Elements of Your Medical Office Startup Business Plan

How to write a first business plan for a medical office

Preparing a business plan in the health care industry is different than the traditional business plans taught in business school. The process, analytical tools and the structure of a startup business plan specifically designed for the medical office requires an understanding of how a physician practice works. This type of business plan requires the collaboration of a team of experienced professionals.

A business plan should also include a list of potential problems that may occur and what strategies are in place to overcome them. This shows that the management team has anticipated roadblocks but nonetheless don’t plan to be hindered by them. Include these important elements in your medical office business plan:

  1. Organizational Structure
  2. Marketing Basics
  3. Financial Forecasts

1
Organizational Structure

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The organization element of a business plan describes the management structure. Because of the unique skills needed to manage a medical office, the management structure may be different than a traditional business plan may show. The chain of command and the responsibilities of management may be impacted based on several variables.

Creating an organization chart can help to illustrate the management structure of the medical office. It also indicates how responsibilities are assigned and identifies a formal chain of command.

In a medical setting, there may be two lines of authority to demonstrate clinical and non-clinical duties. For instance, the Office Manager will be at the top of the organization chart with a line to clinical services and a line to business services.

MEDICAL OFFICE MANAGER

CLINICAL ----------- PHYSICIAN ASSISTANTS & NURSES

BUSINESS ----------- FRONT OFFICE & BILLING

Depending on the size of the office, this structure could be more complex and have several different levels of authority.

The organization structure should also answer these basic questions.

  • Who will be responsible for the budget?
  • Who will be responsible for the operations?
  • Who will be responsible for the overall management?

2
Marketing Basics

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The marketing element of the business plan describes the type of market the medical office is attempting to attract based on the type of services being offered. The first thing to do before beginning the marketing phase of the business plan is to determine who will be responsible for the marketing. It is important to choose someone or an organization that is experienced in medical practice marketing.

The marketing phase requires someone that can be realistic about market expectations, setting and accomplishing goals, and assessing the competition. Marketing identifies the types of services that should be offered based on the demands of the community, analyzes the performance potential, and develops strategies and goals necessary to maintain a competitive edge.

Marketing is also instrumental in the successful negotiation of managed care contracts. Knowing the consumer market is one important factor of a contract strategy. Do you know what percent of your market has Medicare, Medicaid, Cigna, Blue Cross Blue Shield, Aetna, United HealthCare or uninsured? A market survey provides valuable information required of all contract negotiations.

3
Financial Forecasts

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The financial element of the business plan describes how the medical office is expected to operate financially over a period of time ranging from one to ten years. Financial forecasts are illustrated by the use of financial statements.

  • The Projected Cash Flow Statement includes the number of years, purchased or leased capital assets, depreciation, earnings, expenses, and loans.
  • The Projected Income Statement includes revenue type, revenue source, revenue amount, and expenses.
  • The Projected Balance Sheet includes cash, accounts receivable,inventory, equipment, property, accounts payable, current liabilities, long-term liabilities, and equity.

Financial reporting is used for external and internal purposes. When used for internal purposes financial reports are used by management for planning and projecting outcomes.

Financial management refers to the day-to-day operations as well as the long-term direction of the medical office. There are various components of financial management from setting prices to controlling costs to accounts receivable management. A successful medical office depends on how well the organization understands the importance and purpose of financial management.

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