Building the future: The art of strategic planning

When Mischelle L. Ferrell began working at Cumberland Family Care the practice was overstaffed and financially unstable. She had to make changes-fast.

“I don’t remember your name,” one physician told her during her first month on the job at the family practice in Sparta, Tennessee, “but if you can’t help change this place in 90 days, you’ll be gone. That’s about all we can afford to pay you.”

“That gave me the motivation to say, ‘Okay, we’ve got to get going,’” Ferrell says, and she set out to transform the practice. She organized a strategic planning meeting with Cumberland’s three physicians. The meeting addressed the practice’s strengths, weaknesses, opportunities and threats (known as a SWOT analysis). They talked about what kind of practice they wanted Cumberland to be and where they saw it in the next three to five years.

By the time the meeting was over six hours later, the worn out crew realized two things: First, how far apart they were on what they each wanted and where they thought Cumberland should be; second, how difficult it was going to be to get out of the rut they were in.

“That was a very grueling meeting,” Ferrell recalls. “I remember saying, ‘Gentlemen, this is the start of many strategic plans.’”

Moving the practice forward

Strategic planning means different things to different people, says Reed Tinsley of Reed Tinsley, CPA, in Houston, Texas. He is a business advisor to physicians and medical practices.

“For small practices, it might be just getting physicians in a room and saying, ‘Here are the issues that we need to address.’ Bigger practices do it in a more formal arrangement such as a one-day retreat held offsite,” he says. It all depends on how much time physicians want to devote to it.

The goal of strategic planning is to get better as a practice and to determine what needs to be done to continue for the next five years. Strategizing is looking both internally and externally with the main goal of moving the practice forward and determining where you want to be in the short term and long term, Tinsley says. 

Internal factors that affect a practice include retirement, disability or death of a physician or staff member, employee retention, unproductive workers and lack of a marketing plan. Some external factors include mergers, changing demographics, competition, reimbursement rates and government regulations.

Healthcare is pretty volatile right now, and it’s a constantly moving target, Tinsley says. “In any medical practice, if you’re just going to show up at work every day and go home every evening, without proper planning, you’re in a heap of trouble.” 

And yet, according to several healthcare consultants, only about 20 percent of practices have a strategic plan in place. Even for those that get as far as creating an action plan, some practices don’t stick with it. Doctors get busy, experts say, and most of them aren’t going to take the time to make it happen.

“What I see too often is that doctors are so busy taking care of patients and trying to survive that they don’t stop and do any planning,” says Owen Dahl of Owen Dahl Consulting of The Woodlands, Texas. “We’ve got so many things coming at us in our industry that if we’re not tuned into at least the top areas, we can find ourselves in a situation that forces us to be reactive as opposed to proactive. When I say reactive, that means selling the practice, closing the practice or filing for bankruptcy, for example.”

Evaluating your business

The outcome of strategic planning is to produce a document outlining what the practice intends to do, the timeframe in which to do it, and who is responsible for particular parts of the plan.

One of the keys is conducting an honest SWOT analysis either before or during a meeting or retreat. “It is an opportunity for everybody in the group to say, ‘This is how I see it,’” Dahl says. 

SWOT analysis is a brainstorming technique. Strengths and weaknesses focus on internal factors that can affect the practice: What do we do well? What do we need to improve upon? Opportunities and threats focus on external factors: Where are areas for growth? What things can hurt us? 

Through this analysis, Dahl brought the picture of Physicians’ Primary Care (PPC) of Southwest Florida into focus, says Administrator Annette Pounders. PPC, a physician-owned and operated multi-specialty primary care group, has 50 providers in three locations.

“We decided back in 2009 that we wanted to come together as a group and do a three- to five-year plan for our company and figure out how we are going to survive the changes in healthcare,” Pounders says. “Where maybe I felt that we were all on the same page, by (Dahl’s) surveys and interviews with the physicians, he was able to say, ‘This is what your membership would like to see your company’s direction move in.’ He also brought us information on what was happening in other healthcare practices around the country.”

The retreat, which took place over two days, resulted in an action plan that covered a laundry list of goals including where to look for additional revenue sources. As a result, the practice added physical therapy and determined that an in-house pharmacy was not going to be beneficial to them.

PPC continues to have planning meetings. According to Pounders, what strategic planning has done for its physicians is “open their eyes to more of the business side of the practice.” 

Healthcare consultant Tinsley’s message to doctors is: Treat your practice as a business because that’s exactly what it is.

Steps to take

To begin the strategic planning process, each physician and key person in the organization should write down goals and objectives for the practice, says Michael J. Reilly, CPA at Dannible & McKee in Syracuse, N.Y., and partner-in-charge of the firm’s healthcare practice group.

He suggests bringing in a facilitator to review those objectives and help physicians identify which goals are realistic and which are not. 

A good facilitator will look at data from the practice, research what is going on in the service area of the practice and help physicians develop an agenda. He or she is also the person who will bring up thorny issues that sometimes need to be discussed. 

It’s important to surround yourself with good advisors, such as healthcare consultants, CPAs and lawyers. You want to look at the way the practice is currently working and that has a lot to do with the financial analysis, Reilly says. It will show where productivity and financial performance have been during the past three to five years. 

Blake Allison, vice president of Physician Strategy Group in Addison, Texas, says his company’s clients range from solo practitioners to 100-physician groups. He helps them create a mission statement. Then they work together to define what Allison refers to as critical success factors: quality, finance, growth, patient satisfaction and people satisfaction. He then creates specific mid- to long-term goals in each critical success factor, which are measurable and actionable. 

“I think the key is you have specific measures, defined goals and a way of monitoring your progress to achieving those goals,” Allison says. “When you do that inside of a strategic planning process, you actually watch the activation of a plan, and you start to see the needle move. We leave physicians with an actual measurement of the strategic plan. And that moves it from being this high-level fluff to being something tangible.”

Cumberland Family Care has seen tangible results. “We come within 1 to 2 percent of our budget every year,” Ferrell says. “There are always things that happen that affect a practice that there is no way to plan for, but having a strategy kept our practice on track when in other situations it could have easily fallen apart.” 

That was the case in 2008 when one of Cumberland’s nurse practitioners died, devastating those at the practice. “We needed to grieve as a family of people who spend their days with each other,” Ferrell says. “But we also had this plan in place of how we keep marching forward. The plan just helped hold us together. It was a document that let us take our focus off of how horrible it was to unexpectedly lose somebody and put our eyes on the document, detach and say, ‘This is what we have to accomplish…Let’s get focused.’” 

It was not just heart-felt devastation but financial devastation that the employee’s death could have brought to the practice. “Because we lost a provider who had a large volume of patients, we had to think about where all those patients were going to go.” Ferrell says. “I do believe there is absolute significance to taking the time to put a plan together.”

Cumberland Family Care was transformed from a fledgling family practice into a group of three practices with 22 employees and more than 20,000 patient visits per year. And it was all in the plan.

Exiting the practice

The final critical element of strategic planning is a physician’s exit from the practice and his or her plan for succession.

“The whole idea of exit strategies and succession planning is almost foreign to doctors,” says Michael D. Brown, president of Health Care Economics in Fishers, Indiana. “It is the absolute most emotional issue I’ve ever talked to any of my clients about.”

Exit strategies and succession planning are mutually exclusive concepts, he says. An exit strategy is a defined five-year strategy for leaving the practice. In a typical five-year plan, you will work full time the first year if you want, slowing down in year two, while getting your successor in place in year three, four and five, Brown says. You also have to decide when to release control of the practice as you wind down your involvement. An exit strategy must be in writing and lead by the accountant, the consultant and the attorney.

A succession plan comes afterward when you ask: Who is my successor going to be? Finding the right individual is critical, Brown says. You have to find someone who wants to be a managing partner, not an employee. 

When it comes to how they will leave the practice “doctors definitely care, even if the say they don’t,” Brown says. “They want to make sure their practice and their patients are going to be taken care of.”

Put strategy into action

There is no boilerplate strategic plan. Each is unique to a practice. The steps consultants take to facilitate a plan vary as well, but here are some general guidelines:

• Set aside time for an offsite meeting to come up with goals and objectives from which to create a mission statement. 

• Surround yourself with good advisers ––and good metrics

• on practice performance.

• Consider a facilitator to complete a SWOT analysis, help you determine which goals are realistic and which are not, and bring up thorny issues that need to be discussed.

• Follow an agenda that addresses issues such as quality, finance, growth, patient satisfaction, and employee satisfaction.

• Develop an action plan.

• Create mid- and long-range goals that are measurable and actionable.

• Assign responsibilities and expect accountability and follow-up.

• Have an exit strategy and succession plan.