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How to Write an Effective Business Plan in Medicine

      In today’s health care economy, physician leaders are required to build programs that fill the unmet needs of their patient population in a cost-effective manner.
      • Papanicolas I.
      • Woskie L.R.
      • Jha A.K.
      Health care spending in the United States and other high-income countries.
      The practice of gastroenterology has numerous areas of specialization that provide innovative and effective subspecialty care. These services include managing complex GI conditions, such as inflammatory bowel disease (IBD), chronic hepatitis, intestinal failure, dysmotility, pancreatology, and advanced endoscopy. As we continue to adopt cutting-edge strategies to treat these diseases, it is essential for GI specialists and medical practices to be aligned in forward-thinking approaches to care. New equipment, services, or hiring personnel to support a growing program require approval from hospital executives or institution’s leadership.
      However, it may be difficult when a physician is asked to explain the value of an investment or a purchase to a hospital administrator. Potential fragmentation of the physician’s vision and the hospital’s mission can occur if the physician and administrator are not able to see eye to eye. Establishing this alignment is similar to constructing a house (Figure 1), where the foundation is the mission of the institution or hospital, the roof is the project investment that the physician leader is attempting to get funding for, and the pillars are the areas of support that promote a unified vision. An investment that demonstrates clear alignment of these 2 viewpoints has the greatest opportunity to secure funding.
      Figure thumbnail gr1
      Figure 1Schematic of elements needed to support subspecialty areas in gastroenterology.
      This task is obviously easier said than done. Administrators often lack the medical knowledge to properly assess the value of an investment for a specialized clinical program. In turn, physicians may be unaware of the large-scale mission that the hospital is trying to achieve. Therefore, a business plan is a standardized tool that can help to align the vision of a gastroenterologist with the hospital’s mission to demonstrate investment value to hospital administrators.
      • Sahlman W.A.
      How to write a great business plan.
      • Cohn K.H.
      • Schwartz R.W.
      Business plan writing for physicians.
      • McKay D.A.
      • Peters D.A.
      You want me to write a business plan? Capital budgeting fundamentals for the plastic surgeon.
      A business plan serves 2 main goals: (1) it allows a gastroenterologist to thoroughly analyze the various processes that contribute to an investment, while also (2) demonstrating value potential to an administrator in a meaningful way. The aim of this paper is to provide an easy-to-follow, standardized, and structured approach that gastroenterologists can use to facilitate writing a business plan. It consists of 5 parts: an executive summary, business concept, market analysis, business strategy, and implementation plan.

      Getting Invited at the Table: Executive Summary

      When undergoing an interview, your first impression can make or break the next steps for future business partnership. A business plan in many ways is the initial interview for your investment proposal. So, a strong executive summary is essential to make a good first impression. An executive summary provides a concise summation of the key points of your business plan, allowing you to make that great first impression as you move toward deeper partnership. In many ways, it is similar to a scientific abstract. It is no more than 1 page in length and divided into paragraphs based on subsections (in this case business concept, market analysis, business strategy, and implementation plan) where the key points are highlighted.
      The key to a memorable executive summary lies in your ability to summarize these key points effectively without getting bogged down in the details. If the executive summary is unappealing or the big picture is lost, the reviewer may not even bother reading the more detailed aspects of the business plan. Ensuring that this first impression engages the reviewer to study the investment proposal in detail is paramount. In Figure 2, we provide a fishbone diagram where the key elements of an executive summary are highlighted. Ultimately, after reading your executive summary, the administrator reviewing your proposal should have a broad sense of what the program is and how it benefits not only your department, but also the institution as a whole. Once you have an invited seat at the table, you can turn your attention on the project details to further their interest and confidence in your proposal.
      Figure thumbnail gr2
      Figure 2Fishbone diagram showing the 4 major components of a business plan.

      Providing the Rationale and Unmet Needs: Business Concept

      Now that you have piqued interest through a well-written executive summary, it is time to get into more substantive matters related to your business plan. In the business concept, you provide your reader with background information to fully understand the significance of the clinical need and justify the potential solution you are proposing in the business strategy. This is your opportunity to highlight all the great things your specialized practice does to help your patients and why you are an asset to the institution. It should include such details as the size of your practice, the services/procedures you currently provide, the characteristics of the patient population served, and so on. However, most important, the business concept should demonstrate why you are unable to adequately meet patients’ needs owing to the lack of equipment, services, or personnel/staff. Table 1 provides a list of questions that should be answered in the business concept to provide the rationale for the investment. As a real-world example, we showcase in Figure 3 how an IBD program needed to hire a nurse coordinator to accelerate program development, reach, and impact while supporting increased patient volume. In this scenario, it was important to discuss the current size of the IBD practice, anticipated growth, payer mix, and academic reputation. This background established the necessary framework to transition into the unmet needs of the patient population. Once introduced, the significance of the unmet need can be further explained in the market analysis. Ultimately, the business concept starts the process of conceptualizing the pillars that connect the foundation of the hospital mission to the roof of the investment proposal (Figure 1).
      Table 1Question Checklist to Assist in Business Plan Development
      Business concept
       What is the size of your practice?
       What is the make-up of your practice?
       What procedures/services do you provide?
       What is the current payer mix?
       What is the vision/goal of your practice?
       What is the current problem being faced by your practice?
       How is this current problem being addressed?
      Market analysis
       What is the population that this problem impacts?
       What are the demographics of this population?
       What is the payer mix of the population?
       Is the size of the market growing or shrinking?
       What are projected market size in the future?
       How are the needs of the population currently being addressed?
       What does the current competition consist of?
      Business strategy
       What is the anticipated budget?
       What other additional costs need to be considered?
       Will there be any marketing for this new project?
       What volume will you need to achieve value?
       How much additional revenue will this generate per patient?
       How long will it take to become profitable?
       How does this proposed solution meet the vision/goal of your practice?
      Implementation plan
       What is the timeline for this plan?
       How will you implement this plan?
       Who will be in charge of implementation?
       What will you do if anticipated volume/revenue not met?
       What other pitfalls need to be considered and planned for?
       How is current competition being addressed?
       What will competitors do to compensate?
      Figure thumbnail gr3
      Figure 3Key driver diagram showing goal-driven drivers and proposed plans. Note: For the purposes of illustration, an example that is relevant for an inflammatory bowel disease (IBD) program is used. A SWOT analysis describes the strengths, weaknesses, opportunities, and threats of a business or project. (For more information: https://en.wikipedia.org/wiki/SWOT_analysis.)

      Demonstrating the Value Potential: Market Analysis

      Now that administration understands the significance of the practice and the unmet clinical need, “How much investment is needed?” is the pressing question at hand. The market analysis is the section that delineates the scope of the unmet need. Fundamentally, a market analysis provides both a qualitative and a quantitative assessment of the potential population affected by the proposal. It aims to clarify the size of the population where the unmet need exists and the potential impact that solving this unmet need will produce. It pulls the broad data (population, payer mix) discussed in the business concept and applies it to the intended target population. From our previous example of an IBD nurse, the market analysis answered how the additional personnel for the program added potential value. Specifically, we had to demonstrate how a nurse coordinator would manage between-visit care, which would allow physician specialists to more cost effectively provide expert care for the growing IBD clinic population (shown by service line trends within the past 5 years). A well-written market analysis is able to addresses both the financial and nonfinancial implications of the unmet needs. For a physician, accessing and applying this information can often be quite challenging. This creates an opportunity to partner with a hospital administrative dyad who is experienced in estimating these metrics. Partnering with an administrative dyad will provide you not only with an accurate estimation, but will also lead to further collaboration between physician and nonphysician stakeholders to generate support for your proposed project or program.

      Selling the Proposal: Business Strategy

      Until this point, you have moved the reader from intrigue to deeper interest, and now the timing is right to make the sale’s pitch. The business strategy is where you finally get to propose your solution to the unmet clinical need. However, the business strategy is more than just proposing a solution; it is a detailed presentation of the costs and benefits of the project. It is important to be thorough in your assessment because an accurate assessment of the cost and benefit of your proposal can impact future investment opportunities. It is also important to note that, when purchasing a new product or offering a new service, you must anticipate not only the direct costs (hiring an IBD nurse), but also the indirect costs of an investment such as staff training costs, any complimentary equipment, and how long it will take to reach value goals (Table 1). These are details that need to be discussed owing to the significant impact they can have on the success of your proposal. Again, collaborating with a hospital administrative dyad here would be invaluable in ensuring a well-formulated business strategy.
      However, not all projects are able to demonstrate profitability easily. These purchases demonstrate an objective cost, but their benefit is more abstract. In our scenario (Figure 3), the nurse spending time on patient education and care coordination would be an appropriate example. Any gastroenterologist can attest to the value of having dedicated personnel to help patients and their families with the co-management of their disease and navigate the complexity of the health care system, allowing physicians to see more patients and provide the medical expertise that ancillary staff are unable to perform. Demonstrating how education and care coordination adds value can be challenging. The business strategy section can be used to more clearly describe this value by delineating the role of the patient educator, establishing an objective measure of success (how many patients seen, resources provided, increased patient satisfaction, etc), and demonstrating the degree of productivity that can be achieved by the physicians. Based on the same example, Figure 3 attempts to clearly demonstrate the value of hiring such an important team member through the logical presentation of a key driver diagram.

      Executing the Vision: Implementation Plan

      After performing the business sale’s pitch, it is time to conclude by communicating the steps to making the vision a reality. As a gastroenterologist, you need to be able to describe in a step-by-step manner how the project will be implemented: from making the purchase, training the staff, and gaining market share (patients). An implementation plan presents a timeframe to completion. Communicating the anticipated timeline demonstrates that the proposal is more than just a concept but an organized plan to get the job done. An effective implementation plan communicates confidence, and ends the business plan on a high note (Table 1).

      Conclusion

      Obtaining the support a gastroenterologist needs to build successful programs is essential to provide the highest quality patient care. It not only allows the program to recruit the best staff and perform innovative and effective procedures and services to meet patients’ needs, but also elevates the institutional reputation and accelerates careers of gastroenterologists. Creating a partnership between physician leaders and hospital administrators is necessary to achieve these shared goals (Table 2). A business plan helps to build the pillars that align the foundation of the hospital mission with the overarching roof of the investment proposal. By understanding the organizational structure, opportunities for growth, and incentives that drive decision making at the institutional level, today’s leaders in gastroenterology can leverage a well-constructed business plan as an invaluable tool to secure funding for their clinical practice.
      Table 2Useful Resources for Business Plan Development
      TitleAuthor/SourceNotes
      The Medical Entrepreneur: Pearls, Pitfalls and Practical Business Advice for DoctorsSteven M. HackerPublished

      December 16, 2010
      The Business Side of Medicine: What Medical Schools Don't Teach YouTom HarbinPublished

      Dec 18, 2012
      How to Write a Great Business Plan (Harvard Business Review Classics)William A. SahlmanPublished

      December 18, 2012
      How to Write a Business Planhttps://www.entrepreneur.com/article/247575Accessed

      6/28/18
      How to build a strategic business plan for your practicehttp://www.medicaleconomics.com/practice-management/how-build-strategic-business-plan-your-practiceAccessed

      6/28/18
      5 things physicians need to know about a business planhttps://www.kevinmd.com/blog/2014/06/5-things-physicians-need-know-business-plan.htmlAccessed

      6/28/18
      Primary Care Strategic Plan Templatehttps://www.advisory.com/research/market-innovation-center/tools/2013/primary-care-strategic-plan-templateAccessed

      6/28/18 (Downloadable template)
      The Five Dysfunctions of a Team: A Leadership FablePatrick LencioniPublished 2002

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