Reed Tinsley, CPA

SWOT analysis for a physician medical practice?

What is a SWOT analysis? It is a situation analysis in which internal strengths and weaknesses of an organization, and external opportunities and threats faced by it are closely examined to chart a strategy. SWOT stands for strengths, weaknesses, opportunities, and threats. Moving forward, it's extremely important for you to conduct a SWOT analysis of your medical practice, no matter how big or small it is. Only then can you make strategic decisons for your physician practice that will move it forward successfully in to the future. Without strategic decisionmaking NOW, your medical practice is just a rudderless ship.

So I ask the question: When was the last time you conducted a SWOT analysis of your medical practice?

Does this not scream out for some physician strategic planning?

A third (34 percent) of physicians plan to leave medicine within the next 10 years, according to a report from staffing company Jackson Healthcare. The "2012 Medical Practice & Attitude Report," based on several surveys of U.S. physicians conducted throughout the year, illustrates how physicians are being squeezed on multiple fronts like never before.

According to a survey of more than 2,000 doctors conducted in the spring of 2012, 57 percent of oncologists and hematologists said they will retire by 2022, as well as 49 percent of general surgeons, 49 percent of ear, nose and throat specialists, 45 percent of cardiologists and 42 percent of urologists. Moreover, out of the more than half (56 percent) of respondents currently working in private practice, 6 percent said they planned to leave by year's end. Driven mostly by high overhead and reimbursement cuts, these doctors will seek respite by becoming hospital employees, seeking work as locum tenens or moving to nonclinical teaching or administrative positions.

The phases of physician practice strategic planning

It is an observation that never ceases to be interesting: Strategic planning plays a central role in the ongoing management and operation of the most successful medical practices. It is also a process that is commonly either missing or maligned among practices of average performance. As with any key functional initiative, the value the medical practice perceives, and realizes, from the undertaking is a function of how well the process is implemented, and the plan itself is executed. It is also worth noting that, in the past five years, many practices actively engaging strategic planning processes and related strategic initiatives have tended to over-weight the external market factors, and under-weight the significance of the internal needs and related considerations.

A balanced process that properly evaluates internal and external environmental issues, and develops strategic initiatives with respect to those issues, will create more success opportunities for a medical practice. So when considering strategic planning, make sure your process is broken into the following phases:

Physician interviews and questionnaires
Mission Statement development and ratification
Internal environmental assessment
External environmental assessment
Action plan - Goal setting
Follow-up and measurement of action plan
Annual edit and revisions to initial strategic plan
Action plan - Goal setting - Year Two
Follow-up and measurement of results

A strategic planning self-assessment for physicians

Following is an example of our strategic planning self-assessment. The purpose of these self-assessments is to give you a concise checklist of best practices in a clinical practice. This checklist follows the Pareto Principle of focusing on the 20% of business practices that get you 80% of the results. Therefore, I don’t claim that it covers EVERYTHING. But it does cover a good percentage of the most important things.

Strategic Planning Checklist

 We do a strategic planning process at least annually.
 This process gathers input from key stakeholders and data about our practice and marketplace.
 We review our mission and vision for the practice.
 We assess the size and growth of the market for our services.
 We compare our own “penetration” to the size of the market.
 We assess trends in managed care and payments and analyze our contracts.
 We evaluate competitors’ strengths and weaknesses, and how we can gain an edge.
 We assess the strengths and weaknesses of our referral network.
 We evaluate the depth and breadth of our overall service offerings. We assess the strengths and weaknesses of our marketing.
 We assess our payers, including our payer mix.
 We evaluate our clinical utilization rates and quality or care outcomes.
 We evaluate our internal controls.
 We evaluate our cost structure and financial ratios.
 We review our technology.
 We take a hard look at the patient’s experience, and how to improve it.
 We assess the capabilities of our clinicians and staff and identify any gaps to fill.
 We review physician and staff compensation.
 We assess our risks, compliance, and malpractice insurance.
 We evaluate our relationship with local hospital(s).
 We analyze our financial strength, including capacity for debt, days receivables, trends in aging of receivables, collection ratios, and profitability by services.
 We assess our facility and location, including whether we are located in the optimal zip code/area to serve our desired patient base.
 We do an overall “Strength, Weaknesses, Opportunities, and Threats” or SWOT analysis about our practice.
 We determine which services and programs to expand, which to defend, and which to exit.
 We identify the top issues we need to address, and then identify key priorities to address these issues, achieve our vision, and be more competitive and profitable.
 We set annual performance/financial goals for our practice and develop a plan to achieve those goals.
 We assign specific accountability to achieve these initiatives, and a communication plan to follow up on them.

 

Start the year with a SWOT analysis for your medical practice

The start of a new year—along with pretty much any other date—is a good time to assess your physician practice's marketing position and plan for the future. What’s going well? What isn’t? And how to distinguish critical information from the superfluous? One time-tested approach is to do a SWOT analysis—strengths, weaknesses, opportunities and threats. Here are the basics.

Strengths. What are your strengths in your marketplace? Put another way, what distinguishes you from your competitors in a positive way? Do render a service they don't? Is your clinical quality and outcomes better? Reputation? Patient satisfaction? You goal is to capitalize on these strengths.

Weaknesses. This might be the converse of your strengths, but not necessarily. Be honest with yourself about your practice's weaknesses. This is the only way you can improve. Remember that your weaknesses that lead right into …

Opportunities. What’s new? Is there a new service line or product you can add to your practice. Maybe there's an opportunity to open a satellite office. What about joint venture opportunities? One often overlooked opportunity is the ability to reengineer your practice to make it more effective, efficient, and profitable.

Threats. Recognizing threats early and planning to meet them can spell the difference between a thriving and a failing physician practice. How is your practice going to address shrinking reimbursements, competition from hospital employed physicians, lowered profit margins, physician practice mergers, and Accountable Care Organizations?, just to name a few.

The only thing constant in healthcare these days is change - and change is what creates opportunities and threats. So plan to capitalize on your strengths, minimize your weaknesses and take full advantage of change in 2012.

Ways to Tank Your Physician Practice Strategic Planning Retreat

As I’ve talked about until I’m blue in the face, all physician medical practices need to plan their future. One way to do this is to have a strategic planning retreat. Retreats have a bad reputation because it’s so easy to stumble over the details. Anyone who knows what good meetings look like, also knows that they don’t happen by circumstance. Avoiding the following five pitfalls might keep you in the clear when planning your next retreat.

1. Ignoring the Elephant in the Room

Strategy is worthless if your house isn’t in order. The best-prepped strategic retreats will not go anywhere without people. And if any key staff member is upset or has an outstanding problem, your strategic planning meeting will likely be disrupted. Give your employee the opportunity to voice issues or concerns privately. Make sure you clarify your intent is to clear up any problems that may inhibit his or her full participation during strategy session.

2. Refusing to Use an Independent Facilitator

If you were having a party for 100 of your closest friends, would you improve your efficiency by hiring a caterer, or would you cook for all of them? Why take on the extra stress? A strategic planning meeting is no different. Hire an independent facilitator and you can be fully engaged in the strategy and planning, and leave meeting process and structure to someone else. The return on your investment will be worth the time and money.

3. Inviting Everyone

The old cliché of “too many cooks spoil the broth” couldn’t be closer to the truth. While it is imperative that key employees have a voice in planning, not everyone has to literally be at the table. You can decide the ideal size for your strategic planning meeting. The key thing to remember is be inclusive, but don’t invite everyone to everything.

4. Forgetting to Explain the Process

A good facilitator will make sure to explain the strategic planning process and outcome of the meeting from the get-go. Use shared strategic planning language, understand the elements of a strategic plan, and be clear on the desired outcome for the meeting. By making sure that everyone starts on the same page, you eliminate any confusion that might derail your meeting.

5. Ending on a Low Note

The best way to get people jazzed about the plan is to have them visualize success. Do that by asking your team to draw a picture of what the medical practice will look like if you achieve your strategic plan. Have them really explain it. How many employees? What is the office like? Who are your customers? What is the competition saying? Etc. That way everyone leaves the planning session seeing a connection between the work of the day to a future state of success.

Strategic planning for physician practices

As you likely know, there are many changes occurring in the health care marketplace.  These changes are coming to pass very rapidly and this in turn is forcing many practicing doctors for the first time to consider where their practice stands and what to do about its future.  Declining reimbursement patterns and heightened competition are fueling concerns everywhere. 

Faced with an uncertain future, medical providers need to begin the process of addressing specific issues within their practices and begin implementing related solutions. With all of the changes to physician reimbursement, the increasing penetration of managed care, and the heightened competition for patients, practices can no longer afford a "business as usual" attitude. Practices need to decide how they intend to position themselves in the future in order to maintain their net income, grow their practice, transition the current owner(s) to other owners, and compete with others for patients and managed care contracts. In many areas of the country where there is a large penetration of managed care, the latter is arguably the most important. This is due to the fact increased competition in these areas have resulted in patients being shifted away from practices to other practices and delivery systems. 

As a result, we feel most medical practices today need to engage in the process of developing a strategic plan. Practices operate today in an industry that is rapidly changing and evolving. These changes are not going to go away any time soon. Each succeeding "change" seems to impact the revenues and operations of medical practices. 

Most medical practices should consider developing a strategic plan. The best forum for this is a strategic planning meeting or retreat. The first step in the planning process is to meet to discuss how the practice intends to address the future and whether or not a strategic planning meeting might be in order. Decide if planning for the future is in fact important and whether this process might get all of the doctors thinking on the "same page." Also, decide if such a process would in fact benefit the practice, not only in the short term, but the long term as well. Strategic plans seem to work very well for those practices that seem to “drift” along year to year. These are the types of practices that run along smoothly without any evident problems, both internally and externally. Everyone perceives there are no problems. However, as soon as there are changes, these practices often fail to react and in the end, are impacted greatly. 

After deciding that a strategic plan would be beneficial, the next step is to set a specific date for the strategic planning meeting. All physicians and administrative personnel should attend. So as to not take away from patient care time, this meeting is usually held on a Saturday or even over a weekend. Some practices want to “get away from it all” and schedule their retreat at an out of town location. You will also need to decide if a facilitator is necessary. If so, this person can be the practice's CPA or an independent consultant can be hired. 

Before the meeting, gather input from all of the people in the practice who are going to attend about those issues they really want brought up and discussed. This is usually given to the facilitator, who then will use this information to develop the meeting agenda. The following is a sample outline that can be used at the strategic planning meeting: 

Strategic Planning Meeting Outline 

1. Discussion of Desired Outcomes from the Meeting [IMPORTANT TO GET EVERYONE ON THE SAME PAGE ABOUT WHY THERE ARE HERE]
   1. Common understanding of where the practice is today
   2. Everyone needs a cooperative view of “soft spots” and opportunities for improvement
   3. Everyone needs to develop a consensus of where the practice wants to be in the future
   4. Everyone must agree to design an action plan and implement it
2. Practice Overview and Discussions
   1. Financial Overview
   2. Billing and Collection Benchmarks
   3. Practice Overhead
   4. Accounts Receivable Status
   5. Financial History
   6. Provider Income Levels – Past and Present
   7. Overview of Current Practice Personnel
   8. Other [As determined by facilitator or the participants]
3. Participant Observations about the Practice – Be specific
   1. Positive points about the practice [ALWAYS EMPHASIZE THESE]
   2. Negative points about the practice
4. Overview of Local Health Care Service Area
   1. Managed care plans, penetration, and growth
   2. What has been the growth in capitation
   3. Consolidation activities
   4. Who are the practice’s competitors
5. Review of Key Objectives & Critical Success Factors
   1. What makes practice unique
   2. What makes practice successful
   3. What is the doctors' shared vision
   4. Review key undertakings of past year
6. Top Issues Now Facing the Practice
   1. How Practice Intends to Address Each Issue
   2. A detailed discussion should follow, including any obstacles that must be overcome to effectively address the issue
7. Issue 1: ____________________
   1. How practice intends to address the issue
   2. Obstacles to overcome to ensure success
8. Issue 2: ____________________
   1. How practice intends to address the issue
   2. Obstacles to overcome to ensure success
9. Issue 3: ____________________
   1. How practice intends to address the issue
   2. Obstacles to overcome to ensure success
10. Issue 4: ____________________
    1. How practice intends to address the issue
    2. Obstacles to overcome to ensure success
11. Issue 5: ____________________
    1. How practice intends to address the issue
    2. Obstacles to overcome to ensure success
12. Goals for Next Period
    1. Strategic undertakings for the practice
    2. Financial goals for the practice
    3. Other key efforts for the practice
13. Summary
    1. Summarize key successes/challenges
    2. Reiterate key goals
    3. Create action plan committee
    4. Set next meeting to review implementation status
    5. Thank you to all attendees

Hospital employment of physicians rising

Thought you might be interested in the article below that was recently published in the Dallas Business Journal. I again emphasize the need for strategic planning for all medical practices, no matter what the size. Is fleeing to hospital employment a real “long term” option for physicians? We’ll see.

Physicians are flocking to hospitals for employment and the migration will continue under the health care overhaul, industry experts said in a conference Wednesday in Dallas.

"The employment of physicians (by hospitals) is a health care megatrend of the future," said Joel Allison, CEO of Dallas-based Baylor Health Care System.

A survey of physicians indicates that 58 percent of all medical doctors are interested in more closely integrating with a hospital system, said Ben Isgur, director of Health Research Institute for PricewaterhouseCoopers LLP.

"It's a different world than it was just two years ago," Isgur said. "There is a stampede of physicians aligning with hospitals."

Seventy-one percent of the physicians surveyed said they want to work for a hospital because they believe they'll have more job satisfaction. Fifty-seven percent said it would increase their annual revenue, 47 percent said the benefits and retirement package would be better, 41 percent said it would give them more work-life balance and 41 percent liked the idea that hospital employment would give them a more consistent income level, the PricewaterhouseCoopers survey found.

Sixty-eight percent of physicians said hospitals are wooing doctors to give the hospital more market power when negotiating with insurers and other payers. Sixty-six percent said hospitals want to decrease costs and increase efficiency, and 64 percent said hospitals are aligning with physicians to improve patient outcomes.

Steps in the Strategic Planning Process

As listed below, there are logical, distinct steps in the strategic planning process. As you know, I am a vocal advocate that all physician practices, no matter how small, should go through some type of strategic planning process. When go through the planning process, you should complete one step before moving to the next, even though they may occasionally need to go back and make changes to earlier steps. The seven steps listed below represent a systematic, rational, objective approach for developing a Strategic Plan, rather than relying upon politics, emotions, opinions, and subjectivity to determine your organization's future. Now quit wasting time and get to it!

 

1.   Develop a Vision and Mission Statement

2.   Perform External Audit

3.   Perform Internal Audit

4.   Establish Objectives

5.   Establish Strategies

6.   Implement Strategies

7.   Evaluate Strategies

8. Conclusion