and the ways in which you’ll sustain financial stability and growth. A compelling business plan not only assures your preparedness but also showcases your commitment to providing quality healthcare solutions.
Introduction To Business Planning In Healthcare
Healthcare businesses require careful planning and strategy. A comprehensive business plan is the backbone of any successful healthcare venture.
The Importance Of A Solid Plan
Every healthcare service provider needs a robust business plan . It outlines the road map for success. The plan sets clear objectives. It helps attract investors. Without it, maintaining focus and achieving goals becomes difficult.
- Clarifies vision and direction
- Facilitates financial planning
- Informs decision-making processes
Challenges In The Healthcare Industry
Healthcare leaders face multiple hurdles. Rising costs, regulatory pressures, and evolving patient needs stand out.
Challenge | Impact on Business Plan |
---|---|
Regulatory changes | Requires flexible strategies in the plan |
Technological advancements | Necessitates investment in new technologies |
Patient-centered care | Demands improved service delivery models |
Identifying Your Healthcare Business Model
Identifying Your Healthcare Business Model is a pivotal step in crafting a comprehensive business plan for healthcare services. This process crystallizes your vision, enabling you to showcase how your services address the needs within the healthcare landscape. Setting this foundation is essential. It supports all subsequent business planning elements.
Types Of Healthcare Services
To begin, understanding the diverse array of services in healthcare is vital. Each offers different benefits and caters to specific market needs. Here is a snapshot of the possibilities:
- Primary Care: Foundations of healthcare, offering general medical services.
- Specialist Clinics: Focus on specific fields like cardiology or neurology.
- Urgent Care: Immediate assistance for non-life-threatening conditions.
- Long-term Care: Support for chronic conditions or recovery periods.
- Telehealth Services: Remote consultations leveraging digital technologies.
- Home Healthcare: In-home medical support and rehabilitation services.
Selecting the right type for your business plan is the first crucial decision. It should align with both market demands and your expertise.
Unique Value Proposition In Healthcare
Your Unique Value Proposition ( UVP ) sets you apart in the healthcare market. It reflects what makes your services valuable and different.
Service designed around patient comfort and convenience. | |
Integrating the latest medical technologies and practices. | |
Making services available to underserved areas or populations. | |
Concentration on niche medical areas for targeted expertise. | |
Providing high-quality care at a reduced cost. |
To craft a compelling UVP, focus on your strengths. Ask what you offer that others don’t. Your answer should resonate with your target audience. Creating a clear, strong UVP is non-negotiable. It’s your ticket to standing out in a competitive sphere.
Market Analysis For Healthcare Enterprises
An intricate understanding of the market serves as the backbone for any successful healthcare business. Devising a sample business plan for healthcare services without a thorough market analysis is like navigating without a compass. This section delves into the critical step of researching your target market alongside recognizing healthcare trends and demands.
Researching Your Target Market
Identifying the audience is crucial for healthcare providers. Factors such as demographics, location, and purchasing power significantly affect service offerings. Inquire into the patient volume, insurance coverage, and local healthcare needs . Understand patient behaviors to tailor services.
- Survey local populations for health concerns.
- Examine competitors and their service scope.
- Analyze insurance trends affecting patient choices.
Data on age, income, and prevalent health issues guide service structuring. Health authorities or databases can provide valuable insights. Facilitate easy access to data through clear visuals. Tables and charts enhance comprehension of complex market statistics.
Age Group | Common Health Issues | Percentage of Population |
---|---|---|
0-18 | Pediatric Illnesses | 22% |
19-35 | Preventative Care | 35% |
36-55 | Chronic Diseases | 28% |
56+ | Geriatric Care | 15% |
Recognizing Healthcare Trends And Demands
Staying current with healthcare trends is essential. Telemedicine, wearable tech, and personalized medicine redefine how services are delivered. Note which technologies gain traction and which policies influence healthcare practice. For example:
- Shift towards outpatient services for cost efficiency.
- Growth in mental health awareness drives demand.
- Regulatory changes impact service delivery models.
Digital platforms and forums can reveal patient sentiments . Social media analysis provides real-time trend data. A keen eye on industry reports and healthcare journals ensures the business aligns with the latest demands.
Mapping Out Financial Projections
One of the most crucial parts of your healthcare business plan is Mapping Out Financial Projections. This section provides a glimpse into the financial backbone of your healthcare services. It’s essential to understand your starting point and how your business will grow income-wise. Let’s dive into estimating initial investments and planning revenue growth.
Estimating Startup Costs
Before opening your doors, knowing your required investment is key. Creating a comprehensive list of startup expenses ensures you cover every angle. Here’s how you can tackle this:
- Facilities: Calculate the cost of purchasing or leasing your healthcare facility.
- Equipment: Include costs for medical equipment, office furniture, and technology.
- Licensing: Research and total up all licensing and permit fees.
- Marketing : Set aside funds for branding, advertising, and promotions.
- Personnel: Account for salaries, benefits, and training for your staff.
It’s vital to be precise with these estimates to secure adequate funding.
Revenue Forecasting Strategies
Forecasting your revenue ensures financial viability and attracts investors. Implement these strategies:
- Past Data: Use historical data from similar businesses to guide your projections.
- Market Analysis: Understand your target market to estimate potential sales.
- Pricing Strategy: Define how you will price your services competitively.
- Services Mix: Determine which services will most likely generate revenue.
- Growth Plan: Outline how you will scale operations and increase income over time.
Partner these strategies with a well-thought-out sales plan to map a feasible pathway for financial success.
Developing Marketing Strategies For Healthcare Services
When crafting a business plan for healthcare services, marketing strategies form a core component. A robust plan targets the right audience effectively. It is vital to select channels that connect with patients and build trust within the community. Below, we discuss essential tactics in developing strong marketing strategies for your healthcare venture.
Effective Healthcare Marketing Channels
Maximizing your healthcare service’s visibility requires leveraging multiple marketing channels. These include:
- Digital advertising : Google Ads and social media promotions reach a broad audience.
- SEO : Optimizes your website to rank higher in search engine results, attracting organic traffic.
- Email marketing : Keeps your patient base informed and engaged with health tips and updates.
- Content marketing : Educates and informs through blog posts, e-books, and videos.
- Offline methods : Billboards, print media, and community events enhance local presence.
Building A Brand In The Medical Field
Creating a recognizable brand in healthcare is crucial. It reflects your services’ quality and care excellence. Steps to establish a strong brand include:
- Define your unique value proposition that sets you apart.
- Design a professional logo and visual elements that resonate with your brand identity.
- Ensure consistency in messaging across all marketing materials and platforms.
- Collect patient testimonials and stories to showcase real-life successes.
- Engage with the community through health workshops and free screenings .
Remember, your brand symbolizes your commitment to healthcare excellence, reassuring patients of their choice.
Operational Planning For Quality Care
Operational Planning for Quality Care is critical in healthcare. A well-crafted business plan ensures service excellence. Here, we unpack the operational aspects that promote quality in healthcare services.
Staffing Solutions And Training
Building a strong healthcare team is paramount. Smart staffing solutions and ongoing training programs ensure efficiency and expertise. Key steps include:
- Identify staffing needs — Determine the number and types of healthcare professionals required.
- Recruit skilled personnel — Hire qualified staff with a strong track record in patient care.
- Implement robust training — Regular training enhances skills and keeps staff updated on the latest healthcare trends.
Maintaining High Service Standards
A steadfast commitment to high service standards sets healthcare services apart. Fostering a culture of excellence is vital. Important factors include:
Create clear, comprehensive service policies. | |
Regular audits and patient feedback analysis. | |
Adopt a proactive approach to enhance patient care. |
Implementing these strategies is crucial for delivering quality healthcare services. They define the roadmap for daily operations and future growth.
Risk Management In Healthcare Businesses
Healthcare businesses must navigate a sea of risks. From legal obligations to patient safety, every aspect requires a meticulous approach. A well-crafted business plan must feature a robust risk management strategy. It should protect both the patients and the healthcare entity.
Addressing Legal And Ethical Considerations
In healthcare, legal and ethical considerations are at the forefront. These impact patient care and business operations . Crafting a business plan entails understanding these factors:
- Patient privacy and confidentiality : Outlining how to protect sensitive data.
- Medical malpractice: Detailing prevention and response plans.
- Regulatory requirements : Staying updated with healthcare laws.
- Healthcare ethics: Setting standards for care and decision-making.
A business plan should also include training for staff on these matters.
Implementing Compliance Systems
To minimize risks, your business plan must include effective compliance systems . These systems can detect and prevent violations of laws and regulations. They should cover:
- Internal audits and monitoring.
- Compliance with health codes and licensing.
- Ensuring staff credentials and certifications are up to date.
- Adherence to billing and coding standards.
Staff training on these compliance systems is also essential.
Detailed Business Plan Structure
An effective business plan acts as the blueprint for your healthcare services company. It maps out your path to success. A detailed business plan structure can convince investors or lenders that your enterprise has potential. It breaks down all aspects of your business for easy understanding. Whether you’re a seasoned entrepreneur or just starting, a solid plan is crucial. Let’s dive into what makes a thorough business plan.
Executive Summary
The executive summary gives a quick overview of your healthcare business. It should capture interest and highlight key points. Include your business name, location, services offered, and mission statement. Stress on your healthcare service’s unique aspects, and outline your goals. Use this section to grasp the reader’s attention and encourage them to read more.
- Business Name: State your company name clearly.
- Location: Mention where you provide services.
- Services Offered: Briefly list your healthcare services.
- Mission Statement: Define why your business exists and its values.
- Goals: Outline short-term and long-term objectives.
Company Description
In this section, detail your healthcare company’s structure. Share information about the ownership, history, and type of healthcare services. Point out your target market and the needs you will fulfill. Discuss how your services stand out compared to competitors. Showcase your expertise and experience in the healthcare field.
Aspect | Details |
---|---|
Explain who owns the company and their role. | |
Touch on the origins and growth of your business. | |
Identify who will use your healthcare services. | |
List the needs that your healthcare services satisfy. | |
Clarify what makes your services different. |
Service Offerings
Your service offerings are the heart of your healthcare business. Detail each service you provide. Explain how these services meet your clients’ needs. Show the benefits each service offers. Make your services as attractive and beneficial as possible
- Detailed Service Descriptions: Explain what you offer clearly.
- Client Benefits: Highlight how services improve client health.
- Service Uniqueness: Point out how your services stand out.
Operational Plan
The operational plan outlines how your business runs day-to-day. It covers your location, equipment, supplies, and staff. Discuss your office flow and patient management. Share details on how you will maintain a high standard of care.
- Location: Describe your physical or virtual service points.
- Equipment and Supplies: List what you need to provide services.
- Staff: Outline the roles and expertise of your team members.
- Office Flow: Explain how patients will move through your services.
- Quality Control: State how you will ensure top healthcare standards.
Seeking Funding And Partnerships
Starting a healthcare service requires capital. Big dreams need big budgets. You may have the best plan. Yet, without funds, it stays a plan. Your business plan is your map. It shows where you’re going. Use it to convince others to join your journey. Here’s how to win support and secure financing.
Crafting an Investor Pitch
Crafting An Investor Pitch
Make your investor pitch stand out . Investors see many pitches. Yours must be clear and bold. Tell them why your healthcare service is unique.
- Highlight the need for your service in the community.
- Showcase your team’s expertise ; investors bet on people.
- Demonstrate potential growth ; profits capture attention.
- Outline your financial plan ; show them the numbers.
Practice your pitch. Keep it short. Make every word count. Your goal: spark interest and invite questions .
Exploring Government Grants and Subsidies
Exploring Government Grants And Subsidies
Government support can boost your business . Grants and subsidies are gifts. They don’t need to be paid back.
- Identify relevant grants ; some are healthcare-specific.
- Understand the criteria ; match their goals with yours.
- Prepare a solid application ; show how you’ll use the funds.
- Meet all deadlines ; be early, not just on time.
Seek advice from experts. They have done this before. Use their knowledge to improve your chances.
The Role Of Technology In Healthcare Business Plans
Healthcare services constantly evolve with technology . A strong business plan for healthcare includes cutting-edge tech to improve patient care and streamline operations. Here’s how technology shapes healthcare’s future and should form part of any robust business plan.
Incorporating E-health Innovations
E-health is vital for modern healthcare services. It includes tools like electronic health records (EHRs) , telemedicine, and mHealth applications. These innovations offer better patient care and enhance workflow efficiency. They should be central in a healthcare business plan.
- EHRs make patient data management safer and simpler.
- Telemedicine expands access to care, especially in remote areas.
- mHealth apps empower patients to manage their health proactively.
Leveraging Data Analytics For Growth
Data analytics transform large amounts of health information into insights. This helps to predict trends, improve patient outcomes, and optimize costs. A healthcare business plan must detail how to use data analytics for growth.
Trend Prediction | Machine Learning | Forecast future healthcare needs |
Patient Outcomes | Big Data Analysis | Personalize patient care plans |
Cost Optimization | Predictive Analytics | Reduce unnecessary expenses |
Monitoring Success And Making Adjustments
Monitoring Success and Making Adjustments is a vital element of any business plan. A healthcare service is no exception. To stay on the path to success, regular evaluation of the business’s performance is essential. This means tracking the right metrics and knowing when it’s time to make strategic changes.
Key Performance Indicators In Healthcare
In the realm of healthcare services, Key Performance Indicators (KPIs) offer a clear measure of operational success. These indicators can be financial, clinical, or operational. Keeping a close eye on them helps you understand where your service excels and where it needs improvement.
- Patient Satisfaction Scores: High satisfaction often means high-quality service.
- Readmission Rates: Indicates the effectiveness of care provided.
- Operational Efficiency: Relates to the cost and speed of delivering services.
- Employee Performance: Critical for maintaining excellent patient care.
When To Pivot Your Business Strategy
Understanding when to pivot is crucial to sustaining your healthcare business. A pivot could involve adapting your service offerings, altering your pricing strategy, or implementing new technology. Key signs that it’s time to pivot include:
- Stagnant or declining patient numbers
- Negative feedback trends
- Emerging healthcare technology
- Changes in healthcare regulations
Recognize these signs early and embrace flexibility to maintain a competitive edge. Regular assessment of your business plan against these markers ensures that your healthcare service can quickly adapt to the ever-changing industry landscape.
Conclusion: Your Healthcare Business Roadmap
A well-crafted business plan is your healthcare service’s blueprint for success . It clarifies your vision and outlines the steps to achieve your goals. The conclusion of this ultimate guide ties together all the critical elements you’ve mapped out.
Summary Of Key Takeaways
- Define your healthcare service offerings : Know what you will provide.
- Understand your market : Identify the needs of your audience.
- Analyze competitors : Find your unique position in the industry.
- Set clear objectives : Outline measurable goals for growth.
- Detail financial projections : Present a sustainable economic model.
Next Steps After The Business Plan
Once your business plan is complete , the journey does not end. The next steps set the foundation for bringing your plan to life.
- Secure funding : Explore loans, investors, or grants.
- Build your team : Hire qualified healthcare professionals.
- Develop marketing strategies : Create a brand presence.
- Set up operations : Establish day-to-day management systems.
- Monitor and adjust : Review your plan regularly and adapt as needed.
Frequently Asked Questions
How do i write a business plan for healthcare.
Begin by outlining your healthcare business objectives. Research the market and define your target audience. Detail your services, management structure, and marketing strategies. Include financial projections and funding requirements. Keep your plan clear and concise to facilitate understanding and action.
How Do You Write An Ultimate Business Plan?
To write an ultimate business plan, start with an executive summary. Define your business goals and target market. Outline products or services, marketing strategies, operational plan, and financial projections. Be concise and use clear, simple language for easy understanding and SEO optimization.
How Do You Write An Effective Business Plan Sample?
To craft an effective business plan, begin with a clear executive summary. Outline your objectives, market analysis, company organization, product line, marketing strategies, and financial projections. Ensure your plan is concise, well-structured, and tailored to attract investors or partners.
How To Write A Business Plan Step By Step Guide Templates?
Begin with an executive summary that encapsulates your vision. Segment your plan into clear sections: market analysis, organization management, sales strategies, funding needs, and financial projections. Utilize templates for structure and guidance. Keep each section focused and concise for clarity.
Crafting your healthcare business plan just got easier. This guide aimed to arm you with tools and insights for a robust strategy. Remember, precision and clarity are key. Tailor your plan to reflect unique goals and services. Let’s create a plan that not only opens doors but also ensures your business thrives.
Ready, set, strategize!
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Healthcare Business Plan Template
Written by Dave Lavinsky
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There are several types of Healthcare businesses, from family medicine practices to urgent care centers to home health care agencies. Regardless of the type of healthcare business you have, a business plan will keep you on track and help you grow your healthcare business in an organized way. In addition, if you plan to seek funding, investors and lenders will use your business plan to determine the level of risk.
Download our Ultimate Business Plan Template here >
Below is the business plan outline you should use to create a business plan for your healthcare company. Also, here are links to several healthcare business plan templates:
- Assisted Living Business Plan
- Counseling Private Practice Business Plan Template
- Dental Business Plan
- Home Health Care Business Plan
- Medical Practice Business Plan Template
- Medical Spa Business Plan Template
- Non Medical Home Care Business Plan Template
- Nursing Home Business Plan Template
- Pharmacy Business Plan
- Urgent Care Business Plan
Finish Your Business Plan Today!
Healthcare business plan example outline, executive summary.
Although it serves as the introduction to your business plan, your executive summary should be written last. The first page helps financiers decide whether to read the full plan, so provide the most important information. Give a clear and concise description of your healthcare company. Provide a summary of your market analysis that proves the need for another healthcare business, and explain your company’s unique qualifications to meet that need.
Company Analysis
Your company analysis explains your healthcare business as it exists right now. Describe the company’s founding, current stage of business, and legal structure. Highlight any past milestones, such as lining up clients or hiring healthcare providers with a proven track record. Elaborate on your unique qualifications, such as expertise in a currently underserved niche market.
Industry Analysis
The healthcare industry is incredibly large and diverse, but your analysis should focus on your specific segment of the market. Do you specialize in pediatric healthcare? senior healthcare? emergency medicine? family medicine? Figure out where your healthcare company fits in, and then research the current trends and market projections that affect your niche. Create a detailed strategy for overcoming any obstacles that you uncover.
Customer Analysis
Who will your healthcare company serve? Are they families? The elderly? What is important to them in a healthcare business? How do they select a healthcare provider? Narrow down their demographics as closely as you can, and then figure out what their unique needs are and how you can fulfill them.
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Competitive Analysis
Your direct competitors are those healthcare companies that fulfill the same needs for the same target market as yours. Your indirect competitors are healthcare businesses that target a different market, or other companies that fulfill a different need for your target market. Describe each of your direct competitors individually, and talk about the things that set your healthcare company apart. Categorize your indirect competitors as a group and talk about them as a whole.
Marketing Plan
A solid marketing plan is based on the four P’s: Product, Price, Promotion, and Place. The Product section describes the healthcare you sell along with any other services you provide. Price will change according to the specifics of the property, but you can delineate your fees here. Promotion is your means of getting new business. Place is your physical office location, along with your web presence and the areas where you sell. Another category, Customer retention, refers to the ways you will build loyalty.
Operations Plan
Your operations plan explains your methods for meeting the goals you set forth. Everyday short-term processes include all of the daily tasks involved in servicing clients. Long-term processes are the ways you will meet your defined business goals, such as expanding into new markets or new types of service.
Management Team
The management team section highlights the backgrounds of the key members of your team. Focus on those aspects that prove your team’s ability to build and run a successful company. A business mentor or advisor can help fill in any gaps, provided you can identify the specific ways that your advisor will influence your company’s growth.
Financial Plan
Investors and lenders heavily scrutinize the financial plan, but it is often the most challenging part of the business plan to write. Healthcare is a strong market, it usually not subject to economic turns. The financial plan requires you to detail your individual revenue streams by implementation timeline and relative importance, and disclose any sources of outside funding. You also need to summarize your past and future Income Statements, Cash Flow Statements, and Balance Sheets, based on key assumptions that must be both reasonable and verifiable based on an analysis of similar companies. You should also provide a solid exit strategy that shows your understanding of the market and your desire to capitalize on profitability.
Your full financial projections should be attached in the appendix along with any other documents that support your claims, such as letters from key partners.
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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success. Click here to see how our professional business plan writers can create your business plan for you.
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Strategic Planning in Healthcare: An In-Depth Guide for Executives
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Explore key strategies for healthcare executives in our in-depth guide on strategic planning, covering essential techniques, phases, and success tips.
A healthcare organization's strategic plan is designed to identify the necessary actions needed to reach the objectives of the organization. Whether you’re creating a new strategic plan from scratch or you’re trying to breathe life into an old plan, I bet we can both agree that strategic planning and execution are tougher than they seem.
But if you have the right tools at your disposal, the process doesn’t have to be quite so painful.
Below, we present an overview of strategic planning in the healthcare industry , including: an introduction to six strategic planning techniques; the four phases necessary to execute a strategic plan; and two examples of strategic planning in healthcare.
Last but not least, we’ll describe some common pitfalls of strategic planning, so you can avoid them in your own planning.
6 Strategic Planning Techniques for Healthcare Providers
- The Performance Prism Model : The Performance Prism is a performance management framework with five perspectives: stakeholder satisfaction, stakeholder contribution, strategies, processes, and capabilities.
- The EFQM Excellence Model : Like the majority of these six techniques, the EFQM model can be used in conjunction with other frameworks. It combines three elements —Fundamental Concepts of Excellence, Criteria, and RADAR—to help you understand cause-and-effect relationships in your organization.
- The Balanced Scorecard : The Balanced Scorecard (BSC) is a strategy management framework that helps you “balance” four perspectives in your organization: finances, customers, internal processes, and learning and growth. In conjunction with a strategy map , the BSC can help provide an excellent way to manage your strategy.
- Benchmarking : Benchmarking allows you to compare metrics in your organization to either an industry average or your competitors. This is a great targeted solution, but less of a full framework.
- Capability analysis : Conducting this analysis helps you think of your organization as a set of capabilities so you can work on identifying gaps that may represent a competitive weakness (and highlight new capabilities that could be a competitive advantage!)
- Market analysis : Conducting market research will give you a good indication of industry size, growth, and trends to be aware of. This is very helpful input for your strategic plan, but it is not a plan in and of itself.
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For strategic plans in healthcare organizations to work, you need to ensure you’re following a process instead of having a free-for-all. For example, if you don’t take time to analyze what needs to go into your strategic plan, you’ll end up with a handful of pointless (and frustrating) meetings.
Take a look at the following four planning phases—they’ll help you set a solid strategic plan in place.
The 4 Planning Phases of Strategic Planning
1. the analysis & assessment phase.
First, it’s critical to gain a basic understanding of what direction you’re trying to go in (while taking into account your internal organizational structure and any external factors you have to consider). You’ll want to hold the majority of your strategy meetings during this phase. In hospitals specifically, you’ll want to figure out where you need to increase performance and focus in on your plans. This is also a good time to look at areas where you are struggling and determine what direction the regulatory and competitive environment is moving in. This will be the area of the highest and most critical need.
2. The Strategy Formulation Phase
During this phase, you’ll focus on developing your high-level strategy and documenting your organization-level strategic plan. You’ll want to pick out the goals and metrics you want to track. For example, most hospitals track metrics that deal with operations, finances, communication, internal issues, public health, and care.
If you're ready to create a Balanced Scorecard that supports your healthcare strategy, we're here to help.
Also, this is the time to look at your general organizational structure and how it links to the strategy. Do you have the right people in charge of the right aspects of your strategy. This helps create accountability and ensures things don’t fall through the cracks. For example, if you’re using the Balanced Scorecard, we encourage you to name owners and collaborators as well as what each person is responsible for therein.
3. The Strategy Execution Phase
During this phase, you’ll translate your high-level strategic plan into an operational plan by honing in on projects and actions.
The execution phase can be particularly challenging for healthcare organizations because they tend to have lots of moving parts. Performance-wise, this not only complicates seeing the big picture—even if individual departments are tracking their own metrics—but also makes it nearly impossible for strategy teams to keep up with the demands of generating massive amounts of relevant data.
To execute your plan successfully, you’ll need to turn your strategy execution process into a well-oiled machine—hence the growing use of strategy software by healthcare organizations. Advanced software like ClearPoint allows you to track and manage performance using a single cloud-based platform, so that everyone in your organization remains informed and in sync with one another. (See more on this in the next chapter.)
4. The Plan Evaluation Phase
This final phase deals with the management process—which includes refining your plan, evaluating performance, and reporting on your data. For example, if you’re tracking all of your metrics and you see one that doesn’t align well, this is when you’d alter or enhance it to make it more applicable to your strategy. Keep in mind, this phase is ongoing and never-ending. You will always be evaluating and refreshing your plan!
2 Examples Of Strategic Planning In Healthcare
Though good strategic planning is indispensable, it’s arguably less than half the battle; the lion’s share of effort in achieving progress will go toward the execution of your plan. This is where many healthcare organizations stumble. They aren’t prepared for the work involved in follow-through, nor are they ready to commit the time and tools required to improve performance.
ClearPoint , for its part, is an invaluable tool. It was specifically designed to help you visualize strategy, organize strategic data, and track and report on performance.
Below are two examples of healthcare strategic planning that demonstrate the impact strategic planning software can have on strategy execution. In both cases, ClearPoint aided the execution of the plans.
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San juan regional medical center (sjrmc).
SJRMC came to us with a problem: They had always used strategy planning for continuous improvement, but struggled to achieve their goals because their software lacked sufficient data tracking and reporting functionality. In particular:
- They had difficulty organizing their data in a meaningful way. They couldn’t get a big-picture view of important metrics, and had no way to compile individual metrics into a strategically comprehensive profile of the hospital’s performance. This made it hard to see how any single department’s daily work was contributing to (or underserving) SJRMC’s larger goals.
- They spent too much time on reporting. Staff members devoted nearly a full day to compiling reports every month.
- Most managers avoided looking at their data because the software was hard to use. Apart from occasionally entering data for committee meetings, people avoided the tedious chore of data entry as well.
Now that they’re using ClearPoint:
- Managers have a better overall picture of performance. Data is displayed in a clear, logical format that enables users to easily analyze performance and make impactful changes based on data-derived conclusions.
- Staff members can produce reports in minutes. All the hospital’s strategic data is housed in ClearPoint. Where calculations are involved, ClearPoint performs them automatically. Team members simply press the “export to PDF” or “print” buttons and the software generates a report.
- Managers stay on top of their metrics. The first thing SJRMC’s employees noticed about ClearPoint was its simplicity, making them more inclined to use it as an aid to improving performance.
Such improvements expedite and streamline hospital processes, and give managers more opportunities and resources for continuously improving performance. They also help leadership more effectively target strategic goals.
Carilion Clinic
Carilion Clinic has a similar story. Following the Balanced Scorecard framework for strategic planning, the clinic uses leadership and provider scorecards to track and improve performance across all its facilities. While the scorecards themselves are effective, the system Carilion was using to create, manage, and share them was not. It took a significant amount of effort just to create a single scorecard. On top of that, there was no easy way for everyone—from physicians and management to senior leaders and board members—to access the information.
The upshot is that Carilion staff members have found ClearPoint to be much more user-friendly and efficient than the old system. The software automatically collects data from other internal applications, and uses advanced algorithms to calculate and roll up key measurements. These capabilities make scorecard creation quick and easy.
ClearPoint also makes it easier for Carilion’s strategy team to share scorecards, which are now sent on an automated schedule to the clinic’s 1,000-plus providers and its senior leadership. By making performance data widely available, the software clarifies performance expectations and ensures everyone knows the metric targets inherent in the goals. It also promotes an understanding of factors that affect compensation for employees or physicians in a given year.
6 Pitfalls To Avoid In Healthcare Strategic Planning
Part of strategic planning in healthcare involves dealing with any road bumps that come your way. While most companies go through some trials during their strategic planning process, a misstep could have major consequences. For one, it could derail your progress and cause you to waste months of time and energy. Additionally, it could create confusion—or even concern—across your organization. Keep in mind, some people in your organization will always be critical of your strategic plan, and those individuals will be the first to doubt it and wonder why you aren’t headed “full-steam ahead.”
While there’s not much you can do to avoid critics, you can avoid putting yourself in a position to have your strategy (and your strategy office) criticized. Avoiding these six common pitfalls is an important step in that direction.
Pitfall #1: Selecting operational KPIs instead of strategic KPIs
It’s far too simple to fall into the trap of selecting metrics that are important for your operations, but have little to no impact on your strategy . For example, many healthcare centers track the percentage of beds that are occupied in order to get a closer look at ongoing patient capacity. This metric helps you understand where you stand on capacity, and is largely operational. However, if one of your strategic goals is to increase the number of patients who choose your hospital or increase your capacity, then this metric could be strategic. Always be sure your metrics truly tie back to and inform your goals.
Pitfall #2: Having too many metrics
The majority of healthcare providers come from either a business or a science background—which makes it quite easy for them to fall in love with measures. But the caution here is that some may get overzealous about metrics and try to track too many—which is a mistake.
If you have too many metrics—say, anywhere north of 35 at the enterprise level—you won’t be able focus on the metrics that will actually make an impact on your strategy. The list of negatives goes on and on: Your reports will end up being too extensive and leadership will be less likely to read them; your meetings will end up being hours long; and you’ll simply never complete the meeting agenda, etc. All of these issues can be avoided simply by not selecting extra metrics that will distract from the conversations you need to be having.
Pitfall #3: Piling too much on your strategy office
I always recommend that you keep your strategy office as “clean” as possible. Here’s what I mean: It’s important to allow those working in the strategy office to do what they’re meant to do—plan and execute your strategy. We’ve seen many instances where others in the healthcare organization begin to tap the strategy office for little projects here and there that aren’t strategy related. The reason for this is typically that those in the strategy office are close to the leadership and are in-tune to what’s happening around the organization. While this makes them a tempting target for random projects, be sure everyone involved in your strategic planning knows their limits. The best way to ensure your strategic planning and strategy execution are successful is to keep the strategy office focused on its priorities, and nothing else.
Pitfall #4: Not having support lined up
It would be a mistake to think it is easy to get people on board with a strategy whose planning process is already in motion. If you want the buy-in of high-level personnel, you must involve them from day one. Such “zero-base” coordination is critical to setting the stage for successful execution. Without it, you’ll invariably experience a degree of organizational discord that will impede planning, muddy priorities, hamstring the alignment of departmental goals, and hinder access to key resources. To avoid these impediments, you’ll need:
- People who understand where the organization should be going, as well as where performance can be improved
- People who can drive change in the process from start to finish
- People who can get the appropriate resources in place to carry out the strategic plans
Pitfall #5: Making unrealistic or ambiguous plans
Making vague or ambiguous plans is a recipe for failure. You need to be specific about the work to be done if you hope to see improvement.
Similarly, make sure projects and action plans can realistically be achieved (including reasonable schedules). If goals and time frames are unrealistic, a constant sense of frustration will undermine morale. To avoid this pitfall, meet with the teams responsible for carrying out the components of your plan—as well as the department heads—to make sure they are armed with realistic goals and the resources they’ll need to succeed.
Pitfall #6: Hazily defined roles and responsibilities
In non-medical corporations, most measure and project owners are tasked with updating their own measure statuses and project reports. But in healthcare organizations, this isn’t always the case. Healthcare organizations can have an assistant-heavy culture, and department leaders and doctors often task those assistants with updating projects they aren’t involved in.
Therefore, it’s particularly important for those in healthcare to clearly define roles and responsibilities when it comes to strategic planning and execution. Is it acceptable for assistants to make measure updates in an ongoing fashion? If so, do they know how to do this appropriately in your strategic planning software so your leadership is consistently made aware of updates? Simply communicating these details can save you a lot of grief in the long term.
Try ClearPoint Strategy Software for Healthcare Strategic Planning
ClearPoint Strategy Software is here to streamline your planning process, from formulation to execution, ensuring you avoid common pitfalls and achieve your strategic goals efficiently.
Don’t let outdated methods hold you back—experience the power of ClearPoint and watch your organization thrive. Book your FREE demo today and see how ClearPoint can revolutionize your strategic planning!
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What are strategic planning skills.
Strategic planning skills include the ability to analyze complex situations, think critically, set long-term goals, develop actionable plans, and adapt to changing environments. Skills such as communication, leadership, analytical thinking, and decision-making are essential for effective strategic planning.
What are strategic planning tools?
Strategic planning tools are methodologies and frameworks that help organizations define their strategy and make informed decisions. Examples include SWOT analysis, Balanced Scorecard, and PEST analysis. ClearPoint Strategy offers software that facilitates the use of these tools, enabling organizations to streamline their strategic planning processes.
What are strategic planning models?
Strategic planning models are structured approaches used to develop and implement strategies. Common models include the Balanced Scorecard, Blue Ocean Strategy, and Hoshin Planning. These models help organizations align their activities with their vision and objectives, ensuring a cohesive approach to achieving their goals.
What are strategic planning techniques?
Strategic planning techniques are specific methods used to analyze and plan strategies. Techniques such as SWOT analysis, scenario planning, and stakeholder analysis are commonly used to identify opportunities, assess risks, and develop actionable plans. ClearPoint Strategy supports these techniques through its comprehensive planning software.
What are strategic planning concepts?
Strategic planning concepts are fundamental ideas and principles that underpin the strategic planning process. Key concepts include vision and mission statements, goal setting, environmental scanning, and strategy formulation. Understanding these concepts is crucial for developing effective strategic plans that drive organizational success.
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Tricia Jessee
Tricia manages our implementation and onboarding team to ensure the success of ClearPoint customers.
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7 steps to writing a business plan for your healthcare business
Creating a strong business plan is the key to a successful private healthcare business.
When it comes to building your private healthcare business, writing a strong business plan and implementing it properly is perhaps the most effective strategy to propel your business to success. Whether you are just starting out, or are already an established healthcare practice, it is never too late to write your business plan and put it in place.
We’ve put together seven steps to help you write a healthcare business plan and then implement it. You can also find a sample private practice business plan PDF here to get you started!
Download our free Business Plan template here!
1. Identify your end goal
Perhaps the most important step of writing a business plan is identifying what it is you are trying to achieve. Identifying clear business goals will enable you to build a step-by-step plan to ultimately achieve these aims.
Dr Gero Baiarda, Clinical Director at GPDQ, states the importance of knowing your practice’s aims in our ‘Launching a Private Practice’ ebook. He states that identifying your purpose, vision, and mission, will help keep you consistent and accountable to your goals. Knowing exactly what you are seeking to achieve in your business will mean that your business plan is tailored to achieving that goal at every step.
2. Get to know your business in numbers
To write a business plan that will enable you to reach your goals, you need to understand how your business is currently performing . Obtaining a complete and in-depth overview of the health of your business will help you to make concrete and achievable goals based on accurate data.
Tracking data is also essential as you progress further with your business. You can’t make a successful business plan without knowing your business inside and out, and you won’t be able to understand how you are performing against your business plan without measuring data as you go.
Make sure you have access to business management tools that allow you to track the key data, such as revenue, patient numbers, cash flow, and other financial and patient demographics which will be useful for your growth goals.
Find out more about Semble’s business management tools here.
3. Break it into smaller steps
With a business goal in mind, the best way to create a business plan is to break it down into smaller, achievable steps. By doing this you will be able to map out a clear trajectory for your business over the next months or years and it will be easier to track your progress against your aims and expectations.
Work backwards from the end goal to create smaller steps, each with a clear, quantifiable goal, such as reaching a revenue goal in a certain month or number of patients reached. If you work well with visuals, experiment with creating a visual diagram or board that you can keep close at hand to check and measure up against as you grow your healthcare business.
4. Identify key successes and failures
A business plan is about improving and growing your business, and to do this it is important to understand your strengths and weaknesses. Consider what has worked well for your business and what has not.
For example, how is your staff management? Does your team work well together, understand their individual roles, and achieve tasks efficiently ?
By identifying main strengths, you can work them into your plan to help you improve business performance. Identifying any weaknesses will enable you to know areas that need some attention and a greater input of time and resources to help you build an all-around stronger business.
5. Get to know your target market
An understanding of your patient’s needs is essential to performing well in the market. Your patient population will depend to an extent on the healthcare services you are offering, but conducting key market research into the specific needs of your patients will help you to create a unique and tailored service that will perform better in the market.
Oliver Capel, Managing Director at Medico Digital, explains that market research and patient demographics such as age, gender, religion, income level, and more, can help you to cultivate a more targeted and effective marketing strategy because it provides insight into what sort of marketing materials will be best received by patients. For example, a young mother will respond differently to marketing than a 60-year old male retiree.
Explore how to use patient market research to improve your business performance in Chapter 2 of the ‘Launching a Private Practice’ ebook .
6. Schedule regular time for business management
You can’t expect to see results in business growth if you don’t invest the time and energy into nurturing it. Whether that be investing in your own development with business management learning time, or setting aside a weekly hour for growth strategy and progress reviewing, it is essential that you carve out time to work on your business.
There are many online courses, books, and guides for basic business management which could help you learn invaluable skills for managing and growing your healthcare business. Start by identifying areas where you have less knowledge and schedule in an hour a week for learning, planning, and strategy.
Even as little as one hour a week will have a profound effect on your business skills and management, and the results will soon be evident!
7. Get your team on board
There is little point in setting goals if your team is unaware of what they are. Sharing business goals with your team and employees means that everyone can do their part to reach certain milestones and improve the business. It also helps to create a stronger network that you can rely on to carry out delegated tasks and ease the burden of both business management and the day-to-day running of your private healthcare practice.
Whether it be improving customer service with better bedside manner, or making changes to workflows to improve efficiency, making your team aware of the end goal will help them understand why change is needed and thus more likely to get on board.
Get started writing your business plan with this free private healthcare practice business plan PDF!
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18 Health Care Business Ideas for Passionate Entrepreneurs
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The health care sector is an amazing place for aspiring entrepreneurs to open up shop. Exploring health care business ideas is smart for lots of reasons.
There’s an opportunity to do a world of good by serving an aging American population and helping those struggling with the national drug crisis. There are lots of new medical and technological advances, and widespread interest in health and wellness, too. And those are all great incentives for passionate entrepreneurs.
Plus, these factors combined mean there's a thriving market for health-related businesses. Aspiring new business owners can turn one of many health care business ideas into a viable way to make a living, including those entrepreneurs who want to work remotely.
This list of health care business ideas should get you started — and maybe inspire you to explore starting a business.
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Why businesses in health care are worth exploring
Nationwide spending on health is projected to grow at an average rate of 5.5% annually through 2026. That’s one percentage point faster than the national GDP is projected to grow during that same time. And by 2026, health care is projected to account for nearly 20% of the GDP.
Employment in health care-related occupations is projected to grow 18% from 2016 to 2026, much faster than the average for all occupations, according to the U.S. Bureau of Labor Statistics. Nearly half of the 20 occupations projected to have the highest percentage increase in employment by 2026 are in the health care industry.
What that spells is a lot of opportunity.
One big reason for the surge in health care spending: By 2030, the Census Bureau projects, approximately one-fifth of the population will be 65 and older. This will be the first time in history that the number of Americans over age 65 will surpass the number of Americans under 18.
Keep those numbers in mind as you look through this list of health care business ideas.
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18 health care business ideas to consider
1. medical transcription services.
Medical transcriptionists transcribe doctors’, nurses’ and other health care practitioners’ voice recordings into written documents for patients’ records. Speech recognition technology has definitely improved the efficiency of medical transcription, sure. But it certainly hasn’t yet replaced the need for human transcriptionists to review and correct the transcriptions to make sure they’re accurate.
This is a great business to run from home because you can make your own hours, and all of the work can be done digitally. Plus, if you’re digitally savvy and can create an efficient (and secure) way to share files, you can really one-up the competition.
2. Medical records management
Start a service that manages medical records for hospitals, clinics and doctors’ offices. You can work with clients to identify the best records management systems, implement them and provide their staff with training on how to use the systems.
Another approach? You can offer full-service medical records management, and clients can outsource the work to you. This can be helpful for boutique practices and sole practitioners who need the organization but can’t afford the in-house staff.
3. Physical/occupational therapy center
Physical therapists help patients recover from injuries to regain their full range of motion and reduce pain. Occupational therapists provide more specific therapy to help patients perform tasks of daily living, such as dressing themselves or feeding themselves. You can specialize in one or the other, or put both under one roof. Note that this does require certification.
4. Develop a health care app
Both health care providers and individuals alike are increasingly turning to mobile apps to track, record and manage medical conditions. The world is your oyster if you’re skilled in app development, so you might want to consider developing your own health care app targeting these markets. Do some field research to find out where your skills can fit a need.
5. Diabetic care center
According to the CDC, 9.4% of all Americans either have diabetes or are prediabetic . Opening a diabetic care center can help diabetic patients improve their quality of life by providing nutrition counseling, dialysis and other medical services. You can also provide preventive help such as teaching healthy eating habits or providing support groups for diabetics.
6. Home health care service
A home health care business provides in-home medical care for recently discharged hospital patients, patients with chronic health conditions, seniors and others who need assistance managing their health.
In states with rapidly aging populations, like Florida and California, not only could this be a benefit to the community — but also a strong business prospect for you.
7. Medical foot care
A growing population of seniors and diabetics means more need for foot care services. Something as simple as trimming toenails can be impossible for seniors and overweight patients who can’t reach their feet. You can either open a foot care clinic or save patients a trip to the podiatrist by providing mobile foot care services in their homes or in a van. You’ll need to train as a podiatrist or hire one.
8. Drug treatment/rehabilitation center
As drug use has escalated to become a national crisis in the United States, legitimate places for people to seek treatment for their addictions and rebuild their lives are needed more than ever. Every day, more than 115 Americans die after overdosing on opioids, according to the National Institute on Drug Abuse .
Open a drug treatment and rehabilitation center to help clients with drug addiction. You can specialize in different types of patients, such as juveniles or more senior patients.
9. Childbirth services
Today's expectant parents want to control every aspect of childbirth, and that often includes having a midwife or doula present at the birth. The use of midwives is increasing , according to the American College of Nurse-Midwives.
Midwives are trained health care providers who assist women during childbirth, while a doula is more like a pregnancy coach who helps couples arrange all aspects of the birth and caring for the newborn. You can either become certified yourself or open a business that employs contractors under your umbrella.
10. Medical billing service
Medical billing requires performing complex coding when submitting insurance claims. Keep in mind, certification is required in this field to ensure that doctors and other health care practitioners get paid.
Although big hospitals and health care organizations often have in-house staff, small medical practices that don’t have time to manage billing and coding themselves are an ideal market for medical billing services. Acquire and learn medical billing software, get trained in proper coding and target these smaller medical practices to take medical billing hassles off their hands. And you can even earn your certification online.
11. Nutritionist/dietitian
If you want to help people improve their nutritional intake and habits, you can build a business as a nutritionist or dietitian. Only nutritionists who get a license with the Commission on Dietetic Registration, or CDR, can advertise themselves as dietitians. Some states regulate nutritionists and others don’t.
You can specialize in different types of clients, such as sports nutrition, nutrition for weight loss or holistic nutrition.
12. Alternative health care
Acupuncture and massage therapy are two alternative health care business ideas that are becoming more popular. Many are using these services to supplement their traditional medical treatment — or as a primary treatment unto itself.
Check with your state to see what the requirements are to practice; they vary across the country. Even when health insurance plans don’t provide coverage, Americans are more willing to pay out-of-pocket for these types of care than they used to be.
13. Health information website
If you have health care expertise — or access to people who do — consider starting a website to provide health care information and advice. You can create all kinds of content, such as podcasts, YouTube videos and even online classes, in addition to blog posts.
You might even be able to get health care experts to contribute content for free in exchange for the publicity your site offers. There are a lot of options; just make certain that you do some market research to figure out the white space to fill, and find viable revenue streams to make your business highly sustainable, too.
14. Medical supply sales
Seniors, people with disabilities and those with chronic illnesses have an ongoing need for medical supplies and equipment. This can include walkers, braces, bedpans and more.
Although you can open a physical store, keep in mind that your target customers will often have difficulty getting to your location, so an online store is likely a better bet. Again, research here will be key so you can make sure that you’re stocking the right products and marketing in the right places.
15. Stylish uniforms for medical professionals
Medical professionals who wear scrubs to work are always looking for affordable and durable uniforms. They’re also looking for stylish options — and those aren’t as easy to find. Start a store selling scrubs, comfortable shoes, lab coats and other gear for health care professionals. You can design the goods yourself or source them from multiple places, and encourage your customers with word-of-mouth incentives to drive sales.
16. Hearing aid dispensary
Because hearing aids generally aren’t covered by health insurance, this can be a lucrative health care business idea if you find the right customer base. You might want to open a location to provide hearing tests, recommendations and hearing aid fittings and care. You could even outfit a mobile van to come to customers' homes to clean and repair their hearing aids as an extra service.
17. Respite care service for caregivers
Whether they’re parents caring for severely disabled children or adult children caring for aging parents, caregivers have a stressful job. Provide a much-needed break for caregivers by starting a respite care business. Your caregivers can come in for a few hours or a few days, giving family caregivers a chance to rest.
18. Medical marijuana dispensary
As a growing number of states legalize medical marijuana, this $8 billion industry is projected to continue its growth, according to IBISWorld . Opening a medical marijuana dispensary can be a profitable business in the right location; however, changing state and federal regulations could affect your startup. (Marijuana is still illegal under federal law.)
Frequently asked questions
How do i start a health care business.
When you start a health care business, it can be helpful to begin by writing a business plan, registering your business and hiring employees. While all businesses need to obtain any necessary licenses, permits and forms of insurance, health care businesses may require earning professional designations or taking out extra forms of insurance. Research what you need to run your business safely and legally before you launch.
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How do I start a home health care business?
Starting a home health care business requires a high level of professionalism, even if you’re running a business where the bulk of the work will occur in your clients’ homes. For example, you may still need office space to train your employees. Like starting any business, it is important to write a business plan, register your business and create proper business procedures. You should also obtain any necessary licenses, permits and insurance for running a business in your area, as well as for working within the health care industry.
How do I write a business plan in health care?
In general, a business plan is an organizational tool that business owners can follow when they need guidance. This document can also tell outside parties, such as investors, about your business and its value. A good business plan should include thorough research about your industry, market and competitors, as well as dive into your financials, products and services and your marketing plan. When writing a business plan in health care, it will be important to do heavy research on the industry, as well as outline clearly what medical services or products you will be offering and why you or your staff are qualified to run a health care business safely.
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LLC Formation
The bottom line
There are a lot of potential great health care business ideas for entrepreneurs interested in the health care sector — and many opportunities for health care business ideas to become real, sustainable businesses.
Be sure to check regulations, licensing, professional training or degrees needed for these businesses before you get started, and do lots of market research. Don’t forget that “care” part, of course.
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Business Plan Template for Healthcare Organization
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Running a healthcare organization is no small feat. With so many moving parts and the constant need to provide high-quality patient care, having a solid business plan is essential. That's where ClickUp's Business Plan Template for Healthcare Organizations comes in.
This template is designed specifically for healthcare organizations like hospitals and clinics, helping you:
- Clearly define your organization's goals and objectives
- Strategize your approach to patient care, operations, and financial management
- Create detailed financial projections and budgets for sustainability and growth
With ClickUp's Business Plan Template, you can streamline your planning process, ensure a focused approach, and set your healthcare organization up for success. Get started today and take your healthcare services to new heights!
Business Plan Template for Healthcare Organization Benefits
Creating a business plan using the Business Plan Template for Healthcare Organization offers several benefits for healthcare organizations:
- Provides a structured framework to clearly define organizational goals, strategies, and objectives
- Enables effective financial planning and projection, ensuring sustainable and profitable operations
- Helps healthcare organizations identify potential risks and challenges, allowing for proactive mitigation strategies
- Facilitates collaboration among stakeholders, ensuring alignment and shared vision for the organization
- Enhances decision-making by providing a comprehensive overview of the organization's direction and priorities
Main Elements of Healthcare Organization Business Plan Template
ClickUp's Business Plan Template for Healthcare Organizations provides a comprehensive framework for creating and managing your organization's business plan. Here are the main elements of this template:
- Custom Statuses: Track the progress of each section of your business plan with statuses like Complete, In Progress, Needs Revision, and To Do, ensuring that all tasks are clearly defined and managed.
- Custom Fields: Utilize custom fields such as Reference, Approved, and Section to add vital information and categorize different aspects of your business plan, enabling easy organization and filtering.
- Custom Views: Access five different views tailored to your needs, including the Topics view for a high-level overview, the Status view to track progress, the Timeline view to visualize deadlines and milestones, the Business Plan view to see the plan in its entirety, and the Getting Started Guide view to assist you in navigating the template effectively.
With ClickUp's Business Plan Template for Healthcare Organizations, you can streamline your planning process, collaborate effectively, and ensure the success of your healthcare services.
How To Use Business Plan Template for Healthcare Organization
If you're a healthcare organization looking to create a business plan, our Business Plan Template can help guide you through the process. Follow these six steps to ensure your plan is comprehensive and effective:
1. Executive Summary
Start by writing a compelling executive summary that provides an overview of your healthcare organization. This should include your mission statement, key objectives, target market, and a brief description of your services. The purpose of the executive summary is to grab the reader's attention and give them a clear understanding of your organization's value proposition.
Use the Docs feature in ClickUp to easily write and format your executive summary.
2. Market Analysis
Conduct a thorough market analysis to understand the healthcare landscape in your area. Identify your target market, including demographics, needs, and preferences. Research your competitors and analyze their strengths and weaknesses. This will help you identify opportunities and gaps in the market that your organization can capitalize on.
Utilize the Table view in ClickUp to organize and analyze your market research data.
3. Services and Offerings
Outline the services and offerings your healthcare organization will provide. Clearly define each service and explain how it addresses the needs of your target market. Include details such as pricing, delivery methods, and any unique features or benefits that set your organization apart from competitors.
Create tasks in ClickUp to break down each service and assign responsible team members for implementation.
4. Operations and Management
Describe the operational structure of your healthcare organization, including key departments, roles, and responsibilities. Outline your management team and their qualifications, highlighting their expertise in the healthcare industry. Discuss your organizational structure, communication channels, and any processes or protocols that will ensure smooth operations.
Use the Automations feature in ClickUp to streamline and automate your operational processes.
5. Marketing and Sales Strategy
Develop a comprehensive marketing and sales strategy to promote your healthcare organization and attract patients. Identify your target audience and tailor your messaging and marketing channels accordingly. Outline your promotional activities, such as digital marketing campaigns, community outreach programs, and partnerships with other healthcare providers.
Visualize your marketing and sales strategy using the Board view in ClickUp , where you can track progress and assign tasks to your marketing team.
6. Financial Projections and Funding
Create detailed financial projections that include revenue forecasts, expenses, and profit margins. Identify your funding needs and explore potential sources of financing, such as loans, grants, or partnerships. Include a timeline for achieving financial milestones and outline your plan for managing cash flow and financial risks.
Utilize the Goals feature in ClickUp to set financial targets and track your progress towards meeting them.
By following these six steps and using our Business Plan Template, you can create a comprehensive and well-structured business plan for your healthcare organization. Good luck!
Get Started with ClickUp’s Business Plan Template for Healthcare Organization
Healthcare organizations can use this Business Plan Template to create a comprehensive plan that outlines their goals, strategies, and financial projections.
First, hit “Add Template” to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.
Next, invite relevant members or guests to your Workspace to start collaborating.
Now you can take advantage of the full potential of this template to create a solid business plan:
- Use the Topics View to organize your business plan into different sections, such as mission and vision, services offered, marketing strategies, and financial projections.
- The Status View will help you track the progress of each section, with statuses like Complete, In Progress, Needs Revision, and To Do.
- The Timeline View will give you a visual representation of your business plan's timeline, allowing you to set deadlines and milestones.
- The Business Plan View will provide a comprehensive overview of your entire plan, including all sections and their statuses.
- The Getting Started Guide View will help you navigate through the template and provide tips and guidance on how to create an effective business plan.
- Use the custom fields Reference, Approved, and Section to add additional information and categorize your business plan sections.
- Update statuses and custom fields as you work on each section to keep stakeholders informed of progress.
- Monitor and analyze your business plan to ensure it aligns with your organization's goals and objectives.
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The future of healthcare: Value creation through next-generation business models
The healthcare industry in the United States has experienced steady growth over the past decade while simultaneously promoting quality, efficiency, and access to care. Between 2012 and 2019, profit pools (earnings before interest, taxes, depreciation, and amortization, or EBITDA) grew at a compound average growth rate of roughly 5 percent. This growth was aided in part by incremental healthcare spending that resulted from the 2010 Affordable Care Act. In 2020, subsidies for qualified individual purchasers on the marketplaces and expansion of Medicaid coverage resulted in roughly $130 billion 1 Federal Subsidies for Health Insurance Coverage for People Under Age 65: CBO and JCT’s March 2020 Projections, Congressional Budget Office, Washington, DC, September 29, 2020, cbo.gov. 2 Includes adults made eligible for Medicaid by the ACA and marketplace-related coverage and the Basic Health Program. of incremental healthcare spending by the federal government.
The next three years are expected to be less positive for the economics of the healthcare industry, as profit pools are more likely to be flat. COVID-19 has led to the potential for economic headwinds and a rebalancing of system funds. Current unemployment rates (6.9 percent as of October 2020) 3 The employment situation—October 2020 , US Department of Labor, November 6, 2020, bls.gov. indicate some individuals may move from employer-sponsored insurance to other options. It is expected that roughly between $70 billion and $100 billion in funding may leave the healthcare system by 2022, compared with the expected trajectory pre-COVID-19. The outflow is driven by coverage shifts out of employer-sponsored insurance, product buy-downs, and Medicaid rate pressures from states, partially offset by increased federal spending in the form of subsidies and cost sharing in the Individual market and in Medicaid funding.
Underlying this broader outlook are chances to innovate (Exhibit 1). 4 Smit S, Hirt M, Buehler K, Lund S, Greenberg E, and Govindarajan A, “ Safeguarding our lives and our livelihoods: The imperative of our time ,” March 23, 2020, McKinsey.com. Innovation may drive outpaced growth in three categories: segments that are anticipated to rebound from poor performance over recent years, segments that benefit from shifting care patterns that result directly from COVID-19, and segments where growth was expected pre-COVID-19 and remain largely unaffected by the pandemic. For the payer vertical, we estimate profit pools in Medicaid will likely increase by more than 10 percent per annum from 2019 to 2022 as a result of increased enrollment and normalized margins following historical lows. In the provider vertical, the rapid acceleration in the use of telehealth and other virtual care options spurred by COVID-19 could continue. 5 Bestsennyy O, Gilbert G, Harris A, and Rost J, “ Telehealth: A quarter-trillion-dollar post-COVID-19 reality? ” May 29, 2020, McKinsey.com. Growth is expected across a range of sub-segments in the services and technology vertical, as specialized players are able to provide services at scale (for example, software and platforms and data and analytics). Specialty pharmacy is another area where strong growth in profit pools is likely, with between 5 and 10 percent compound annual growth rate (CAGR) expected in infusion services and hospital-owned specialty pharmacy sub-segments.
Strategies that align to attractive and growing profit pools, while important, may be insufficient to achieve the growth that incumbents have come to expect. For example, in 2019, 34 percent of all revenue in the healthcare system was linked to a profit pool that grew at greater than 5 percent per year (from 2017 to 2019). In contrast, we estimate that only 13 percent of revenue in 2022 will be linked to profit pools growing at that rate between 2019 and 2022. This estimate reflects that profit pools are growing more slowly due to factors that include lower membership growth, margin pressure, and lower revenue growth. This relative scarcity in opportunity could lead to increased competition in attractive sub-segments with the potential for profits to be spread thinly across organizations. Developing new and innovative business models will become important to achieve the level of EBITDA growth observed in recent years and deliver better care for individuals. The good news is that there is significant opportunity, and need, for innovation in healthcare.
New and innovative business models across verticals can generate greater value and deliver better care for individuals
Glimpse into profit pool analyses and select sub-segments.
Within the context of these overarching observations, the projections for specific sub-segments are nuanced and tightly connected to the specific dynamics each sub-segment is currently facing:
- Payer—Small Group: Small group has historically seen membership declines and we expect this trend to continue and/or accelerate in the event of an economic downturn. Membership declines will increase competition and put pressure on incumbent market leaders to both maintain share and margin as membership declines, but fixed costs remain.
- Payer—Medicare Advantage: Historic profit pool growth in the Medicare Advantage space has been driven by enrollment gains that result from demographic trends and a long-term trend of seniors moving from traditional Medicare fee-for-service programs to Medicare Advantage plans that have increasingly offered attractive ancillary benefits (for example, dental benefits, gym memberships). Going forward, we expect Medicare members to be relatively insulated from the effects of an economic downturn that will impact employers and individuals in other payer segments.
- Provider—General acute care hospitals: Cancelation of elective procedures due to COVID-19 is expected to lead to volume and revenue reductions in 2019 and 2020. Though volume is expected to recover partially by 2022, growth will likely be slowed due to the accelerated shift from hospitals to virtual care and other non-acute settings. Payer mix shifts from employer-sponsored to Medicaid and uninsured populations in 2020 and 2021 are also likely to exert downward pressure on hospital revenue and EBITDA, possibly driving cost-optimization measures through 2022.
- Provider—Independent labs: COVID-19 testing is expected to drive higher than average utilization growth in independent labs through 2020 and 2021, with more typical utilization returning by 2022. However, labs may experience pressure on revenue and EBITDA growth as the payer mix shifts to lower-margin segments, offsetting some of the gains attributed to utilization.
- Provider—Virtual office visits: Telehealth has helped expand access to care at a time when the pandemic has restricted patients’ ability to see providers in person. Consumer adoption and stickiness, along with providers’ push to scale-up telehealth offerings, are expected to lead to more than 100 percent growth per annum in the segment from 2019 to 2022, going beyond traditional “tele-urgent” to more comprehensive virtual care.
- HST—Medical financing: The medical financing segment may be negatively impacted in 2020 due to COVID-19, as many elective services for which financing is used have been deferred. However, a quick bounce-back is expected as more patients lacking healthcare coverage may need financing in 2021, and as providers may use medical financing as a lever to improve cash reserves.
- HST—Wearables: Looking ahead, the wearables segment is expected to see a slight dip in 2020 due to COVID-19, but is expected to rebound in 2021 and 2022 given consumer interest in personal wellness and for tracking health indicators.
- Pharma services—Pharmacy benefit management: The growth is expected to return to baseline expectations by 2022 after an initial decline in 2020 and 2021 due to the COVID-19-driven decrease in prescription volume.
New and innovative business models are beginning to show promise in delivering better care and generating higher returns. The existence of these models and their initial successes are reflective of what we have observed in the market in recent years: leading organizations in the healthcare industry are not content to simply play in attractive segments and markets, but instead are proactively and fundamentally reshaping how the industry operates and how care is delivered. While the recipe across verticals varies, common among these new business models are greater alignment of incentives typically involving risk bearing, better integration of care, and use of data and advanced analytics.
Payers—Next-generation managed care models
For payers, the new and innovative business models that are generating superior returns are those that incorporate care delivery and advanced analytics to better serve individuals with increasingly complex healthcare needs (Exhibit 2). As chronic disease and other long-term conditions require more continuous management supported by providers (for example, behavioral health conditions), these next-generation managed care models have garnered notice. Nine of the top ten payers have made acquisitions in the care delivery space. Such models intend to reorient the traditional payer model away from an operational focus on financing healthcare and pricing risk, and toward more integrated managed care models that better align incentives and provide higher-quality, better experience, lower-cost, and more accessible care. Payers that deployed next-generation managed care models generate 0.5 percentage points of EBITDA margin above average expectations after normalizing for payer scale, geographical footprint, and segment mix, according to our research.
The evidence for the effectiveness of these next-generation care models goes beyond the financial analysis of returns. We observe that these models are being deployed in those geographies that have the greatest opportunity to positively impact individuals. Those markets with 1) a critical mass of disease burden, 2) presence of compressible costs (the opportunity for care to be redirected to lower-cost settings), and 3) a market structure conducive to shifting to higher-value sites of care, offer substantial ways to improve outcomes and reduce costs. (Exhibit 3).
Currently, a handful of payers—often large national players with access to capital and geographic breadth that enables acquisition of at-scale providers and technologies—have begun to pursue such models. Smaller payers may find it more difficult to make outright acquisitions, given capital constraints and geographic limitations. M&A activity across the care delivery landscape is leaving smaller and more localized assets available for integration and partnership. Payers may need to increasingly turn toward strategic partnerships and alliances to create value and integrate a range of offerings that address all drivers of health.
Providers—reimagining care delivery beyond the hospital
For health systems, through an investment lens, the ownership and integration of alternative sites of care beyond the hospital has demonstrated superior financial returns. Between 2013 and 2018, the number of transactions executed by health systems for outpatient assets increased by 31 percent, for physician practices by 23 percent, and for post-acute care assets by 13 percent. At the same time, the number of hospital-focused deals declined by 6 percent. In addition, private equity investors and payers are becoming more active dealmakers in these non-acute settings. 6 CapitalIQ, Dealogic, and Irving Levin Associates. 7 In 2018, around 40 percent of all post-acute and outpatient deals were completed by an acquirer other than a traditional provider.
As investment is focused on alternative sites of care, we observe that health systems pursuing diversified business models that encompass a greater range of care delivery assets (for example, physician practices, ambulatory surgery centers, and urgent care centers) are generating returns above expectations (Exhibit 4). By offering diverse settings to receive care, many of these systems have been able to lower costs, enhance coordination, and improve patient experience while maintaining or enhancing the quality of the services provided. Consistent with prior research, 8 Singhal S, Latko B, and Pardo Martin C, “ The future of healthcare: Finding the opportunities that lie beneath the uncertainty ,” January 31, 2018, McKinsey.com. systems with high market share tend to outperform peers with lower market share, potentially because systems with greater share have greater ability not only to ensure referral integrity but also to leverage economies of scale that drive efficiency.
The extent of this outperformance, however, varies by market type. For players with top quartile share, the difference in outperformance between acute-focused players and diverse players is less meaningful. Contrastingly, for bottom quartile players, the increase in value provided by presence beyond the acute setting is more significant. While there may be disadvantages for smaller and sub-scale providers, opportunities exist for these players—as well as new entrants and attackers—to succeed by integrating offerings across the care continuum.
These new models and entrants and their non-acute, technology-enabled, and multichannel offerings can offer a different vision of care delivery. Consumer adoption of telehealth has skyrocketed, from 11 percent of US consumers using telehealth in 2019 to 46 percent now using telehealth to replace canceled healthcare visits. Pre-COVID-19, the total annual revenues of US telehealth players were an estimated $3 billion; with the acceleration of consumer and provider adoption and the extension of telehealth beyond virtual urgent care, up to $250 billion of current US healthcare spend could be virtualized. 9 Bestsennyy O, Gilbert G, Harris A, and Rost J, “ Telehealth: A quarter-trillion-dollar post-COVID-19 reality? ” May 29, 2020, McKinsey.com. These early indications suggest that the market may be shifting toward a model of innovative tech-enabled care, one that unlocks value by integrating digital and non-acute settings into a comprehensive, coordinated, and lower-cost offering. While functional care coordination is currently still at the early stages, the potential of technology and other alternative settings raises the question of the role of existing acute-focused providers in a more integrated and digital world.
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Healthcare services and technology—innovation and integration across the value chain.
Growth in the healthcare services and technology vertical has been material, as players are bringing technology-enabled services to help improve patient care and boost efficiency. Healthcare services and technology companies are serving nearly all segments of the healthcare ecosystem. These efforts include working with payers and providers to better enable the link between actions and outcomes, to engage with consumers, and to provide real-time and convenient access to health information. Since 2014, a large number and value of deals have been completed: more than 580 deals, or $83 billion in aggregate value. 10 Includes deals over $10 million in value. 11 Analysis from PitchBook Data, Inc. and McKinsey Healthcare Services and Technology domain profit pools model. Venture capital and private equity have fueled much of the innovation in the space: more than 80 percent 12 Includes deals over $10 million in value. of deal volume has come from these institutional investors, while more traditional strategic players have focused on scaling such innovations and integrating them into their core.
Driven by this investment, multiple new models, players, and approaches are emerging across various sub-segments of the technology and services space, driving both innovation (measured by the number of venture capital deals as a percent of total deals) and integration (measured by strategic dollars invested as a percent of total dollars) with traditional payers and providers (Exhibit 5). In some sub-segments, such as data and analytics, utilization management, provider enablement, network management, and clinical information systems, there has been a high rate of both innovation and integration. For instance, in the data and analytics sub-segment, areas such as behavioral health and social determinants of health have driven innovation, while payer and provider investment in at-scale data and analytics platforms has driven deeper integration with existing core platforms. Other sub-segments, such as patient engagement and population health management, have exhibited high innovation but lower integration.
Traditional players have an opportunity to integrate innovative new technologies and offerings to transform and modernize their existing business models. Simultaneously, new (and often non-traditional) players are well positioned to continue to drive innovation across multiple sub-segments and through combinations of capabilities (roll-ups).
Pharmacy value chain—emerging shifts in delivery and management of care
The profit pools within the pharmacy services vertical are shifting from traditional dispensing to specialty pharmacy. Profits earned by retail dispensers (excluding specialty pharmacy) are expected to decline by 0.5 percent per year through 2022, in the face of intensifying competition and the maturing generic market. New modalities of care, new care settings, and new distribution systems are emerging, though many innovations remain in early stages of development.
Specialty pharmacy continues to be an area of outpaced growth. By 2023, specialty pharmacy is expected to account for 44 percent of pharmacy industry prescription revenues, up from 24 percent in 2013. 13 Fein AJ, The 2019 economic report on U.S. pharmacies and pharmacy benefit managers , Drug Channels Institute, 2019, drugchannelsinstitute.com. In response, both incumbents and non-traditional players are seeking opportunities to both capture a rapidly growing portion of the pharmacy value chain and deliver better experience to patients. Health systems, for instance, are increasingly entering the specialty space. Between 2015 and 2018 the share of provider-owned pharmacy locations with specialty pharmacy accreditation more than doubled, from 11 percent in 2015 to 27 percent in 2018, creating an opportunity to directly provide more integrated, holistic care to patients.
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Challenges emerge for the US healthcare system as COVID-19 cases rise
A new wave of modalities of care and pharmaceutical innovation are being driven by cell and gene therapies. Global sales are forecasted to grow at more than 40 percent per annum from 2019 to 2024. 14 Evaluate Pharma, February 2020. These new therapies can be potentially curative and often serve patients with high unmet needs, but also pose challenges: 15 Capra E, Smith J, and Yang G, “ Gene therapy coming of age: Opportunities and challenges to getting ahead ,” October 2, 2019, McKinsey.com. upfront costs are high (often in the range of $500,000 to $2,000,000 per treatment), benefits are realized over time, and treatment is complex, with unique infrastructure and supply chain requirements. In response, both traditional healthcare players (payers, manufacturers) and policy makers (for example, the Centers for Medicare & Medicaid Services) 16 Centers for Medicare & Medicaid Services, “Medicaid program; establishing minimum standards in Medicaid state drug utilization review (DUR) and supporting value-based purchasing (VBP) for drugs covered in Medicaid, revising Medicaid drug rebate and third party liability (TPL) requirements,” Federal Register , June 19, 2020, Volume 85, Number 119, p. 37286, govinfo.gov. are considering innovative models that include value-based arrangements (outcomes-based pricing, annuity pricing, subscription pricing) to support flexibility around these new modalities.
Innovations also are accelerating in pharmaceutical distribution and delivery. Non-traditional players have entered the direct-to-consumer pharmacy space to improve efficiency and reimagine customer experience, including non-healthcare players such as Amazon (through its acquisition of PillPack in 2018) and, increasingly, traditional healthcare players as well, such as UnitedHealth Group (through its acquisition of DivvyDose in September 2020). COVID-19 has further accelerated innovation in patient experience and new models of drug delivery, with growth in tele-prescribing, 17 McKinsey COVID-19 Consumer Survey conducted June 8, 2020 and July 14, 2020. a continued shift toward delivery of pharmaceutical care at home, and the emergence of digital tools to help manage pharmaceutical care. Select providers have also begun to expand in-home offerings (for example, to include oncology treatments), shifting the care delivery paradigm toward home-first models.
A range of new models to better integrate pharmaceutical and medical care and management are emerging. Payers, particularly those with in-house pharmacy benefit managers, are using access to data on both the medical and pharmacy benefit to develop distinctive insights and better coordinate across pharmacy and medical care. Technology providers, together with a range of both traditional and non-traditional healthcare players, are working to integrate medical and pharmaceutical care in more convenient settings, such as the home, through access to real-time adherence monitoring and interventions. These players have an opportunity to access a broad range of comprehensive data, and advanced analytics can be leveraged to more effectively personalize and target care. Such an approach may necessitate cross-segment partnerships, acquisitions, and/or alliances to effectively integrate the many components required to deliver integrated, personalized, and higher-value care.
Creating and capturing new value
These materials are being provided on an accelerated basis in response to the COVID-19 crisis. These materials reflect general insight based on currently available information, which has not been independently verified and is inherently uncertain. Future results may differ materially from any statements of expectation, forecasts or projections. These materials are not a guarantee of results and cannot be relied upon. These materials do not constitute legal, medical, policy, or other regulated advice and do not contain all the information needed to determine a future course of action. Given the uncertainty surrounding COVID-19, these materials are provided “as is” solely for information purposes without any representation or warranty, and all liability is expressly disclaimed. References to specific products or organizations are solely for illustration and do not constitute any endorsement or recommendation. The recipient remains solely responsible for all decisions, use of these materials, and compliance with applicable laws, rules, regulations, and standards. Consider seeking advice of legal and other relevant certified/licensed experts prior to taking any specific steps.
Before the COVID-19 pandemic, our research indicated that profits for healthcare organizations were expected to be harder to earn than they have been in the recent past, which has been made even more difficult by COVID-19. New entrants and incumbents who can reimagine their business models have a chance to find ways to innovate to improve healthcare and therefore earn superior returns. The opportunity for incumbents who can reimagine their business models and new entrants is substantial.
Institutions will be expected to do more than align with growth segments of healthcare. The ability to innovate at scale and with speed is expected to be a differentiator. Senior leaders can consider five important questions:
- How does my business model need to change to create value in the future healthcare world? What are my endowments that will allow me to succeed?
- How does my resource (for example, capital and talent) allocation approach need to change to ensure the future business model is resourced differentially compared with the legacy business?
- How do I need to rewire my organization to design it for speed? 18 De Smet A, Pacthod D, Relyea C, and Sternfels B, “ Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era ,” June 26, 2020, McKinsey.com.
- How should I construct an innovation model that rapidly accesses the broader market for innovation and adapts it to my business model? What ecosystem of partners will I need? How does my acquisition, partnership, and alliances approach need to adapt to deliver this rapid innovation?
- How do I prepare my broader organization to adopt and scale new innovations? Are my operating processes and technology platforms able to move quickly in scaling innovations?
There is no question that the next few years in healthcare are expected to require innovation and fresh perspectives. Yet healthcare stakeholders have never hesitated to rise to the occasion in a quest to deliver innovative, quality care that benefits everyone. Rewiring organizations for speed and efficiency, adapting to an ecosystem model, and scaling innovations to deliver meaningful changes are only some of the ways that helping both healthcare players and patients is possible.
Emily Clark is an associate partner in the Stamford office. Shubham Singhal , a senior partner in McKinsey’s Detroit office, is the global leader of the Healthcare, Public Sector and Social Sector practices. Kyle Weber is a partner in the Chicago office.
The authors would like to thank Ismail Aijazuddin, Naman Bansal, Zachary Greenberg, Rob May, Neha Patel, and Alex Sozdatelev for their contributions to this article.
This article was edited by Elizabeth Newman, an executive editor in the Chicago office.
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How to Write a Business Plan for Healthcare
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How to Start a Financial Services Business
Example of a medical transportation business plan, how do i start a home business caring for elderly people.
- How to Create an Audit Template for a Client Account Review
- How to Get Federal Funding for a Clinic Start-Up
Writing a business plan for a healthcare involves preparing a document that outlines the services you plan to provide and how you intend to run your company. Health care businesses usually deal with reimbursement, fee schedules, billing systems, managed care contracts and operational issues. By describing how your company handles these challenges, you can prove to potential investors that your business strategy is sound and worthy of their investment.
Available Internet Resources
Use the resources provided by websites, such as the Business.gov and the Small Business Administration Small Business Planner websites, to get started writing your health care business plan. Use the self-assessment tool provided by the Small Business Administration website as well as other resources, such as free online courses, access to online mentoring and templates.
Description of Your Health Care Business
Write a description of your health care business. For example, list how your service offers elderly or disabled clients non-medical support at home. If you plan to purchase and run a franchise operation, the parent company typically provides information and training that describes the business.
For example, urgent care center businesses typically provide care by a certified physician, on-site lab services, prescription services and extended hours. Describe the skills and experience of your staff, such as technicians.
Marketing Strategy and Competitive Analysis
Use resources, such as the Plunkett Research website, to identify the industry outlook and trends in the health care industry. Identify your competitors. Analyze their strengths and weaknesses. Prepare your own promotional campaigns, which could mean describing your plans to develop a website to advertise your services or conduct an email marketing campaign to attract new customers.
Describe your community and how you intend to obtain referrals, such as making connections with doctors and hospital administrative personnel. These health care professionals frequently refer patients requiring home health care to local reputable agencies providing quality service to discharged patients.
Organization and Management
Add a section describing how you intend to organize your health care business. List the software programs you intend to use for charting and billing. Establish a mechanism for receiving payment and obtaining reimbursement for services. List the licenses required to operate a health care business in your state, using the resources provided by the Business.gov website.
Ensure that you meet the guidelines for providing health care services and that your services can be reimbursed by Medicare, Medicaid and private insurance.
Financial and Strategic Goals
Describe how you plan to finance your company and specify a multi-year plan. For example, state the number of patients you hope to serve by the end of the first year. Classify these patients by type, such as home health care or personal injury cases. Set success criteria, such as 80 percent customer satisfaction as reported by follow-up surveys you conduct with clients.
Use the resources provided by the Business.gov website to pay your taxes and ensure you adhere to all the required regulations.
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Tara Duggan is a Project Management Professional (PMP) specializing in knowledge management and instructional design. For over 25 years she has developed quality training materials for a variety of products and services supporting such companies as Digital Equipment Corporation, Compaq and HP. Her freelance work is published on various websites.
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Strategic Planning In Healthcare: Models, Examples & Benefits
By RisingMax
June 28, 2023
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A healthcare organization's strategic plan caters to identifying the necessary actions that need to streamline the complex process of management. Undoubtedly, strategic planning in healthcare is a daunting task and requires close monitoring. Various areas that need attention are:
- Healthcare services and facilities
- Medical facilities, equipment, and hospital supplies
- Human resources
- Information management
- Medical records
- Patient services
- Discharge lounge
The above areas cannot be managed manually and need a modern solution in the form of software that can streamline processes. Seek a solution that can make healthcare strategic planning a cakewalk. Get your free quote!
For the most part, the healthcare business is too complicated and perplexing for most people to comprehend. Because of technical developments or political mandates, it is constantly evolving. It's becoming increasingly crucial to plan for your healthcare organization's success. Your company can better prepare for the unknown incidents by planning in healthcare for the future. Solid strategic planning in healthcare benefits all levels of your company, no matter how big or little it is.
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What is strategic planning in healthcare.
Healthcare strategic planning is setting objectives and goals for where the organization wants to go in the long run. Healthcare organizations like hospitals, clinics, and private practices must engage in this crucial activity to ensure that their services are effective, efficient, and sustainable in the face of constant shifts in the healthcare environment.
In order for your company to prosper, strategic planning is essential. Understanding how your company works is crucial to developing a successful strategic plan for the overall healthcare system.
You may need to examine your organization's hierarchy from time to time. Determining your company's goals and charting a course to attain them inspires your entire team to succeed with you and understand healthcare strategic planning.
Understanding The Strategic Planning Of Healthcare Organizations
Strategic planning in healthcare organizations entails laying out the particular procedures that must be taken to achieve specific objectives.
While there are various types and levels of strategy, the goal of all strategies is to align an organization's actions with its declared mission or values.
Organizations are increasingly needing to re-calibrate their healthcare plans to fit current market trends and evolving patient-care techniques.
Any professional interested in learning more about the inner workings of healthcare organizations should be aware of the various sorts of tactics employed in the field, as well as their significance in ensuring an organization's success.
We hope now you have an idea about what is a strategic plan in healthcare. Let’s get into depth to learn more about strategic planning in hospitals and examples of strategic goals in healthcare.
Strategic Planning For the Future
“You may not be able to control the future, but health care strategic planning may define a direction for your practice and optimize your options for affecting your environment,” according to a paper published in the Journal of Oncology Practice.
The strategic planning process in healthcare comprises taking proactive actions toward a goal rather than simply dealing with problems as they emerge.
Healthcare strategy is critical to an organization's long-term performance because it provides the framework for making daily decisions that are in line with its goals.
Healthcare Strategy Planning At Different Levels
Healthcare strategies differ in nature (prospective or emergent), as well as organizational level, according to the American College of Healthcare Executives (ACHE) (corporate, business, or functional).
1. Types Of Strategies
Most companies, regardless of their size or mission, use some type of strategy to achieve their long-term objectives. Organizations use two different sorts of strategies: prospective and emergent.
Strategy For The Future: The majority of large healthcare organizations create detailed plans to address future concerns that may affect their facilities and the healthcare industry as a whole. These companies must concentrate on developing strategies that anticipate future resource requirements, such as money and manpower. Prospective strategy is the phrase for this form of long-term strategic planning in healthcare organizations. Prospective policies should also allow for flexibility in the event of unanticipated healthcare changes. For setting a healthcare strategy example, it should be developed on an anticipated nursing shortage in the coming years, but the shortage turns out to be less severe than expected, a flexible strategy would contain a plan for reallocating resources to other areas.
Emergent Techniques: Emergent strategies entail a retrospective examination of past events in order to make better decisions in the future. Healthcare market fluctuations can result from events such as the installation of new healthcare policies, swings in prescription drug pricing, and outbreaks of epidemic diseases, all of which require providers to experiment and adapt on a regular basis. Emergent strategy organizations must be exceptionally adaptable in order to re-evaluate internal strategies and fast re-calibrate to better suit current market trends. Many providers examine their competitors' strategies and apply tactics that appear to be successful for other industry leaders.
2. Organizational Levels Of Strategy
There are numerous strategic planning in healthcare organizations, in addition to prospective and emergent strategy approaches. Corporate, business, and functional levels are frequently used to split organizational tactics.
Corporate-Level Strategy: A board of directors, executive leaders, and stakeholders are frequently involved at this level of planning. The corporate level oversees healthcare strategy for the entire organization, with a focus on defining mission and big-picture goals like fund allocation and business deals, as the highest layer of the decision-making process.
Business-Level Strategy: Specific product lines are prioritized at this level of strategy. Managers have the authority to design strategies depending on the demands of their instructions, and business-level healthcare strategic planning focuses on projects in development. Managers integrate corporate directives and intentions into actionable strategies for specific projects and employees.
Functional-Level Strategy: The functional level, which supports the corporate and business levels, is the third tier in an organization's strategic approach. At this level, the emphasis is on the company's final products or services. To better connect products and services with the company's client base, a functional-level strategy incorporates research, marketing, production, and distribution. Managers at all levels must examine how their plans will affect individuals throughout the organization while formulating strategies.
For example, a strategy targeted at enhancing healthcare services during a facility's development should take into account the additional hours that current employees may be required to work before new professionals can be hired.
Similarly, if administrators want to devote additional resources to a certain department at a healthcare facility, the strategy must consider how resource reductions would affect other departments. Information should ideally flow from the top down to the bottom up, with the final product fulfilling all objectives and driving business success.
3. Developing Strategies With Advanced Education
Healthcare strategy in organizations aids medical institutions in achieving their business goals while maintaining the highest level of patient care. Professionals who want to learn more about healthcare plans so they can assess, devise, and implement them may need more than a bachelor's degree.
To effectively manage an entire facility, clinic, or department, healthcare administrators or executives must have a thorough understanding of strategic planning models in healthcare.
A graduate degree, such as a Master of Science in Health Administration from Regis College, will enable professionals to add new abilities to their previous foundation of experience, allowing them to integrate healthcare strategic planning models.
Why Is Strategic Planning Important In Healthcare?
Wondering to know why strategic planning is important in healthcare.With each passing day, a new technology is taking over the market and the healthcare sector should be on its toes for this. Let us understand with some factors.
Improve Communication Between All Chains
It's easy for departments at all levels to lose track of what's going on. Employees and stakeholders alike want to make sure that your company has a long-term future.
They want to know where your company is going and how you plan to get there. Healthcare strategic planning models can help you generate clarity and improve communication.
The primary concerns, your organization's vision, and goals, and the steps to get there should all be addressed in your strategic plan. Your employees and stakeholders will have more trust and confidence in your company.
Creating And Communicating A Vision
With this in mind, you may have a positive impact at all levels of your company. Employees will be dedicated and driven to assist you in realizing your goals. Stakeholders will be able to make prudent financial decisions with the confidence and clarity they require.
Strategic planning in healthcare that is well-developed, implemented, and communicated may assist each of your employees in carrying out your long-term goal for a prosperous future.
Increased Employee Motivation And Engagement
Every one of your employees wishes to be noticed and heard. Recognition from their superiors can have a significant impact on their productivity, engagement, and safety management. Every employee wishes to be given the authority to make decisions that will benefit the company.
This also encourages them to go above and beyond the job description or performance evaluation's minimal acceptable requirements. Employees will be unmotivated to develop themselves if their employer has a clear goal and a well-executed game plan.
Authority And Transformational Leadership
Transformational leadership is a style of management that motivates employees to work more and achieve greater results. It contains strategies that have been recognized in the literature on organizational behavior.
Transformational leaders have the ability to properly express their organization's goal, believe in their staff, and achieve high levels of performance. Strategic management requires you to help your staff understand how their positions can contribute to your company's purpose and vision.
Increase Teamwork And Collaboration
In order to provide high-quality healthcare, teamwork, and cooperation are vital. Employees must collaborate in order for your company to succeed.
Every healthcare industry needs to work together to improve its performance and service. In the healthcare industry, effective strategic planning models in healthcare can bring your employees together to produce high-quality care, excellent customer service, and enhanced productivity.
Before sharing your healthcare strategic planning with your staff, give it some thought. A well-thought-out and implemented strategic plan can help to promote teamwork, performance responsibility, and employee engagement. You may swiftly attain your organization's long-term goals if all levels work together in harmony.
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More Benefits Of Strategic Planning In Healthcare
The four major benefits of strategic planning in healthcare are:
- Proactiveness
- Increases efficiency
- Market share & profitability
- Reliable
Proactiveness
Healthcare organizations can become proactive rather than reactive with the aid of strategic planning. Strategic planning allows providers to foresee negative situations well in advance of them and take the appropriate precautions.
Boost Performance
For healthcare organizations, having a strategic planning process in place serves as a blueprint for aligning operational actions with established goals. As a result, operational efficiency is increased. It directs management conversations and decision-making when assessing resource and budget requirements to meet the primary objectives.
Market Share & Profitability
Strategic planning provides organizations with useful information about market trends, consumer categories, and healthcare product and service offers that might affect their success. Growing profitability and market share will be facilitated by a targeted and well-planned approach to transforming all sales and marketing activities into the best results.
Healthcare organizations that lack a solid foundation, concentration, and foresight will find it difficult to ride the next wave due to the industry's high level of dynamicity. Healthcare organizations that utilize strategic planning are more focused on their goals and methods for achieving them.
Let’s see some of the advantages of strategic planning models in healthcare are various, owing to the fact that healthcare planning is made up of many different elements. Hospitals and healthcare organizations, like most businesses, operate on multiple levels. Health systems must plan for the future in a variety of ways, from patient care to financing.
Strategic planning, unlike typical plans, considers what is to come for every area of the company, including anticipated changes in all departments.
When looking at a company's productivity, it's easy to understand how important strategic planning is in healthcare. Most organizations assume they are operating at maximum efficiency; nevertheless, a thorough examination of productivity can reveal areas where improvements can be made and more specific strategies can be established.
The following are some of the important areas where the strategic planning process in healthcare organizations can make a substantial difference:
- The Workplace Environment
- Objectives and Goals
- Budgeting for Operations
- Decisions on Service Lines
- Risk Assessment and Management
- Capital Projections
- Accounting for Costs
- Long-Term Forecasting
What Qualifies As Good Examples Of Strategic Planning In Healthcare?
Many businesses are seeking assistance, looking for a sample strategic plan to utilize as a benchmark against which their own plans can be measured. Strategic plans, on the other hand, can take many different forms, shapes, and sizes; they are not a “one-size-fits-all” document.
Healthcare strategic planning models with goals, objectives, strategies, and tactics exist alongside more complicated plan structures with several levels and layers.
The level of responsibility you want to create, the time schedule for implementing the plan, and the culture of your business all influence how well-developed your plan should be. You'll see an example of a strategic plan in this post, which is very prevalent among firms today.
Examples Of Strategic Planning In Healthcare: The Foundation
At a bare minimum, strategic and operational plans include three layers, each of which serves a specific purpose. To demonstrate the relationship from the bottom-up, these are listed in reverse order as they appear in a plan:
Tactics are task assignments that must be completed on a one-to-one basis. The strategies are made up of these action elements. For example, if your client satisfaction strategy focuses on an annual client event, you'll need to execute a number of tasks before the event can take place. These are the methods, which have due dates, and deliverables, and are delegated to specific persons to carry out.
A name is required for the collection of tactics, and this name is the strategy. The strategy's name serves as a focal point for something specific, while the strategy itself houses the individual approaches. As a result, strategies are the broad, action-oriented items that we use to accomplish our goals.
The client event technique in this case is intended to boost overall client happiness. Additional client satisfaction techniques may exist, and each of these additional strategies will have its own set of approaches.
Objectives are measurable and quantifiable goals that address the questions of how much and when. You can't improve what you don't measure, according to an old adage. As a result, plans without quantifiable objectives are little more than task lists.
- Baseline performance, targeted performance, and a deadline for accomplishing the goal are all examples of objectives.
- Objectives must be included in any examples of strategic planning in healthcare because they are the foundation for planning.
Examples Of Strategic Planning In Healthcare: Strategic Themes And Goals
While objectives, plans, and tactics are essential examples of strategic goals in healthcare, they are not the only ones. Many plans are more comprehensive and include extra hierarchy levels.
Strategic themes and goals are the levels that come before objectives and are commonly referred to as strategic themes and goals. As a result, a properly completed plan might look like the healthcare strategic planning sample below:
Quality, Safety, People, Customers, Service, Finance, and Growth are examples of one- to three-word affinity group headers used to compartmentalize strategic and operational strategies. Four to six categories tend to be the most prevalent among companies that use strategic themes.
Examples Of Strategic Goals In Healthcare
These are broad statements that help the organization's vision statement become more meaningful and time-bound. Goal statements are used to translate the vision to specific strategic themes if strategic themes are also utilized.
The American Heart Association (AHA) issued research in which they discussed the significance of supporting laws that promote heart health. For example, they advocated for better school nutrition standards and more access to safe locations for exercise, among other measures that encourage healthy eating and physical activity.
Objectives
Like Goals, Objectives are quantifiable items that measure the effectiveness of your strategic plan and, ultimately, your goals. They should track how you intend to improve, decrease, or maintain key performance indicators that are crucial to the goal's accomplishment.
Strategies determine how your strategic plan will be executed and, eventually, move the needle on Objectives, based on your grasp of success measurements. Initiatives, projects, and programs are terms used in some organizations to describe strategies. Strategies, whichever name is used, lay the groundwork for the actual labor that will make up the plan.
A strategy must be appropriately broken down in order to successfully execute a strategic plan. These are, in many circumstances, your strategies.
Tactics are the key elements of your strategy that will help you track your progress toward accomplishment. Tactics are milestones or significant deliverables of the strategy, not quick jobs that may be performed by checking a box.
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The Most Cutting-Edge Questions In All Healthcare Strategic Planning
Despite the fact that every business has a plan that is personalized to its specific aims and objectives, hospitals and healthcare systems should ask themselves a few key questions before embarking on knowing strategic planning models in healthcare.
What Are The Organization's Financial Objectives
Every organization has its own set of financial objectives. Focusing on precise, attainable financial goals for the future of any organization's finances is critical to ensuring that the healthcare strategic planning models are long-term beneficial.
In order to make strategic decisions, it is necessary to consider the financial ramifications of the changes that come with new plans for the future.
Prior to strategic planning, set targets to ensure that these plans will have a good impact on the firm in the future.
Where Can The Company Expand?
Just because strategic planning models in healthcare are in place does not mean it is as effective as they could be. Strategic plans that are effective take into account where a firm can expand.
Growth is often impossible in one area but attainable in another. Before beginning to plan, healthcare organizations should consider the financial benefits of expansion through new locations, access points, and services.
What Are The Needs Of The People?
Hospitals and healthcare systems are designed to meet the needs of patients in whatever way they require. Although there will always be a significant demand for healthcare facilities, the way in which these institutions are needed may alter.
In order to plan forward for what patients may require, it is necessary to understand future market trends and industry orientations.
How Can The Company Close The Gap In Terms Of Accomplishing Key Success Factors?
Many times, healthcare organizations recognize the success characteristics that are required to carry out the institution's mission, but they struggle to put them into practice in day-to-day operations. So that success can be reached efficiently, strategic planning should include a strategy to carry out these criteria.
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How To Implement Effective Strategic Planning In Healthcare
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Are you feeling overwhelmed and uncertain about the future?
According to Deloitte , “The global healthcare sector stands at a crossroads in 2024, poised for profound changes. The future of global healthcare is likely to be shaped by innovation, sustainability, social care integration, cost management, and workforce adaptation.”
If you work in the healthcare industry, you know firsthand how quickly things can change. As technology advances, regulations change, the population ages, and new diseases evolve at lightning speed, it can be tough to keep up.
That's why implementing an effective strategic planning process that is execution-ready is so important. It's a tool that helps healthcare organizations prioritize their goals, anticipate potential roadblocks, and quickly adapt to seize new opportunities.
Whether you’re a manager or a top-level executive, this article will provide valuable insights and guidance to help you develop and execute a successful strategic plan.
We'll also show you how Cascade can help you successfully plan, execute, and track your healthcare strategy in one centralized location. Plus, as a bonus, we'll provide a free strategic planning template prefilled with healthcare examples to help you get started.
So, let's dive in and discover how strategic planning can help you navigate the changing landscape of the healthcare environment and achieve your organization’s goals.
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Strategic Planning In Healthcare: What Is It?
Strategic planning in healthcare helps you set business goals and decide how to allocate resources to achieve these goals. It involves looking at your organization’s internal and external environments using established strategic tools .
Doing so lets you develop a strategic plan outlining what you want to achieve and an action plan to get there. Think of it like building a roadmap that helps you get to where you want to go.
With a healthcare strategy, you’ll have a framework for improved decision-making that is aligned with your overarching business objectives . This ensures you’re moving towards your long-term goals and objectives, even when making short-term decisions.
Examples Of Strategic Planning In Healthcare
Strategic planning can significantly enhance the operational efficiency and service quality of healthcare organizations. Here are some specific examples of how you can use strategic planning:
- Boosting Patient Care Quality : Tackle specific challenges like lowering the rates of hospital-acquired infections or enhancing the coordination of patient care. By pinpointing these areas, you can implement targeted improvements that directly benefit patient outcomes.
- Optimizing Staff and Resource Management : Utilize data analytics to make evidence-based decisions regarding staffing and resource distribution. This approach ensures that your workforce is optimally aligned with patient needs, and your resource allocation is efficient, contributing to a more effective healthcare system.
- Exploring New Avenues for Growth : Seize opportunities to expand your services and reach by integrating telehealth, offering home healthcare solutions, or developing specialized programs tailored to unique patient demographics. Such strategic initiatives can open new revenue streams and meet the evolving needs of your community.
- Improving Financial Health : Identify strategies for cost reduction and revenue enhancement, such as streamlining supply chain operations or venturing into untapped markets. These measures can bolster your organization's financial stability, allowing for reinvestment in key areas.
- Fostering Partnerships for Comprehensive Care : Establish collaborations with community organizations, other healthcare providers and facilities, or specialists to broaden your service offerings and improve patient care. Partnerships can lead to a more integrated care model that addresses a wide range of patient needs.
📚 Recommended read: Strategy study: The Ramsay Health Care Growth Study
Healthcare Strategic Planning: Why Is It Important?
Strategic planning in healthcare is more than just setting goals; it's about ensuring your organization is on the right track for success.
These are some of the countless benefits of strategic planning in healthcare:
Boost profitability
Strategic planning helps healthcare leaders improve their organization’s financial performance and achieve long-term sustainability. It's about using resources wisely, cutting costs where possible, and smoothing out inefficiencies by streamlining processes and creating better strategic initiatives to increase patient volume and improve experience.
Additionally, strategic planning plays a crucial role in uncovering new opportunities for revenue, enabling healthcare organizations to diversify their sources of income.
Enhance collaboration and engagement
Strategic planning in healthcare goes beyond identifying operational challenges; it's about bringing to light the issues that affect our teams daily, such as the strain of long work hours. When staff feel overburdened, their motivation dips, leading to decreased engagement and higher turnover rates.
By articulating a clear vision for the organization and actively involving employees in the strategic planning process, we can significantly boost morale. It's about making sure everyone feels seen and heard, understanding that their contributions are valued. This inclusive approach not only enhances team engagement but also encourages stronger retention.
Strategic planning also fosters collaboration across different teams and business units within the healthcare organization. By working together towards common goals, departments can better align their efforts, share insights, and support each other in achieving the organization's objectives. This synergy not only improves efficiency but also builds a more cohesive and motivated workforce.
💡Pro Tip : Ensure your vision statement is crystal clear organization-wide for unified strategic alignment.
Increase efficiency
Strategic planning helps you align your operational activities with the organization’s goals. This ensures that every action contributes toward achieving your business objectives. Strategic planning also empowers healthcare leaders, providing them with the insights needed to make resource allocation decisions wisely in the dynamic healthcare landscape.
Improve communication
A good strategic plan should be shared with all stakeholders so they can form a clear picture of how their actions affect a future outcome. This transparency promotes better communication within the organization, as employees align their efforts towards achieving a common goal. The end result is a more collaborative environment where the collective focus is on attaining shared objectives.
Drive alignment and strategy execution
Involving key stakeholders in the strategic planning process is crucial for aligning your healthcare organization's goals with its overarching strategy. This ensures that everyone, from top management to frontline staff, is aligned and moving in the same direction. Achieving this level of strategic harmony across the organization reduces confusion and clarifies the collective mission, paving the way for successful strategy implementation. This collaborative approach not only fosters a unified effort towards common objectives but also enhances the overall effectiveness of the organization's strategic initiatives.
💡Pro Tip : Ensure you balance a top-down and bottom-up for enhanced vertical and horizontal strategic alignment .
5 Strategic Planning Tools For Your Healthcare Strategy
Here’s a list of strategy tools and frameworks that can help you identify gaps in your healthcare strategy, prioritize strategic initiatives, and develop business goals:
1. Balanced Scorecard (BSC)
The Balanced Scorecard translates strategic goals into measurable indicators or metrics to help you balance four critical organizational perspectives: financial, customer, internal processes, and organizational capacity.
Using this tool ensures that your organization aligns with your strategic objectives and that you’re measuring the right KPIs to track progress toward those objectives.
2. Objectives and key results (OKR)
The OKR framework sets specific and measurable objectives and tracks progress toward them using key results. Objectives should be ambitious and challenging but achievable. Meanwhile, key results should be specific and measurable and have defined target values.
This framework promotes accountability and transparency since everyone works toward the same goals.
3. Political, economic, sociocultural, and technological (PEST) analysis
PEST analysis helps you understand the external factors that may impact your operations. By using this tool, you can identify potential opportunities and threats so you can anticipate and respond to changes in the external environment.
For example, PEST can help you identify a shift toward consumer-driven healthcare. Consequently, this enables you to invest in telemedicine and other digital healthcare technologies to meet patients’ changing needs.
4. Strengths, weaknesses, opportunities, threats (SWOT) analysis
SWOT analysis is a simple yet powerful way to identify the internal and external factors that can impact your organization’s success.
For example, if you discover that staffing levels are a weakness, you may decide to invest in staff training or recruitment programs. Or, if you identify an opportunity to expand into a new service area, you may choose to allocate resources for the expansion.
By leveraging your organization's strengths through this analysis, you can craft targeted strategies that address challenges and capitalize on opportunities for sustained success.
5. Theory of change (TOC)
The theory of change is a framework that helps your organization articulate the desired outcomes and specific steps you need to take to achieve them. This model provides a more structured approach to achieving goals by identifying the inputs required for success.
For example, if you want to reduce hospital readmissions, you may use the theory of change to identify the inputs needed (staff training on patient education), activities needed (discharge planning), and desired outcomes (reduction in hospital readmissions). By mapping out this logic model and continuously evaluating the initiative, your organization can adjust its activities to achieve your desired outcomes and improve the quality of care for your patients.
📚 Recommended read: 26 Best Strategy Tools For Your Organization in 2024
How To Implement A Strategic Plan In Healthcare
Implementing a strategic healthcare plan can be challenging. Follow this step-by-step framework to help you get started.
💡Pro Tip : Streamline your healthcare strategy planning, execution, and tracking with Cascade Strategy Execution Platform . It serves as a centralized hub for enhanced decision-making and accelerated results. Unsure of where to begin? Kickstart your strategic planning process with our complimentary pre-filled healthcare strategy template .
1. Establish goals
The first step is to establish clear and measurable goals. These goals should align with your organization’s mission and vision , and be SMART (specific, measurable, achievable, relevant, and time-bound).
Examples of goals in healthcare include reducing hospital readmission rates, improving patient satisfaction scores, or increasing revenue.
👉🏻How Cascade can help? With Cascade's Planner feature , you can simplify the process of constructing your strategies. It provides a structured approach, making it effortless to break down complex high-level initiatives into actionable outcomes.
2. Set milestones and measure progress
Once you establish goals, it’s important to set milestones and measure progress regularly. This allows your organization to track its progress toward achieving its goals, identify areas for improvement, and make necessary adjustments.
Make sure to establish a timeframe for your milestones, whether it's monthly, quarterly, or yearly, depending on the nature of your goal.
👉🏻How Cascade can help? Cascade's Metrics Library offers a centralized repository for your business metrics, allowing you to seamlessly link these metrics to your plan's Key Performance Indicators (KPIs). Integrating core metrics becomes a breeze, whether they originate from your business systems, data lakes, Business Intelligence (BI) tools, or spreadsheets.
3. Develop an execution plan
To successfully achieve your goals, it is essential to have a comprehensive execution plan . This plan should detail all the necessary activities and strategies that will guide you toward success.
An effective execution plan must include a well-structured timeline, a checklist of required resources, and clearly defined responsibilities for each action or project.
👉🏻How Cascade can help? Cascade's Alignment Maps feature empowers you to monitor the interactions between activities by documenting and examining dependencies, blockers, and risks that might arise during your strategic journey. This ensures a smooth path to successful strategy execution.
4. Monitor performance and adapt as needed
Once the plan is in motion, you should monitor its performance regularly and make necessary adjustments when you notice deviations. You must be flexible and willing to change your execution plan as needed.
For example, if the original plan doesn't turn out to be effective, it's important to quickly reevaluate and come up with an alternative strategy.
👉🏻How Cascade can help? Cascade's Dashboards & Reports allow you to gain accurate, real-time insights into your strategic performance, enabling you to easily share this information with your stakeholders.
5. Communicate regularly
Communication is key in implementing a strategic plan . Each stakeholder should understand their role and how their work fits into the big picture. You must inform them of progress toward the established goals, any changes to the execution plan, and other relevant information. This will help you build trust and get buy-in, which are essential for successful strategy execution.
6. Celebrate successes
Celebrating successes helps maintain motivation and momentum. It shows staff and stakeholders that their hard work is paying off. This can be done in various ways, such as recognizing staff members who have contributed significantly to the plan or sharing positive feedback from patients.
Positive reinforcement will motivate employees to keep striving to achieve your organization’s objectives.
📚 Recommended read: How Parker University uses Cascade to help them hold a position as a leader in Patient-Centric Healthcare
Case Study: Perley Health’s Strategic Ambition
Perley Health, a healthcare organization dedicated to improving care for veterans and seniors, faced some significant challenges in their strategic planning and execution processes. These challenges included making assumptions about the stability of the external environment in their long-term planning, inconsistency in how different departments planned and reported, a lack of clarity in how they measured success, and a somewhat fragmented approach to strategic and departmental plans.
Perley Health's journey toward strategic improvement began with the adoption of Cascade, a pivotal decision for them. Initially, they used Cascade to bring together all their strategic plans and initiatives, which brought about greater transparency and alignment with their organizational priorities. This not only made resource allocation more efficient but also provided a standardized way to measure results, making it easier to discuss return on investment (ROI) and track progress systematically.
Empowered by Cascade's capabilities, the management and various teams could now propose forward-thinking initiatives with a clear view of how they aligned with strategic priorities. This sped up decision-making and made funding allocation more precise.
With the right tools in place, Perley Health is now confidently working towards their goal of doubling senior care and establishing themselves as a center of excellence in frailty-informed care. They keep a close eye on their progress using the Cascade platform.
This case underscores the critical importance of strategic planning in navigating the complexities of healthcare, demonstrating a clear path to achieving and surpassing organizational objectives.
📚 Read the complete Perley Health Case Study!
Execute Your Healthcare Strategy With Cascade 🚀
Take the guesswork out of strategic planning in healthcare. With Cascade , you can easily create an execution plan customized to your goals and objectives, including assigning initiatives and setting deadlines for each team member involved.
Take a look at this example of a healthcare strategic plan in Cascade:
![business plan for healthcare organization healthcare strategy plan in cascade](https://cdn.prod.website-files.com/63f6e52346a353ca1752970e/643e2e910c6754beedc58f2d_healthcare%2520template.png)
You can also leverage easy-to-use dashboards and visualizations that provide real-time data on your progress toward your goals.
Here’s an example of a real-time dashboard:
![business plan for healthcare organization healthcare kpi dashboard cascade](https://cdn.prod.website-files.com/63f6e52346a353ca1752970e/6452b402823248ce0fcba53b_Healthcare%20KPIs%20dashboard.png)
Cascade lets you collaborate with your team, assign responsibilities, and communicate progress, ensuring everyone is aligned and working toward the same objectives.
Whether you run a small clinic or a large healthcare organization, Cascade will help you make strategic planning in healthcare a breeze. Learn more about Cascade for healthcare !
Looking for a tailored tour of our platform? Book a demo with one of our Strategy Execution experts.
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StatPearls [Internet]. Treasure Island (FL): StatPearls Publishing; 2024 Jan-.
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StatPearls [Internet].
Healthcare business budgeting.
Rui Zhang ; Julie Bohlen .
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Last Update: January 7, 2023 .
- Definition/Introduction
Complex organizations are tasked with utilizing limited resources to create goods and services; a healthcare organization is no exception. The resources that serve as inputs to a healthcare organization include clinical and administrative staff, medical supplies and equipment, and government and private health insurance. The goods and services that serve as outputs of a healthcare organization include patient care outcomes, patient satisfaction, and community and population health.
Therefore, whether it is the director of a national health system (e.g., National Health Services in the UK), the CEO of an academic hospital (e.g., the Mayo Clinic), or the manager of a local urgent care center, they must understand how to design, modify, and implement a business budget. [1] A budgeting system is typically composed of five components. [2] These are the following:
- Budget objectives : This component is the why behind a budgeting system and includes overarching organizational goals and specific programming efforts. For example, suppose a local hospital plans to set up a new dialysis center to better serve its patients with dialysis-dependent kidney diseases. In that case, managers should detail how such an initiative would impact next year's budget.
- Capital budget : This component typically includes equipment and infrastructure such as a robotic surgical system, CT/MRI machine, or new off-site clinic office space. Whenever a capital investment is considered, managers should go through a thorough evaluation process to determine whether the net benefit outweighs the net cost over the project's lifespan.
- Statistical projections : This component serves as the weather forecast function of a budgeting system with estimates of the volumes of services and procedures required during a budgetary period. This forecast will not only help with revenue projection but will also help with staffing and resource planning to ensure supply meets the demand.
- Revenue budget : This is the estimated gross revenue from various output streams. For example, an ophthalmology clinic may estimate its gross income by combining revenues from in-office clinical care and operating room surgical care.
- Operating budget : This is the expense side of the budget, composed of personnel salaries, supply and material costs, and administrative overhead. To accurately estimate the total expenses, one must understand the nature of the fees, i.e., fixed cost vs. variable cost.
The capital budget is often a big-ticket item throughout the budgeting process; therefore, it warrants further discussion. As stated above, the capital budget in the healthcare setting includes technologies, equipment, and sometimes physical buildings and facilities, which could require the investment of millions of dollars in any of the categories. Two financial models that could help managers evaluate whether a capital project is worth investing in are the weighted average cost of capital (WACC) and the discounted cash flow (DCF) models. [3] [4]
The WACC model is based on the concept of opportunity cost, computed by plugging in several variables to generate a percentage rate of return. These variables include the cost of capital before tax, the cost of equity, the cost of debt, the corporate tax rate, the value of equity shares, and the market value of debt. [3] After plugging in these variables, the WACC equation will produce a percentage (e.g., 12%) representing the threshold rate of return that a capital investment needs to demonstrate to be profitable. In other words, if a project is estimated to return 5%, the organization will most likely experience a loss on the investment.
The DCF model considers the time value of money by projecting the value of an investment over its lifespan. With this model, the yearly revenue from a project (cash flow) is projected, and each annual revenue projection is then discounted by the interest rate (i.e., the discounted cash flow). All the discounted values are added together to reflect the cumulative current value, and finally, the initial capital investment is subtracted from the cumulative current value. The resulting figure is the net present value (NPV), which could be positive (i.e., resulting in a profit), zero (i.e., resulting in net even), or negative (i.e., experiencing a loss). [4]
Both WACC and DCF only estimate financial rates of return. Sometimes decisions to proceed with certain capital investments are also dictated by non-financial needs such as governmental mandates.
- Issues of Concern
In "Budgeting for Results," Ross writes that instead of viewing budgeting merely as a tool to estimate revenues and expenses, organizations should utilize budgeting as a process to translate organizational values into operational roadmaps. [1]
Further, this process can be completed through joint efforts among senior leadership, mid-level management, and corporate finance departments. Ross discusses the five fundamental budgeting systems as listed below:
- Incremental budget : This budgeting system estimates the total cost of production based on current and historical expenditures. This system adjusts the budget based on the estimated changes in the price of inputs and outputs and the estimated changes in the quantity of the results. The primary focus of the incremental budget is to control the total cost to be within budget. Also known as the fixed or static budget, the incremental budget commonly induces the "use it or lose it" mentality among sub-division managers. For example, the nursing staff of an inpatient unit is allocated an annual budget of $10,000 for all social events; if the team doesn't use all of the $10,00 that year, the remainder will not carry over to the following year. The staff either uses it or loses it.
- Flexible budget : In contrast to the incremental budget, the flexible budget acknowledges that future output could fluctuate; therefore, the budgeted amount could also change. Managers of this budgeting system need to know their operations' fixed and variable costs so the budgeted output can be updated as circumstances evolve. The primary focus of the flexible budget is to control the average cost per unit of output to be within budget. For example, an ophthalmology surgical center newly offers an advanced cataract surgery procedure and thus adjusts its budget based on fluctuating levels of output (i.e., surgical cases).
- Zero-based budget : This budgeting system rejects the assumption that historical expenditures should dictate future budgets. The primary focus of the zero-based budget is to minimize the marginal cost of production, which is measured by changes in total cost over changes in total output. In zero-based budgeting, managers are required to answer three questions: (1) whether a product needs to be produced, (2) how it should be produced, and (3) at what scale it should be produced. In other words, the zero-based budget aims for the optimal product mix, production method, and quantity. For example, an in-house wellness clinic at a large manufacturing company adjusts its product offerings (e.g., physical therapy, weight management, smoking cessation) based on its employees' utilization.
- Program budget : This budgeting system is distinguished by its long-term, multi-department, and top-down approach to budgeting. This budgeting system starts at the executive level of an organization based on overarching objectives, then is passed down to mid-level management to produce department-level budgets. The primary focus of the program budget is to use the budget process to achieve organizational goals. For example, the National Health Service (NHS) in Great Britain allocates funding for its functions of direct medical care, public health endeavors, and medical research based on the organization's priorities in a given budget year.
- Activity-based budget : This budgeting system is the most operationally focused budget. Budget planners examine the step-by-step activities required to produce a specific output and estimate the costs generated from such activities. Activity-based budgeting is the composite summation of the cost associated with each production activity multiplied by the quantity of each production activity. The primary focus of the activity-based budget is to maximize effectiveness, efficiency, and throughput. For example, an outpatient surgical center conducts value stream mapping by illustrating a patient's care experience from initial referral to surgery to post-operative care; the center then estimates the cost associated with each step.
A subset of the activity-based budget is time-driven activity-based costing (TDABC), which is important in the era of value-based care. [5]
In value-based care, healthcare organizations are judged by the outcome of care divided by the cost of delivering the care. Medicare designed prospective payment rates based on diagnostic-related groups (DRGs) in the 1980s for hospital reimbursements. The DRG-based payment system is a version of value-based care in which the cost of care is directly tied to the diagnosis and the severity of the illness. [6]
As a result, TDABC has emerged as an all-encompassing yet relatively efficient cost-accounting method that examines the entire care delivery process. Kaplan and Porter developed the 7-step method of TDABC that examines the care delivery roadmap, incorporates direct and indirect costs, estimates time spent per activity, evaluates capacity cost rate, and ultimately generates the cost of the entire care process. [5] [7]
- Clinical Significance
Individual Level
For individual patients, a well-budgeted healthcare operation can positively impact their care experience, quality, and outcome. In wound care management, 15% of costs are from dressings and materials, 35% are from nursing care time, and 50% are from hospitalization. [8]
If a wound care clinic erroneously increases the budget for dressings and materials but reduces the budget for nursing staff, then this budgetary decision would directly reduce nursing wound care time, worsen wound healing, and ultimately increase hospitalization and associated costs.
Organizational Level
Ross emphasizes that budgeting is an important management tool that enables a healthcare organization to translate its visions into actions. [1] Rather than viewing budgeting as a tedious cost-control mechanism, Ross argues that organizations should evaluate whether their budget reflects their long-term objectives at the executive level, whether the budget process successfully performs and functions at the management level, and whether the process honors the constraints and opportunities at the finance level. A well-budgeted healthcare organization enables buy-in from its employees at all levels.
Community Level
If healthcare budgeting is considered complex for a single organization, one could imagine how interwoven and intricate the process can be for a local government or state. The State of Maryland, for example, has been operating under an all-payer global budget system since 2014, which has led to cost savings and demonstrated collaboration among stakeholders, including hospital leaders, state and federal regulators, and payers. [9]
National Level
At the national level, healthcare budgeting directly impacts access, delivery, staffing, and quality of care. In the United Kingdom, the National Health Service (NHS) is tasked with delivering care to the public. In 2021, the NHS announced that it would add £5.9bn ($8.1bn) to its annual budget to tackle the long waiting time for diagnostic studies and elective medical care. [10] Regardless of the level and scale of budgeting, the same principles mentioned above still apply.
- Nursing, Allied Health, and Interprofessional Team Interventions
Healthcare budgeting is an extensive interprofessional process in any healthcare organization. When performed well, healthcare budgeting invites interdisciplinary participation from clinical staff (e.g., physicians, advanced practitioners, nurses, and pharmacists), operational staff (e.g., clinical engineering, environmental services, and nutrition services), and administrative staff (e.g., executives and managers). Nurse managers play a vital leadership role in budgeting, as evidenced by Baker, Lindholm, and Searle, because they can combine clinical experiences with operational understanding to make sound budgetary decisions. [2] [8]
Given the importance of budgeting to patient care, organizational success, and public health, it is ever more critical for healthcare professionals to understand the fundamental principles of budgeting.
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Disclosure: Rui Zhang declares no relevant financial relationships with ineligible companies.
Disclosure: Julie Bohlen declares no relevant financial relationships with ineligible companies.
This book is distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) ( http://creativecommons.org/licenses/by-nc-nd/4.0/ ), which permits others to distribute the work, provided that the article is not altered or used commercially. You are not required to obtain permission to distribute this article, provided that you credit the author and journal.
- Cite this Page Zhang R, Bohlen J. Healthcare Business Budgeting. [Updated 2023 Jan 7]. In: StatPearls [Internet]. Treasure Island (FL): StatPearls Publishing; 2024 Jan-.
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Integrating Healthcare Revenue and Operating Models to Create a Sustainable Future
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Myriad, simultaneous shifts in health care have many provider organizations looking to retool their revenue models.
Healthcare organizations are contending with myriad changes—including declining government payment, regulatory changes on the state and federal levels, shifting demographics, and changes in payment structure—any one of which could cause dramatic shifts in their revenue models. Taken together, these changes could cause havoc for an organization if not anticipated and navigated correctly. Increasingly, providers are identifying these changes as key factors in a trend toward revenue degradation and significant margin challenges. Beyond creating significant risks, however, the uncertainty around revenue drivers presents providers with an unprecedented opportunity to redefine and shape their revenue models for the years to come.
The forces affecting the healthcare industry across the country are compelling administrative and clinical leaders to make critical strategic, financial and operational decisions with respect to how and where patient care will be delivered in the future and how their organizations will achieve the margins required with a shifting (and often deteriorating) revenue mix. Such trends will increasingly require leaders to consider how their organizations will be paid for patient care services by site of care as well as how they will maintain operating margins.
A provider’s revenue model represents the operating framework that it uses for generating revenues. For providers, the primary source of operating revenue comes from health plans (both public and commercial), and it is more generically referred to as their payer mix by fiscal class.
The complexity of changing rates and shifting volumes and demographics has created increasing uncertainty for provider organizations regarding their current and future revenue models. The revenue model has become even more complex with the introduction of value-based payment and its wide-ranging impact on provider organizations’ overall operating and care delivery models.
Any provider that lacks a well-defined revenue model strategy integrated with clinical operations will almost certainly have difficulty maintaining margins, investing in growth, and sustaining operations. Conversely, a provider that has a well-defined, strategically aligned, and forward-looking revenue model plan in place is in a position to manage future transitions profitably and predictably. Such a plan can empower a health system to maintain or improve margins, invest in strategic growth opportunities, and sustain overall enterprise economics.
Challenges Affecting the Model
From an enterprise perspective, a healthcare organization’s revenue model should have strategic parity with the organization’s operating and clinical care models, combining to represent the organization’s enterprise business model. The high level of variation in this type of model has led to margin management challenges for all types of provider organizations, including hospitals, post-acute care providers, physician practices, and ancillary service providers. These challenges typically arise from one or more of the following organizational factors.
Separate business processes instead of enterprise-level thinking. Organizational operating, clinical care, and revenue models should be aligned in a manner that provides the necessary core “systems thinking” building blocks. An organization that lacks such alignment will be poorly prepared operationally for a dynamic marketplace, in which it must seek to optimize the total cost of care delivery, market growth, and revenue yield across commercial health plans.
Prioritization and sequencing of business model strategy components. The revenue model should be designed to support the organization’s future operating and care delivery models. Other organizational initiatives should be designed and implemented with full consideration of the dynamic nature of the revenue model and how the revenue model will change over the next three to five years.
Revenue portfolio management. In the historical, purely fee-for-service (FFS) payment environment, the general portfolio management strategy to meet margin targets has been to increase charges and negotiate higher payment levels with managed care payers. These historical FFS payer contracting strategies and tactics, however, will continue to become less applicable and sustainable in 2017 and beyond with broader implementation of value-based payment models, market-competitive pressures, and payment model changes implemented by insurers, providers, and product distribution channels. As such, revenue model investments and associated ROI increasingly will be measured by the level of risk-and-return opportunity within each investment or revenue source and across each insurer financial class, as illustrated in the exhibit below.
Third-Party Revenue Model: Optimize Patient Revenues Today and Into the Future
Strategic planning focused on the past. When engaged in an enterprise strategic-planning process, providers should incorporate the most likely and most plausible scenarios for how their revenue model will change in their marketplaces over the next three to five years. Review of past operational, competitive, and financial performance across a largely FFS and volume-driven acute-care-centric business model will be a poor predictor of future performance. To prepare for the future, providers must first understand where, when, and how their revenue model will evolve as well as which sources of revenue are at increased risk and then develop stratagies to mitigate those risks.
Within each major fiscal class and throughout different geographic regions of the country, there will be variations in payment methodologies and payment rules across a revenue model’s top three patient market segments (i.e., managed care, Medicare, and Medicaid). That variation will exist in the Medicaid segment is a given; however, three key questions likely will apply to providers in all three types of third-party insurer agreements:
- What is the organization doing to be accountable for the total cost of care for patients?
- What is the organization doing to improve and sustain quality and patient outcomes?
- What is the organization doing to identify, capture, and deliver better value ?
The answers to these questions will have an impact on overall enterprise revenue model strategies as well as negotiations with managed care insurers. Prior to value-based payment models, addressing these questions with clear and strong initiatives was not a high priority for many providers. But with the emergence of value-based payment models, addressing how an organization will answer these questions has become a strategic imperative for senior leadership.
Although the questions are relatively simple to answer at a high level, executing initiatives based on the answers is extremely complex because successrequires a level of disruptive financial-clinical-operational system transformation. Providers must be proactive in embracing the disruption necessary for business model transformation to a sustainable, value-based business enterprise.
The Enterprise Revenue Model Planning Process
Given the administrative and technical complexity of payment models and rules for both FFS and value-based payment agreements, the enterprise revenue model strategic-planning process must incorporate a range of factors that can affect provider margin management strategies and net operating income. Therefore, it is essential that providers apply the same level of planning discipline to the revenue model planning process as they would in developing strategic-growth or diversification plans, long-range financial plans, capital plans, and operating budgets. The enterprise revenue model planning process can be categorized into three major steps:
- Revenue model strategy formulation
- Tactical game plan development
- Strategy implementation
The exhibit below illustrates the entire enterprise revenue model planning process.
Revenue Model Portfolio Strategy Across Segments Strategy Formulation
As the first step, strategy formulation is key to the success of any revenue model development plan. This process consists of four key steps:
- Performing a root-cause analysis
- Engaging in payment benchmarking
- Undertaking market segment research and market segmentation
- Setting business goals and objectives
Root-cause analysis. Providers today are challenged with several competing narratives on why and how their revenue is changing. For example, an organization may observe that overall revenue growth is stagnating, but executives may formulate significantly different conclusions from the same data on the root cause of the problem. Without clear answers, a senior finance executive cannot make strategic decisions to improve the organization’s financial outlook.
To build a clear and undisputable fact base for responding to changes in their revenue picture, providers must look deeper within their data than ever before in an effort to isolate the key levers and the subdrivers of change. Examples of the latter include market growth, commercial and government payment rates, and denials. This data analysis can provide a new opportunity to develop clear actionable and tactical choices to mitigate revenue challenges (see the exhibit below).
Sample Analysis of Health System Risk by Revenue Source
Benchmarking. To set an appropriate goal and make the case to the insurer as to why a certain rate is deserved, provider senior leadership and managed care executives must understand how their rates compare with the market averages. Organizations can employ two useful methods to approach this fact-based initiative: standard managed care benchmarking and insurer-specific benchmarking.
With standard managed care benchmarking, a provider can determine how its payment rates compare with the prevailing rates within its market or markets. Using data from a large national claims data set as benchmarks can enable a provider to observe relativity of its current contract rates compared to prevailing rates at the market median, market premium, or a custom-defined market threshold.
By contrast, insurer-specific benchmarking to marketwide benchmarks will help support an unbiased fact-based analysis of a provider’s rates compared with market rates among providers and also show the provider’s actual price parity among its insurers. Despite working together on shared savings arrangements, value-based care, and other items, insurers and providers are bound by legal restrictions and competitive interests from sharing actual competitor rates with the other party. Such market-based analyses however, often conducted as a “black box” analysis by an independent third party, can help build trust between insurers and providers to ultimately broker a deal at a mutually agreeable level.
The same types of analytic assessment processes also could be applied for Medicare and Medicaid patient sources of revenue (e.g., a two-sided alternative payment arrangement with Medicare or a risk contract with a managed Medicaid plan).
Market segment research and market segmentation. As is the case with any strategic-planning initiative, providers must gain an in-depth understanding of the market segments that should be targeted for pull-and-push marketing strategies. Within the context of an organization’s revenue model, all providers require, at a minimum, an understanding of the following:
- Clinical services—the range of services offered to managed care, Medicare, and Medicaid patients relative to their care-access and clinical care needs, and the completeness of varied service line offerings (i.e., acute, post-acute, and ambulatory) with respect to covering a complete service line episode of care
- Patient volume—the inpatient, outpatient, and ambulatory service volume growthdrivers for different patient demographics and for each fiscal class, and how these will change over the next three to five years
- Care and payment model innovations—emerging care delivery and payment models in the market that an organization must address to remain competitive and minimize volume, price, product-exclusion, and site-of-care substitution risks, both today and over the next three to five years
- Competitor initiatives—relative to enterprise revenue model strategies and tactics, the potential risks to patient market segment volumes from key competitors (e.g., a narrow- network risk contract with a payer tied to a specific commercial product or a Next Generation Medicare ACO that would change referral patterns)
- Market speed of the transition from volume to value—the speed at which the market is transitioning from FFS to value-based payment models, with which insurers, and for which patient or revenue model market segments
- Strategic pricing/planning by market segment—an undertaking that involves a relatively deep dive into strategic pricing relative to services to be offered, combined with market share growth considerations
First steps for the strategic pricing and planning for each market segment involve looking at historical paid claims data across managed care insurers (i.e., commercial health plans, Medicare, and Medicaid) and categorizing inpatient-outpatient-freestanding ambulatory services in one of three categories:
- Commodity—price sensitive with a high risk of volume decrease/site-of-care substitution
- Mixed commodity-proprietary—price sensitive with a moderate risk of volume decrease/site-of-care substitution.
- Proprietary—limited price sensitivity and typically inpatient and high-end/complex on-campus outpatient, where the focus is on total cost of care and patient outcomes versus unit price
Providers should build the above factors and market data into a straw financial model with different sensitivity drivers to determine the best pricing strategy for inpatient-outpatient-ambulatory services to use in insurer contract and payment negotiations.
Once a combined quantitative and qualitative fact base is established for understanding potential revenue model risks and opportunities, providers should apply a risk-level rating to each key revenue lever across each major revenue model source of patient revenues. A sample framework is shown in the exhibit below.
Sample Revenue Portfolio Growth and Margin Management Strategy Framework
Business goals and objectives. Goals and objectives for the enterprise revenue model strategy are similar to those that might be developed for a provider’s overall corporate strategy. Using a service-line comparison to illustrate aspects of a revenue model strategy, instead of looking at market factors to determine which clinical services to offer as part of a traditional service line strategy, could help providers understand which revenue and payment model strategies will best support their service-line strategy goals and objectives.
One effective approach to address the above considerations is to establish goals and objectives for revenue model strategy across three strategic dimensions: enterprise, business unit, and functional.
In the enterprise dimension, decision making is focused on the overall business model and its three major submodels: revenue, operational, and clinical care. An enterprise revenue model strategy should support a provider’s current and future operational and clinical care models. Senior leadership should be engaged in forward-looking enterprise strategy development with an eye on strategic repositioning for five years out. For example, a stand-alone academic medical center might later seek to reposition itself to be the high-end tertiary-and-quarternary-level hospital within an integrated delivery system.
The business unit dimension represents a provider’s strategic business units (SBUs), including core clinical service lines (e.g., cardiac, neuro, women’s) and separate businesses (e.g., a hospital’s physician enterprise, post-acute care skilled nursing facility, or ambulatory surgery center). An SBU notably competes at the product and market segment level. An example of the revenue model connection might be the need to develop an alliance strategy with a Medicare Advantage plan and enter into a risk-sharing arrangement designed to secure current patient volumes and increase market share with Medicare patients across several clinical service lines.
Functional-level strategy in the context of the overall revenue model enterprise strategy could best be thought of in terms of attaining operational readiness and establishing organizational competencies to pursue the full range of revenue model opportunities. For example, an organization might need to determine whether it has the IT infrastructure to manage patient populations across networks of care and the finance capabilities to track, monitor, and distribute funds from risk-sharing contracts.
For each of these dimensions, a provider must identify its goals and objectives, which—seen through the lens of each of the different dimensions, along with the strategies and tactics the organization develops—are necessary to support an overall enterprise strategy for the organization’s go-to-market business model.
Tactical Game Plan Development
Once an overall enterprise revenue model strategy has been developed to address revenue diversification, optimization of revenue yields, risk mitigation, and tactics for margin improvement, the provider must incorporate all of these associated strategies into its tactical game plan. The game plan will focus on prioritization, capabilities development, and resource allocations to pursue short-term goals and objectives across the organization’s revenue model.
To illustrate, if under the Medicare Access and CHIP Reauthorization Act of 2015, an organization decides to transition from an existing Medicare Shared Savings Program (MSSP)Track 1 accountable care organization (ACO) to an alternative advanced payment model such as a MSSP Track 3 ACO or Next Gen ACO, it must, in the very least, prepare a detailed tactical plan for meeting all Medicare filing requirements, adapt policies and procedures for its new risk model, and update and modify provider agreements. A detailed blueprint is essential for the organization to execute its Medicare ACO strategy.
Key Takeaways
Implementation of enterprise revenue model strategies also should be aligned with other aspects of an overall business model. Strategic implementation of revenue, operating, and clinical care models involves the introduction of a great deal of change to an organization. The organization must create a workable transition plan to successfully implement its strategies at the enterprise, SBU, and functional levels.
All too often, enterprise revenue model strategies lose momentum and end up not being implemented. This outcome can occur for a number of reasons, including a lack of clarity in vision, insufficient resource allocations, undeveloped but necessary new capabilities, insufficient physician engagement and buy-in to achieve necessary changes in clinical processes and capture value, and a general reluctance to move away from known (FFS) to unknown (value-based) payment models. Organizations that avoid these missteps and prepare for and shape the future will be better positioned for success as the inevitable changes take hold.
Christopher J. Kalkhof , MHA, FACHE, is director, strategic solutions, Navigant Consulting, Inc., Chicago.
Richard Bajner is managing director, strategic solutions, Navigant Consulting, Inc., Chicago.
Jeffrey Leibach is director, strategic solutions, Navigant Consulting Inc., Chicago.
Christopher J. Kalkhof
Richard Bajner
Jeffrey Leibach
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Successful business planning for new programs in health care organizations
Affiliation.
- 1 University of Florida.
- PMID: 10111952
- DOI: 10.1177/016327879101400104
Health care organizations implement business strategies through programs and services, and success depends on careful program design and execution. A conscientious design requires thorough efforts in organizing the planning process, conducting the decision analysis, and obtaining approval for a program. Weak methods and processes in the management of these efforts can result in faulty assumptions and costly errors in the development of new health care ventures, thus preventing the achievement of financial and operating goals. This article reviews the stages of business planning, and the points at which success may be impaired.
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Healthcare Financial and Strategic Planning (FP&A) Guide
- June 15, 2022
- Financial Planning (FP&A) , Healthcare Financial Planning (FP&A)
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Table of contents
Enhance the patient experience, increase competitiveness, facilitate collaboration, boost morale, unify your staff, achieve meaningful milestones, clearly defined values, budgetary limits, needs, and goals, an accountability framework, adopt modernized budgeting processes, define your organization’s mission and goals, identify ways to meet those goals, determine preferred outcomes, select metrics to measure performance, routinely evaluate your efforts, track and review kpis, be willing to adjust course, invest in quality technologies, real-world example of effective healthcare fp&a, optimize your healthcare strategic planning.
Ready to leverage healthcare financial and strategic planning methodologies but unsure where to begin? Have you been exploring ways to help your organization achieve its goals while simultaneously enhancing the patient experience? Want to learn more about the importance of financial planning in healthcare organizations?
If any of this sounds familiar, then this guide is for you. Below, we take an in-depth look at healthcare financial and strategic planning.
We explain what this process is, why your organization needs it, and much more. From there, we outline the key components of financial planning in healthcare organizations so that you can begin utilizing this effective strategy.
What Is Healthcare Financial and Strategic Planning (FP&A), and Why Do You Need It?
Before we examine the importance of financial planning in healthcare organizations, let’s recap what “financial and strategic planning” actually entails. To do this, we will need to address both components separately.
Strategic planning is the process of systematically identifying organizational goals, aspirations, and objectives.
Once these objectives have been identified, organizational leaders can then determine how they plan to accomplish them. Strategic planning can address a broad range of issues, including the patient experience, brand image, and revenue.
The second component of healthcare FP&A is, of course, finances. While it is possible to address financial concerns and strategic goals separately, this approach can be impractical.
Accomplishing any strategic goals will require a financial commitment. Therefore, it is far more pragmatic to combine these two aspects of business management when creating an organizational strategy.
Notable organizations such as the Society for Health Care Strategy & Market Development (SHSMD) strongly recommend that healthcare entities integrate financial and strategic planning. They are proponents of this synergistic approach due to the “interdependence” between the two types of planning.
So why do you need healthcare financial and strategic planning? There is no singular answer, so let’s look at the various benefits that strategic planning can provide. By engaging in healthcare financial planning & analysis, your organization can:
Regardless of which type of healthcare organization you are involved with, the services you provide should be centered around the needs of patients. Proactively working to improve the patient experience can help you better serve clients, which will also improve your brand image.
The healthcare sector is more crowded than ever before. In light of this, you must engage in healthcare FP&A. Doing so will help your organization identify where it stands within your market and ultimately increase its competitiveness.
When your organization engages in healthcare financial and strategic planning, various departments will be able to collaborate more effectively. Your strategic plan will outline each team’s responsibilities and roles within the organization.
When all parties understand their place in the finance teams , they will be able to fulfill their roles and aid the efforts of other staff members more efficiently.
When employees are provided with clear objectives to work towards, they will be more motivated and engaged. They will exhibit higher morale, better job satisfaction, and more productivity as well.
You can further enhance staff morale by involving them in the creation of your strategic plan. This approach will give them the opportunity to be heard and voice their ideas and concerns. Your organizational leaders may even be able to gain a fresh perspective on existing business challenges.
Among other things, your strategic plan should reinforce your organization’s core values and mission. It should outline ways to live out these values in the way that you interact with patients.
If you address these topics with your healthcare FP&A planning efforts, you will be able to unify your staff. Your team members will be on the same page in terms of your organization’s values and what role they play in presenting those values to patients.
Healthcare financial and strategic planning will also help your organization achieve meaningful milestones.
You can establish a variety of different goals and milestones during the planning process. These goals can be fiscally focused, patient experience-centric, or address other performance-related concerns. To learn more about the importance of goal setting, check out this piece on sales planning .
What Are the Key Components of a Successful Healthcare Financial and Strategic Plan?
There is no denying that healthcare financial and strategic planning is a complex process. However, you can increase the efficacy of your efforts by ensuring that you address the following key components:
Any healthcare FP&A (financial planning & analysis) efforts should start by defining your organization’s values and goals. While you may have previously defined your values, it is always a good idea to revisit them when crafting a new strategy.
Additionally, you should examine ways that you can incorporate these values into your business model. You should ask questions such as “How is the way we are interacting with patients demonstrating our core values?”
Your healthcare financial and strategic planning process should also examine your monetary constraints, needs, and goals. Remember, the spirit of this methodology is to merge these interconnected plans into a singular strategy.
How do you know if your healthcare financial and strategic planning efforts are actually helping you accomplish organizational goals? The answer is that you won’t unless you establish an accountability framework.
Specifically, we recommend selecting relevant key performance indicators (KPIs) and implementing tools to track those KPIs. The simplest way to do this is to invest in dynamic reporting software, such as Workday Adaptive Planning. Here is a link to the various Workday integrations if you would like to explore our product further.
How to Create a Financial Plan for Your Healthcare Organization
Now that we have identified a few key components of successful financial and strategic planning let’s examine how you can create your own. When engaging in healthcare financial and strategic planning, we recommend that you:
Creating an annual budget is a tedious process all its own. Integrating your budget and other financial data into your strategic planning process is even more so.
Fortunately, you can streamline healthcare FP&A by modernizing your business budgeting process . This work can be accomplished by investing in quality technology, shifting your focus to business drivers, and incorporating rolling forecasts into your budget.
In the early stages of your planning process, you should set both short-term and long-term goals for your organization. You can set goals for the upcoming year and each quarter as well. We also recommend establishing three and five-year objectives.
Keep in mind that these goals should align with your organization’s purported mission and values. If they do not, you should rework them before moving forward with the healthcare financial and strategic planning process.
Next, you should identify ways to move towards accomplishing your goals. Make sure that your goals, and plans for meeting them, are realistic. Merging financial and strategic planning helps keep your expectations in line with the reality of your organization’s budgetary constraints.
During strategic planning, determine what your preferred outcomes are. What thresholds do you want to meet in terms of revenue generated, patients acquired, and other metrics. Your preferred outcomes should be commensurate with the amount of funding your organization is willing to invest in these initiatives.
As noted earlier, measuring the efficacy of your healthcare financial and strategic planning is essential. It is vital that you choose the right KPIs so that you can gain meaningful insights from these metrics. You should identify a separate group of KPIs for each goal that you established during earlier phases of planning.
After you have implemented your strategic plan, it is essential that you routinely evaluate its effectiveness. Monthly reporting seems to be the most practical approach for healthcare organizations.
However, you should also conduct quarterly reporting so that you can identify trends. Evaluating your plan will help you determine whether it is effective or if you should modify your tactics.
How to Maximize the Results from the Financial Plan
There are several ways to maximize the results of your healthcare financial and strategic planning efforts, including the following:
It is impossible to overstate the importance of tracking and reviewing key performance indicators. If you are not tracking KPIs and monitoring the feedback provided by these metrics, then you are essentially flying blind.
Be careful when selecting KPIs, as choosing the wrong metrics can provide insufficient insights to guide decision-making. The exact KPIs that you should select will depend largely on what goals you are working towards.
Even the best-laid plans may not yield expected results once they are put into action. You must be willing to adjust course if your KPIs reveal that your plan is falling short of expectations.
A modernized budgeting process is critical when modifying your strategic plan on the fly. Advanced forecasting tools can help you understand and account for changing market conditions. This analysis will also shed some light on the long-term consequences of resource allocation choices.
Top-tier financial planning technologies will help you maximize the efficacy of your strategic plan. These technologies include automation capabilities, advanced reporting tools, cutting-edge forecasting features, and much more.
Investing in these solutions is one of the best ways to incorporate healthcare financial and strategic planning into your business model.
The efficacy of healthcare FP&A has been demonstrated time and again. For instance, a study published by PubMed in 2008 identified a strong correlation between organizations that had a strategic plan and positive financial performance.
Specifically, 138 hospital chief executive officers were surveyed. Of these, 87% of them stated that their organization had a cohesive strategic plan. Those that had a plan and actively involved the board in the development of said plan exhibited stronger financial performance.
Since this study, there have been numerous other instances of healthcare organizations improving financial performance via strategic planning.
Financial planning in healthcare organizations is essential if you want to achieve your goals, improve patient care, and protect business continuity.
While there are many ways to enhance your healthcare financial planning & analysis capabilities, the most pragmatic approach involves adopting quality software solutions such as those offered by QBIX Analytics.
If you would like to learn more about our solutions or would like expert guidance from our team, connect with QBIX Analytics today .
Financial and strategic planning should guide all of a healthcare organization’s activities, including what technologies they invest in, how they interact with patients, and how they deal with suppliers. In short, healthcare financial and strategic planning should serve as an organization’s roadmap that guides all business operations.
Healthcare strategic planning is the process of identifying an organization’s goals and then determining what steps it must take to achieve these milestones. Healthcare financial and strategic planning merges these goals with fiscal aspirations and needs.
A healthcare organization’s strategic plan may involve identifying ways to improve brand image and decrease patient wait times. To follow through on this plan, the organization must implement meaningful changes that will help it accomplish these goals.
Healthcare financial and strategic planning is the process of developing a plan that addresses both strategic and financial goals. This methodology treats financial goals and strategic aspirations as intertwined objectives.
Further Reading
- The Pulse of Financial Planning (Nov. 26, 2020)
- Understanding Enterprise Performance Management (EPM)
- 5 Tips to Modernize Your Business Budgeting Process
- Customer Attrition Models: Tips & How to Improve Churn
- Critical Features Of SaaS Analytics & Reporting Software
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Understanding Business Strategy to Facilitate Health Care Success
Published september 26, 2022, courses mentioned in this post: h ealth care strategy, series mentioned in this post: health care leadership.
When you think of health care organizations, do the terms sustainable advantage or strategic differentiation come to mind?
In an industry with increasing competition and innovation, leaders of U.S. healthcare organizations, or those delivering care, need to understand how the success of their business depends on these key principles. This includes understanding the industry you’re in and market dynamics, the forces that make it easy or difficult to capture value, and how you can successfully compete against rivals.
You must go beyond simply creating value to develop the critical thinking and analytical skills to evaluate the needs of your business, and its constituents, in order to optimize business decisions and inform new or innovative health care ventures.
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Taught by Harvard Business School Professor Leemore Dafny , our Health Care Strategy course teaches learners to align business strategy with the challenges and structures of the health care industry in the United States.
This 5-week course explores four main concepts of business strategy that can enable leaders to deal with the unique challenges and structures of health care organizations. These concepts include:
Value Creation and Value Capture
Value is only created if purchasers are willing and able to pay an amount that exceeds the cost of producing a product or service. Additionally, value creation does not automatically result in value capture.
In Health Care Strategy , learners will exercise how to apply a framework that illustrates value creation and value capture. With case studies from Statins and Livongo , you’ll learn how to determine how much value a seller can capture by considering the competitive environment and the value created for different stakeholders.
Industry Analysis
Within the Industry Analysis module of Health Care Strategy , learners will perform a “five forces” analysis and assess the strength of different forces in different industries through a case study with Advanced Fertility Care . Identifying the forces that drive industry profits is a critical first step to defining a business strategy. A successful strategy combats the forces that diminish industry profits.
Developing a strategy requires making tradeoffs. Through a case study with Oak Street Health , learners will evaluate the tradeoffs made by an entrant in elder care, and how this informs decisions about their growth. Learners will better understand how positioning can enable you to succeed in an “unattractive” industry.
Value capture is more challenging when the value of a product or service is divided among different stakeholders, making this an extra challenge within the health care sector.
Competition
Competition among health care providers increases quality, reduces prices, and can increase a provider’s reach. Learners will evaluate the results of a “natural experiment” involving the British National Health Service (NHS) and assess opportunities provided by destination medicine for both providers and employers through a case study with Geisinger Health .
Learners will also analyze business and regulatory moves that reduce and enhance competition in different markets through a case study with the Surgical Institute of Reading .
The Boundaries of the Firm
The last module of Health Care Strategy dissects an organization’s decision to vertically integrate by observing consolidation in Eastern Massachusetts. The decision to vertically integrate depends on several factors, such as the necessity for “relationship specific” investments by upstream and downstream parties, and the degree of difficulty in aligning incentives with arms-length relationships.
Vertically integrated firms may find it more profitable to price their products less than they would if they were not integrated, even if there is no change in production cost from integrating. Learners will assess the effects of vertical integration on pricing under different assumptions.
Lastly, learners will examine the effects of provider-insurer integration on competition, prices, and access for patients through a case study with Civica Rx . Integration can deflect or enhance competition, depending on the industry structure and potential efficiencies created by the merger.
Register for an upcoming Health Care Strategy cohort today to learn how to use business strategy to facilitate health care success.
Demonstrate that you are committed to your growth by specializing further and pursuing a multi-course certificate program.
The health care sector in the United States is one of the most essential and consequential parts of our economy.
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Related Courses
Health care strategy.
Learn from HBS Professor Leemore Dafny how to align the principles of business strategy with the unique challenges and structures of health care organizations to capture value, define your mission, and lead your organization to success.
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Taught by Harvard Medical School faculty, this course provides insights into the interactions between industries in the US health care sector and teaches what economic forces are shaping health care.
Digital Health
Digital technologies and big data offer tremendous opportunities to improve health care.
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Are Small Businesses Required to Offer Health Insurance?
How small business health insurance works, benefits of offering health insurance as a small business, types of health insurance for small businesses, finding affordable small business health insurance, choosing the right health insurance plan for your small business, resources and support for small businesses, which businesses are eligible for the small business health options program (shop), how can small businesses find the right health insurance plan, how much does health insurance cost on average for a small business per employee, the bottom line.
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Healthcare Options for Small Businesses: A Comprehensive Guide
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Offering health insurance as a small business owner can yield tangible and intangible benefits. A good healthcare plan can be a strong incentive when attempting to attract top talent to your business. Employees may feel a deeper sense of job satisfaction in knowing they have healthcare benefits if they need to use them. Employers can also benefit in the form of tax breaks.
The challenge is finding the right healthcare option to offer to your employees.
Key Takeaways
- Small businesses face challenges in providing good, affordable healthcare coverage to their employees.
- The Small Business Health Options Program (SHOP) helps small businesses provide health coverage and offers benefits such as plan comparisons.
- Small businesses should consider factors like cost, coverage options, and employee needs when selecting a health insurance plan.
- Employer-sponsored insurance plans cater to the needs of small businesses and offer various benefits and considerations.
- Offering healthcare benefits can help you attract and retain talented employees, improve their satisfaction and productivity, and contribute to your business success.
Under provisions of the Employer Mandate of the Affordable Care Act (ACA) , businesses are required to offer health insurance only if they have 50 or more full-time employees or full-time equivalent (FTE) employees. If you meet that standard, you’re considered a large employer for Internal Revenue Service (IRS) purposes.
- A full-time employee is someone who averages at least 30 hours of service per week during the calendar month, or at least 130 hours during the calendar month.
- Full-time equivalent employees refer to a group of workers who may not all be employed full-time, but whose working hours combined are equivalent to a full-time employee.
Special rules for determining full-time employee status apply to businesses that hire seasonal workers.
Independent contractors are not considered employees, so the ACA rules for health insurance don’t apply to them. A sole proprietor running a small business may be subject to the rules, but only if they meet the 50 or more full-time employees or FTE guidelines. Self-employed business owners with no employees can enroll in healthcare plans through the federal marketplace if they need coverage for themselves or their family members.
Small businesses that are required to offer health insurance, or that voluntarily choose to do so, are obligated to offer coverage to 95% of full-time employees and their eligible family members. Again, a full-time employee is defined by thresholds of 30 hours per week or 130 hours per month. Businesses would need to have at least one eligible full-time employee to offer coverage.
Coverage must meet two standards to be aligned with ACA requirements:
- Minimum value . An employer-sponsored plan is determined to offer minimum value if it covers at least 60% of the total allowed cost of care for covered employees, and if its benefits include substantial coverage of physician and inpatient hospital services.
- Affordability . For 2024, workplace health insurance is deemed affordable if employees’ share of monthly premiums in the lowest-cost plan offered is less than 8.39% of household income .
Affordability is based on the premium that would cover all individuals in the employee’s household. Income is calculated based on the earnings of everyone in the household who is required to file a tax return. To qualify for a federal tax credit , employers must pay at least 50% of health insurance premiums for covered employees. Employers can, however, opt to pay a larger share of the premiums so that employees have less to pay out of pocket.
Businesses are required to offer health insurance to employees when they become eligible for it. Employers can impose a waiting period before employees are eligible. The maximum allowed waiting period is 90 days.
Employees can make changes to their plan if they qualify for a special enrollment period , which is triggered by a life change. For example, a covered employee who has a child would qualify for a special enrollment period to add a new baby to their plan. Employers must provide a special enrollment period of at least 30 days to employees who are eligible to change their plans.
Offering health insurance to your employees, whether you’re obligated to do so by ACA rules or not, can help your business and your workers in many ways. Here are some of the main advantages of including health insurance as part of an employee benefits package.
- Attract top talent . Job seekers may be more inclined to pursue career opportunities with businesses that offer attractive benefits, including health insurance.
- Increase retention . A good health insurance plan may be an incentive for employees to remain loyal to your business, rather than moving on to another company.
- Qualify for tax breaks . Eligible businesses can qualify for the small business healthcare tax credit , which is worth up to 50% of employer-paid premiums. Tax credits reduce your tax liability dollar-for-dollar.
- Strengthen your business . Offering health insurance to employees could lead to a stronger business overall if workers experience greater job satisfaction, miss fewer days of work because they’re able to get adequate healthcare when they need it, and are more productive while on the job.
Eligible small businesses will need to file IRS Form 8941 , Credit for Small Employer Health Insurance Premiums, to qualify for this tax benefit.
Small business owners may choose from multiple types of health insurance plans. Understanding how they compare is important when choosing a plan.
- PPO plans : Preferred provider organization (PPO) plans allow covered individuals to pay less out of pocket for care when they use in-network doctors, hospitals, and providers. Employees would still be able to seek care out of the network, but will pay more for it.
- HMO plans : Health maintenance organization (HMO) plans can have lower out-of-pocket costs for covered employees, but are more restrictive regarding which doctors, hospitals, and providers you can visit. HMO plans are often focused on wellness and preventative care.
- EPO plans : Exclusive provider organization (EPO) plans only cover healthcare costs when an employee uses an in-network provider. These plans can allow exceptions for emergencies.
- HSA-qualified plans : HSA-qualified plans or high-deductible health plans carry higher deductibles, but offer employees access to a Health Savings Account (HSA) . An HSA offers triple tax benefits to employees in the form of deductible contributions, tax-deferred growth, and tax-free withdrawals when the money is used for eligible healthcare expenses.
- POS plans : Point of service (POS) plans have lower out-of-pocket costs when employees use in-network providers. One key thing to note: These plans require a referral to see a specialist.
- Indemnity plans : Indemnity plans allow covered employees to visit any doctor, hospital, or healthcare provider, with costs covered by the plan once they meet a certain deductible. These are sometimes called fee-for-service plans since they require employees to pay premiums, deductibles , and co-insurance .
Affordability is likely to be a key concern when choosing a health insurance plan for your employees. The plan needs to be affordable for them to meet ACA standards, but it also needs to be affordable for your business if you’ll be paying some of the premium costs.
Here are some tips for finding affordable small business health insurance.
Use the Small Business Health Options Program (SHOP)
The Small Business Health Options Program (SHOP) is designed for small employers who want to provide health and/or dental insurance to their employees. You’ll need to be eligible for SHOP to purchase insurance through the program. You’re eligible if:
- Your business has one to 50 full-time equivalent employees.
- You plan to offer coverage to all full-time employees.
- You anticipate enrolling at least 70% of the employees to whom you offer insurance.
- Your business has an office or employee work site in the state whose SHOP you plan to use.
There are certain benefits associated with using SHOP to find health plans. Business owners can:
- Easily compare pricing and coverage for multiple plans in one place
- Opt to offer more than one plan to employees
- Choose how much to pay toward premiums
- Establish an appropriate waiting period for offering coverage to eligible employees
All of the information you need is centralized, but if you need help making sense of any of it, you can work with a SHOP-registered insurance agent or broker.
Use a PEO Service
A PEO, or professional employer organization, helps small businesses get the insurance they need. Effectively, when you join a PEO, you enter into a co-employment agreement. All of your employees then get access to the health plan options extended to other businesses that have joined the PEO.
You don’t give up any control over the running of your business, but joining a PEO makes that company the employer of record for your employees. Joining a PEO could offer your employees a wider range of plans to choose from, and it can take the guesswork out of trying to choose a plan on your own.
Partner with Purchasing Alliances
Purchasing alliances or cooperatives comprise multiple businesses that come together to purchase insurance collectively. Joining an alliance not only may offer more possibilities in terms of the types of coverage and plans you’ll have access to, but also could save money if you’re able to get access to affordable health insurance that isn’t available elsewhere.
One of the most important things to consider about joining a purchasing alliance is the types of businesses it serves. The more similar that member businesses are in terms of structure and number of employees, the more likely that the plans offered will reflect the needs of the member group as a whole.
Finding the right health insurance plan can be challenging, as there are a multitude of factors to consider, the first being where to buy coverage. Small businesses with fewer than 50 employees can look for options through SHOP or get help from a SHOP-registered broker or agent. Larger businesses can shop for plans with the help of an agent or PEO, or contact insurance companies directly.
When comparing small business health insurance plans, it’s important to consider:
- Premium costs
- Coverage options
- Network providers
- Employee needs
Business owners who are looking for plans through SHOP can easily compare coverage and prices for plans available in their area. All you’ll need to do is enter your ZIP code to see what options you might have.
As you look at SHOP plans, here are some other considerations to keep in mind:
- Will you offer one plan or a choice of plans?
- Will coverage be limited to medical only, or will you add dental coverage?
- How much of employee premiums do you plan to pay?
- Will you offer coverage to full-time employees only or include part-time workers?
- When will the coverage begin?
- What waiting period will you impose before employees can become eligible for coverage?
There are four types of plans offered through SHOP: bronze, silver, gold, and platinum. The amount employees pay depends on the plan, with the highest employee contribution at the bronze level and the lowest at the platinum level. Once you choose a plan and are ready to enroll, you can do so through a registered SHOP agent or broker, or the insurance company.
Some states have their own websites for SHOP enrollment, which you’ll need to use to choose a plan.
Navigating healthcare rules and coverage options can be confusing for new and seasoned business owners alike. If you’re interested in getting more information about what’s required under the ACA or how to find health coverage as a small business owner, you might find these resources helpful:
- Health insurance for your business and employees (HealthCare.gov)
- How to enroll in SHOP insurance (HealthCare.gov)
- Small Business Healthcare Tax Credit and the SHOP Marketplace (IRS.gov)
- Employer Shared Responsibility Provisions (IRS.gov)
- Small Business—Get Answers Page (HealthCare.gov)
Small businesses are eligible for SHOP insurance plans if they have one to 50 employees. If you’re eligible, you don’t need to wait for an open enrollment period to start offering coverage to your employees.
Small business owners can find the best health plan by first understanding what they and their employees may need. Businesses that are SHOP-eligible may look to the federal marketplace first to compare plans. Alternatively, businesses of any size may consult a private insurance agent or broker to help them make sense of the different health plan options that are available.
On average, the annual premium for single coverage for covered employees at small firms was $8,722 in 2023. The average premium cost was slightly lower for covered employees at large firms: $8,321. The average premium was $23,621 for family coverage at small firms and $24,104 for covered employees at large firms.
Health insurance is a requirement for some small business owners, but it may be optional for others. Offering health insurance, whether you’re required to do so or choose to, could help your employees and your business thrive.
When searching for coverage, it’s important to shop around to find the best health plan options for small businesses so that you can make an informed decision for your business.
Internal Revenue Service. “ Affordable Care Act Tax Provisions for Large Employers .”
Internal Revenue Service. “ Determining If an Employer Is an Applicable Large Employer .”
HealthCare.gov (Health Insurance Marketplace). “ Health Coverage If You’re Self-Employed .”
Internal Revenue Service. “ Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act .”
HealthCare.gov (Health Insurance Marketplace). “ Minimum Value .”
HealthCare.gov (Health Insurance Marketplace). “ Affordable Coverage .”
Internal Revenue Service. “ Small Business Health Care Tax Credit Questions and Answers: Calculating the Credit .”
HealthCare.gov (Health Insurance Marketplace). “ Exploring Coverage Options for Small Businesses .”
HealthCare.gov (Health Insurance Marketplace). “ Special Enrollment Period (SEP) .”
Connecticut State Office of the Health Care Advocate. “ How Indemnity Plans Work .”
HealthCare.gov (Health Insurance Marketplace). “ How to Pick a Health Insurance Plan .”
HealthCare.gov (Health Insurance Marketplace). “ How to Enroll in SHOP Insurance .”
HealthCare.gov (Health Insurance Marketplace). “ Find Out If Your Small Business Qualifies for SHOP .”
HealthCare.gov (Health Insurance Marketplace). “ How to Offer SHOP Health Insurance to Your Employees .”
Kaiser Family Foundation. “ 2023 Employee Health Benefits Survey .”
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VCU Health selects chief human resources officer
This leadership role will help develop organizational initiatives that foster a diverse, equitable, inclusive, and accessible workplace for all vcu health employees..
7/22/2024 12:00:00 AM
By Pete Woody
Kristin King has been named c hief h uman r esources o fficer (CHRO) for VCU Health System. She will begin her new role on Sept . 1.
This executive leadership role is responsible for developing and executing an equitable human resource strategy for VCU Health’s business plan and strategic direction for the health system . The CH RO will provide insight and recommendations for organizational initiatives that foster a diver se, equitable , inclusive and accessible workplace.
King is a versatile HR leader with more than two decades of expertise spanning talent, learning and development, employee and employer relations, total rewards and DEI initiatives. She joins VCU Health from Centra Health in Lynchburg, where she most recently served as senior vice president and chief human resources officer.
At Centra , King implemented comprehensive diversity, equity, and inclusion strategies and led the development and execution of a diverse and comprehensive talent acquisition strategy. She also assisted in transforming the organization’s compensation structure and philosophy to align with industry best practices , while implementing strategic workforce planning initiatives to mitigate skills gaps and promote internal career pathways. Prior to this role, s he served as vice president of HR and talent for Centra. King also held management and leadership roles with Southern Illinois Healthcare in Carbondale, Illinois, from 2003-2020.
In addition to her health care experience, King spent 10 years in corporate training, where she designed customized training and staff development programs tailored to meet the organizational needs of diverse clientele. Her professional development accomplishments include earning designation as a Six Sigma process improvement change agent, as well as serving as a member of the Career and Technical Education Executive Committee and the Virginia Workforce and Education
Read the latest stories from VCU Health News
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After a storied career of 22 years – and countless stories – communications leader Pam Lepley is retiring from VCU
VCU appoints new dean of VCU College of Health Professions
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What are the common healthcare reimbursement models for small businesses?
Health Benefits • July 24, 2024 at 3:23 PM • Written by: Holly Bengfort
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If you're worried about the cost of care for your employees, you're not alone. For small employers , in particular, it's hard to find affordable health insurance . According to KFF 1 , in 2023, the average annual cost of employer-sponsored health insurance premiums per employee was $23,968 for family coverage and $8,435 for single coverage.
If a group health plan is out of your budget, a healthcare reimbursement model may be the solution to your problem. This allows you to reimburse your employees for their healthcare expenses instead of buying healthcare coverage for them. However, with so many models to choose from, you need to understand the pros and cons of each one.
In this article, we'll explore the common healthcare reimbursement models for small businesses.
Takeaways from this blog post: Group health insurance is becoming outdated for small businesses, leading to the rise of healthcare reimbursement models that offer more flexibility and cost control. HRAs, stipends, and FSAs are common healthcare reimbursement models for small businesses. These models provide employees with options for covering medical expenses and insurance premiums. Small businesses that partner with PeopleKeep can seamlessly transition to an alternative reimbursement model through an HRA, ensuring compliance, cost-effectiveness, and ease of administration.
Working with a tight budget? Get our small business guide to health benefits.
What is a healthcare reimbursement model for small businesses?
Group health insurance is becoming a thing of the past for small businesses. Its rigid, one-size-fits-all approach doesn't work for most employers or employees. With a group health insurance plan, employees have no individuality. Group plans don’t take their unique and diverse needs into account. Plus, the steep annual rate hikes and high participation requirements make it nearly impossible for small businesses to obtain coverage.
Healthcare reimbursement models alleviate these pain points. They allow small employers to provide quality coverage at a price they can afford. Instead of paying for a group health plan, employers adopting a reimbursement model offer their employees a monthly allowance for their healthcare needs. When employees incur an eligible healthcare expense, they submit the receipt to their employer for reimbursement. Their employer then reimburses them for the expense up to their set allowance amount. This provides valuable cost control to small employers who need to spend their dollars wisely.
Common types of healthcare reimbursement models for small businesses
If you're interested in a reimbursement model for employee health benefits, you have several options to choose from. Here are some common models that small businesses can consider:
Health reimbursement arrangements
A health reimbursement arrangement (HRA) is a type of employer-funded benefit plan that reimburses employees tax-free for more than 200 eligible medical costs .
Some HRA-eligible expenses include:
- Individual health insurance premiums
- Primary care physician visits
- Preventive care
- Emergency care
- Prescription drugs
- Over-the-counter medication
Employers contribute a specific amount to the HRA, and employees can use those funds to pay for qualified healthcare expenses. HRAs are flexible and customizable, allowing you to set limits on reimbursements. Plus, unused funds stay with you if any employee leaves your organization.
With this alternative payment model, your employees have more of a say in the quality of care they receive. An HRA gives your employees the freedom to choose the health plans that work best for them. That way, they can pick their own healthcare providers and medical networks that fit their needs.
Here are three of the most common HRAs:
- Qualified small employer HRA (QSEHRA): The QSEHRA is for small businesses with fewer than 50 full-time equivalent employees (FTEs). It allows you to reimburse employees for out-of-pocket expenses and insurance premiums. Employees need health plans that provide minimum essential coverage (MEC) to participate in the QSEHRA. There are also annual limits on employer contributions .
- Individual coverage HRA (ICHRA): The ICHRA works for employers of all sizes, but employees need qualifying individual health insurance coverage to participate. Like the QSEHRA, the ICRHA allows you to reimburse employees for out-of-pocket expenses and individual health insurance premiums. You can also offer different allowance amounts to different employees using employee classes . For example, you can offer $300 a month to part-time employees and $600 a month to full-time employees. But unlike a QSEHRA, ICHRAs have no maximum contribution limits.
- Group coverage HRA (GCHRA): Unlike the QSEHRA or ICHRA, the GCHRA works alongside a group health insurance plan. So if you're set on offering a group health plan, you can purchase a more affordable option, such as a high deductible health plan (HDHP). Then, you can use a GCHRA to reduce employee out-of-pocket costs. They can use their monthly GCHRA allowance for expenses your group plan doesn’t cover or fully pay for. Employees can't use a GCHRA on monthly insurance premiums.
HRA comparison chart
HRAs may seem confusing, but the chart below clarifies their differences.
|
|
| |
| Only employers with fewer than 50 FTEs can use a QSEHRA. | Employers of any size can use an ICHRA. | Employers of any size can use an ICHRA. |
| You can’t offer a QSEHRA if you offer a group plan. You can cancel your group plan and switch to a QSEHRA. | You can offer an ICHRA as a stand-alone benefit or as an alternative health benefit to employee classes that don’t qualify for your group health plan. | You have to offer a GCHRA alongside a group health plan. |
| All W-2 full-time employees with MEC are automatically eligible for the QSEHRA. Employers can include W-2 part-time employees as long as they offer the same allowance amount as full-time employees. | The ICHRA is only available to employees with a qualifying individual health plan. | The GHCRA is only available to employees who are also covered by the company's group health plan. |
| The IRS sets annual contribution limits for the QSEHRA. | There are no annual contribution limits with an ICHRA. | There are no annual contribution limits with a GCHRA. |
| Employers can offer different allowance amounts based on whether the employee is single or has a family. | Employers can differ allowances by family status. They can also offer different allowance amounts to different classes of employees based on their job criteria, such as full-time or part-time. | Employers can offer different allowance amounts to different classes of employees based on their job criteria. |
Health savings accounts
While a health savings account (HSA) isn’t a reimbursement model, it’s another popular way to control healthcare costs. These are tax-advantaged savings accounts that employees can use to pay for qualified medical expenses. You and your employee can contribute pre-tax dollars to the HSA as long as your combined contributions don’t exceed the annual contribution limit . Your employees who are 55 or older can also make an additional contribution of $1,000 each year.
HSAs are portable, meaning employees can take the account with them if they change jobs. HSAs only work alongside HDHPs to help employees cover their out-of-pocket healthcare costs.
Flexible spending accounts
A flexible spending account (FSA), also called a flexible spending arrangement, is another type of payment model that allows your employees to use tax-advantaged money for various eligible expenses. Like HSAs, employees fund their FSAs through payroll deductions. Employers have the option to make contributions as well.
Health stipends
You can also offer your employees a taxable health stipend . With a health stipend, you provide your employees with extra compensation for their out-of-pocket medical expenses and health insurance premiums. However, you can’t ask your employees for proof of what they spent their stipend on.
Healthcare payment models for hospitals and healthcare providers
The insurance and hospital industries utilize healthcare reimbursement models as well. Let's quickly explain how this looks on their side.
Hospitals, health systems, and healthcare providers receive payment for patient care from various sources, including government insurance programs like Medicare and Medicaid, private insurance companies, or individuals paying out-of-pocket.
Here are some of the common payment models in healthcare:
- Fee-for-service 2 : Fee-for-service models are one of the most traditional models in healthcare. With this payment model, each medical service and procedure is paid for separately. This model can result in high out-of-pocket costs for individuals since they're responsible for paying a portion of the fees for each service. It can also incentivize providers to perform a higher quantity of services, even if those services don’t impact patient outcomes.
- Pay-for-performance 3 : As part of a recent national strategy to reduce healthcare costs, insurance providers are shifting to pay-for-performance models, which rely on overall agency performance and patient outcomes. Pay-for-performance, value-based reimbursement, value-based model, or value-based care models use financial incentives to improve patient care. They reward providers based on the efficiency of care and quality of care provided.
- Capitation 4 : In a capitation model, patients pay providers a fixed amount per month, regardless of the services provided. This model incentivizes providers to deliver cost-effective care and focus on preventative services to keep patients healthy. However, providers may be at financial risk if they're unable to manage the health of their patient population effectively.
- Bundled payments: In a bundled payment or episode-based payment model, providers are reimbursed a fixed, single payment for an episode of care, such as a knee replacement surgery. This model encourages efficiency and coordinated care among providers since they share in the financial risk and reward of achieving good patient outcomes at a lower cost.
Unfortunately, individuals have little control over which payment model they’ll be billed under. However, they can do some research to understand which billing methods certain providers use when selecting an insurance carrier and network.
How PeopleKeep can help you reimburse your employees
While traditional group health insurance has been the standard for several years, it's not the best option for small employers. With that said, it may feel overwhelming to try something new. But that's no reason to miss out on a more cost-effective solution. All you need is a little help to get you started.
When you team up with PeopleKeep, you get a stress-free experience. Our HRA administration software solution and award-winning customer support are here to make your life easier. Our experts generate your legal plan documents, verify employee expenses per IRS guidelines, and automatically send required notices so you don’t have to. We take on these tedious tasks for you so you can focus on managing your business.
Plus, our software serves solely as a support system for self-administrators, so you always maintain ownership of your benefit design and decision-making process.
Don't get overwhelmed by the various healthcare reimbursement models available. Each model has its advantages and considerations, so it’s important to evaluate the needs of your employees and the resources available to determine which model is the best fit for your business. While it's nearly impossible to find an affordable health insurance plan, you can set your own budget with an HRA and reimburse your employees for their healthcare expenses instead of buying coverage for them.
- https://www.kff.org/report-section/ehbs-2023-summary-of-findings/
- https://seed.nih.gov/glossary-reimbursement
- https://wtcs.pressbooks.pub/nursingmpc/chapter/8-4-healthcare-reimbursement-models/
- https://www.intelycare.com/facilities/resources/how-do-the-3-healthcare-payment-models-work
New to HRAs? Learn which is best for you in our comparison chart.
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Holly Bengfort
Holly is a content marketing specialist for PeopleKeep. Before joining the team in 2023, Holly worked in television news as a broadcast journalist. As an anchor and reporter, she communicated complex stories to the vast communities she served on a daily basis. Her background has given her a greater understanding of people and the issues that affect our lives. When Holly isn’t writing, she enjoys reading, exercising, and spending time at the beach.
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NCPA Leads Retail Pharmacy in a Class Action Suit Against Change Healthcare, UnitedHealth Group, and Optum for Data Breach and Losses
Plaintiffs say defendants failed to secure its network failed to provide adequate guidance, and cost them money.
NCPA July 22, 2024
ALEXANDRIA, Va. (July 22, 2024) – The National Community Pharmacists Association, along with dozens of providers from multiple states, filed a class action lawsuit late last Friday against UnitedHealth Group and its subsidiaries Change Healthcare and Optum for losses resulting from the massive cyber-attack earlier this year.
United Healthcare is one of the country’s largest companies. Optum is its pharmacy benefits manager, one of the three largest in the world, and Change Healthcare handles medical billing for a huge chunk of the health care industry. In February, Change Healthcare was hit with a ransomware attack that brought payment and claims processing across the country to a halt. NCPA and the other plaintiffs say Change failed to take reasonable precautions against a catastrophic breach; mislead them about its network security; and caused massive financial losses for health care providers who were never reimbursed for services, and who incurred huge expenses trying to work around the downed system.
“UnitedHealth Group and its subsidiaries need to be held accountable for their lax security measures and for their failure to provide our members with adequate support and assurances to alleviate the financial losses our members suffered,” said NCPA CEO B. Douglas Hoey. “NCPA was against UnitedHealth’s acquisition of Change from the start. This breach proves that bigger is not better and that consolidation often leads to inefficiencies. Companies are so big they cannot protect every entry point and cannot respond quickly due to internal bureaucracy. The fact issues remain unresolved is a testament to this point. This breach has cost our members a significant amount of money and time and it is still not resolved months later.”
Not only did Change, Optum, and UnitedHealth fail to adequately protect data for millions of patients, but when they discovered the breach, they shut the entire system down without providing a workable alternative, leaving thousands of pharmacies without any way to process claims.
“Because Defendants disconnected the Change Platform, many healthcare providers lost their primary (and in some cases their only) source of claims processing for their patients and did not receive payment. Healthcare providers had to absorb these upfront costs,” says the complaint. In addition to the losses from not being paid, many pharmacies had to take out loans or deplete their reserves to buy expensive new software.
“Community pharmacies incurred the losses because they wouldn’t let their patients suffer,” said Hoey. “Senior citizens and people with chronic illnesses were especially vulnerable. They can’t afford to pay out of pocket for drugs that can cost thousands of dollars because a medical billing firm left itself vulnerable.
“It wouldn’t have been fair to patients, and it isn’t fair to leave pharmacies holding the bag.”
Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist , representing over 19,400 pharmacies that employ more than 230,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America’s most accessible health care providers. To learn more, visit www.ncpa.org .
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NCPA: Oversight PBM Hearing, Report Demand Reforms and Enforcement
Amid house oversight hearing, pharmacy organizations issue united call for action on ‘must-pass’ pbm reform legislation, ncpa announces finalists for 2024 good neighbor pharmacy ncpa pruitt-schutte student business plan competition, scathing ftc interim report on pbms warrants further investigations, immediate action by policymakers and regulators.
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The price of bitcoin eased on Saturday as U.S. Republican presidential candidate Donald Trump told an audience of cryptocurrency enthusiasts that bitcoin was going to the moon and he wanted the U.S. to lead the way.
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If you're worried about the cost of care for your employees, you're not alone. For small employers, in particular, it's hard to find affordable health insurance.According to KFF 1, in 2023, the average annual cost of employer-sponsored health insurance premiums per employee was $23,968 for family coverage and $8,435 for single coverage.. If a group health plan is out of your budget, a ...
ALEXANDRIA, Va. (July 22, 2024) - The National Community Pharmacists Association, along with dozens of providers from multiple states, filed a class action lawsuit late last Friday against UnitedHealth Group and its subsidiaries Change Healthcare and Optum for losses resulting from the massive cyber-attack earlier this year. United Healthcare is one of the country's largest companies.
CrowdStrike's cybersecurity software — used by numerous Fortune 500 companies, including major global banks, healthcare and energy companies — detects and blocks hacking threats.
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