A Good Business Plan Can Help Your Medical Practice Thrive

There’s a reason that physicians typically don’t have MBAs. For most physicians, business is far from your primary function — healing is your business. But whether you’re obtaining loans to expand your practice or simply setting up operations, generating a business plan makes sense. And with the current economic uncertainty brought about by COVID-19, it’s even more important. A good plan will enable you and your colleagues to operate a successful medical practice based on proven methods, freeing you to provide the excellent health care your patients deserve.

Make it work

The key elements of a good business plan are:

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 — for example, whether you plan to have a partner and whom you expect your target patient population to be. Include your CV or a paragraph with a few more details on how you expect to fulfill your mission.

Marketing plan. Marketing is often a never-ending aspect of running a business, though it carries even more weight when you’re starting up your practice. Plan on developing a website and being on social media. Link to professional networking sites like LinkedIn. Make sure you connect with and visit — in person if possible and virtually if not — 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 community events (again, making sure you’re observing proper COVID-19 safety protocols) — wherever your targeted group of patients might be.

In addition, ask any hospital with which you’re affiliated to help you market your practice. Pharmaceutical vendors and/or representatives also often assist with marketing efforts.

Financial budgets. A start-up medical practice needs a budget for the business and the physician needs one for his or her 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 obviously 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 so does having one that projects funds for two to five years.

Staffing strategy. Management includes you, of course, but the biggest part of your job is to see patients. You’ll likely need someone to manage your office. Thinking this through will help define your practice, which also will affect your budget. Some questions to ask are:

  • Will you hire an office manager or administrator or act as your own — at least at first?
  • Will you have one or more nurses?
  • Will you have physician assistants or nurse practitioners, and how many?
  • Will some staff be part-time, or will they all be full-time?

Your decisions will affect pay and budget. And you’ll likely need to revisit these questions over time as your practice grows.

Make it happen

In these uncertain times, many medical practices are struggling to maintain profitability and at the same time ensure they can respond to patients’ changing needs. A professional financial advisor can help you set up or periodically restructure your business plan to reflect your evolving medical practice.

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DISCLAIMER: This blog is provided for informational purposes only and is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information in this article does not create nor constitute an accountant-client relationship. While we use reasonable efforts to furnish accurate and up-to-date information, the evolving landscape surrounding these topics is supported by regulations or guidance that are subject to change.

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