Many medical practices have been faced with both financial and practical challenges over the past two years because of the many effects of the COVID-19 pandemic, some temporary and some lasting. As a result, when starting up a new practice, you need to ensure it’s designed to survive and thrive in this new environment.
You can’t casually assume that, if you treat patients and pay the bills on time, your new practice will be fine. You need to plan your operations strategically — and creating a business plan can help provide you with a blueprint for success.
What should it cover?
A good business plan generally should contain:
A business description. Essentially, this is your medical practice’s mission statement. It could consist of a single sentence, such as: “To run a single-practitioner family medicine practice.” Or: “To run a single-practitioner orthopedic surgery practice focusing on sports and athletic medicine.” But those examples are rather bare bones. It’s a good idea to include more details on your intended practice structure, whether you plan to have a partner and whom you expect your target patient population to be.
A marketing plan. Marketing is a never-ending aspect of running any business, but it carries more weight when starting up a practice. Plan on developing a website and being on social media platforms such as LinkedIn. Make sure you connect with local physicians and introduce yourself as a potential referral doctor. Based on your practice’s focus, you may even want to visit nursing homes or sporting events — wherever your targeted group of patients might be.
In addition, ask any hospital with which you’re affiliated to help you market your new practice. Pharmaceutical reps also are often willing to assist with marketing efforts. An open house can be another way to introduce your practice to the community.
Financial budgets. Start-up medical practice budgets need one budget for the business and another for the household. Generally, new practices require about six months of working capital for both the business and the household.
The household budget includes how much money you need to live on for six months, including rent or mortgage, taxes, insurance, and food. Be generous with yourself, because it’s better to estimate on the high end and have more than you need rather than less.
The business budget is more complicated and requires you to make decisions about your practice. For example, if you plan to perform surgery, you’ll need a surgery suite. This will require a larger space and a bigger budget that includes equipment and staff. After you decide the appropriate number of staff, you’ll need to determine how much to pay them and what kind of benefits you’ll offer.
A specialized consultant can help with many of these decisions. A pro forma budget covering expenses and income for the first year makes sense — but having one that projects financial activity for two to five years is even better.
A staffing strategy. Management includes you, of course, but the biggest part of your job is to see patients. You’ll likely need someone to run your office. Thinking this through will help define your practice and shape the budget. Decide whether you’ll hire an office manager or administrator or act as your own — at least at first. Determine how many nurses will be needed and whether you’ll need to hire a specific number of physician assistants or nurse practitioners. Finally, evaluate whether you’ll need additional full- or part-time staff on board.
Who can help?
After you’ve written the initial draft, it’s generally a good idea to revise your business plan based on advice from qualified professional advisors such as your banker, your CPA and your attorney. If you consider all aspects of operations and put sound strategies in place, you’ll better ensure that your new medical practice will get off to a good start and meet the distinctive challenges of these uncertain times. Contact Holbrook & Manter today for help with these matters and other related to your medical practice.