HELP WHERE HOSPITALS NEED IT ®
HELP WHERE HOSPITALS NEED IT ®
Community Hospital Blog
By Cindy Matthews, CHC Executive Vice President
Vital to an organization’s future, a business plan is a framework outlining the steps for financial and operational success. For many hospitals, this process has occurred at five-year intervals tied to strategic planning efforts. However, in today’s healthcare environment marked by ongoing industry, reimbursement, and market shifts, development of an annual business plan offers leaders a greater measure of security and flexibility to manage change.
Best practices for your hospital’s business planning include:
Align business planning efforts with strategic initiatives
Getting started, associate business planning efforts with strategic goals and objectives. Some hospitals benefit by having a board-level strategic planning committee to identify overarching strategic initiatives. The business-unit focused plans you develop for service line growth, physician alignment, operational efficiency, clinical quality and patient engagement/satisfaction must be consistent with the organization’s strategic objectives. Leaders should work with hospital managers to ensure department and service line business plans and budgets align with hospital strategic initiatives.
Conduct a market assessment prior to starting the business plan
A snapshot of your environment—such as demographics, patient origin and market share—will serve as the foundation of your business plan. For example, evaluate volumes coming into the hospital broken down by zip code and/or service line. Who are your competitors in the marketplace? What opportunities are available to stem outmigration?
Draft your business plan concentrating on measurable results; develop an action plan
Incorporate these areas of focus:
Each stated strategy should have a measurable metric. What does the term “enhance” mean, for example? Be specific. Do you anticipate an increase in the number of orthopedic surgical procedures? How would you get there and what are the associated revenue goals?
An integral component is a detailed action plan with tactics to achieve the desired results. Identify who is responsible for achieving a stated goal, and the timeline (a date or quarter) for completion.
Involve Stakeholders in plan development
Although the hospital CEO is ultimately responsible for the business plan, hospital Board members and medical staff members should be included in the planning process, in addition to other C-suite leaders including a marketing representative if available.
Input from Board members can be advantageous particularly at the beginning of the planning process; some hospitals engage Board representatives as part of a pre-planning process, and others have a strategic committee to assist with business plan development.
Stakeholders including physicians are also essential planning process team members. The hospital’s medical staff plan should drive physician recruitment efforts; regular physician-CEO communication integrates valuable physician input into the plan.
A process timeline
Although planning is often viewed as a task or event, something with a timetable marked with a beginning and an end, it’s an ongoing process. “Always be planning and implementing” should be the mindset.
The timeline you develop for the business planning process should
integrate with the hospital’s fiscal plan and associated deadlines. For hospitals with a fiscal plan year running from July 1 to June 30, completing a market assessment in the fall provides much-needed data for business plan development due in January. Next, plans can be presented to respective hospital Boards for approval in February or March —a precursor to development of the annual budget with accompanying action plans. Be certain to allocate additional time if needed depending on the level of Board involvement.
A well-crafted business plan identifies the steps for financial and operational success. Also, the plan places your organization in a position of strength to grow regionally or get ready for a partnership, if desired.
For more information on business planning, see CHC Consulting Annual Business Planning and Budgeting.
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