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Building a Business Plan: Part 3
The Internal Environment
This article by By Terry Flanagan, DC, DABCO, MPH, MBA first appeared in ACA News • Volume 1 • December 2005

In this installment of our business planning series, the focus will be on the internal structure of your practice environment. The emphasis will be on the development of mission and vision statements, scope of services, operational analysis, key personnel and team building.

Mission, Vision Statements
The first step in developing your internal environment is writing a mission statement and a vision statement. These statements direct the internal focus of the practice and provide touchstones for the practitioner. While this process might not appear to be the most exciting, it is critical in building the foundation for success.

In my experience, physicians want to bypass this stage and move directly into the results and decision-making phase of the strategic plan. The mission and vision statements, however, should be considered critical to success. The vision statement should reflect the physician’s personal goals and is optional for outside distribution.

The mission statement, on the other hand, is germane to everyone in the practice. It announces which direction you plan to take, lists your goals and outlines how you plan to achieve them. It should be given to all staff members because it tells them why they are there. The statement serves as an ongoing reminder of goals for the physician and the staff, and it also announces to patients that you are striving for excellence.

The mission and vision statements are possibly the most difficult portions of the business plan to write – having general ideas of what you want to do is one thing, expressing them in black and white is quite another.

Scope of Services
Developing your scope of service may seem obvious at first, but, on deeper reflection, it may not be as easy as it seems. Deciding what type of services you want to provide and what type of conditions you want to treat requires greater consideration than it has in the past. Increased utilization of complementary and alternative medicine (CAM) means there is the potential to treat a greater variety of ailments.

In addition, because of variations in state scope of practice laws, how you practice may determine where you practice. The desire to be a generalist versus specializing in a specific type of practice may influence which state and what set of laws gives you the best opportunity to succeed. Scope of service determinations should help influence decisions such as which type of population base would be most appropriate for your service and the type of equipment and the level of staff training you will need. Financial considerations related to scope of service and reimbursement sources (i.e., cash, insurance/managed care, PI, WC) will also affect cash-flow velocity. By deciding whether you want to practice in a specialized niche or within a sector of the broader market, you will be able to design your business plan to incorporate the specifics of your individual needs.

Staffing Considerations
The success of your practice will be determined to a large extent by the people with whom you surround yourself. For this reason, your plan should map out how you will integrate staff into the philosophy of the office and develop them into a team. As the practice matures, key positions will develop. Be sure to document job descriptions.

Consideration should be given to internal factors.
Operational Systems
One of the primary drivers of practice value is the operational system. Consider the type of software your practice will require, including the cost and information-return capabilities. Being able to obtain operational information about the trends and tendencies of the practice will give you important feedback on operational efficiencies and areas that should be flagged for improvement. For example, referral tracking can provide an opportunity for inter-professional growth. Comparative financial information can determine changes over time. Account aging systems can alert you to slow or delayed reimbursement patterns. Accounts receivable turnover information can provide a look at system and staff efficiencies. Ongoing evaluation of CPT codes can track reimbursement returns.

You should also consider additional operational systems such as electronic billing, patient documentation, patient scheduling and follow-up. Further, regulatory-related systems (i.e. HIPAA), with the necessary supporting documentation, should also be developed and a plan outlining responsibilities drafted. Evaluate the cost versus capabilities of the software that you are considering and outline a working model.

When developing the internal environment plan, look at the multiple aspects of the practice that will be merged into the day-to-day working environment. Internal operations should be viewed as the “platform” to your success – without a solid internal structure, even detailed external planning and the best marketing will not deliver the desired results or a return on your investment. With improved internal practice efficiencies, however, you can lower your overhead – increasing your value at the bottom line.

View the next article in this series. GO

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