Simple steps to write, implement a long-range strategic plan for your practice
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“Without leaps of imagination, or dreaming, we lose the excitement of possibilities. Dreaming, after all, is a form of planning.”
– Gloria Steinem
“Never look back unless you are planning to go that way.”
– Henry David Thoreau
Barely one out of 10 practices — even quite large practices — ever get around to writing down their long-range goals. It is easy to get hung up about preparing a strategic plan for your practice.
We have had hundreds of clients promise to write up their strategic intentions (or promise to edit our first draft of a plan) only to return months later to find this chore undone.
Most surgeons we ask feel a little guilty that they have never gotten around to preparing a strategic plan. They feel diminished as entrepreneurs to be lacking this basic cornerstone of business management and development. They have good intentions, but getting started on something as abstract and murky as a future plan can be daunting.
If you feel this way, here is a simple five-step process to make a plan for your practice — if indeed a plan is needed in your setting.
Step one: Decide if (and why) you need a strategic plan
Let’s commence with a little business heresy: It is a myth that you must have a strategic plan for your practice. Here is the evidence.
Exhibit one: The vast majority of ophthalmic practices — like the vast majority of small, closely held businesses — do not have a formal, written strategic plan. With few exceptions, they do not get into trouble.
Exhibit two: The vast majority of practice owners who do write down a strategic plan do not look at their plans very often. Absent the urgings of their practice consultants or administrators, they rarely edit their plans, once written, much less use them as an active document.
This does not mean you should not have a plan. Here are some possible excellent motivations that may exist in your setting:
- You may be at a crossroads in your professional career, either ready to kick it up a notch (common in your 40s) or down a notch (common as you reach your mid-50s or 60s).
- You may have grown your practice over the years by opportunity rather than by plan. As a result, your business is a hodgepodge of unrelated satellites and patient services, with no clear sense of direction or focus. Because of this, profits are low, and your practice team is confused about the future.
- Your informal, unplanned operations may have resulted in “mission drift” or, worse, frank commercial failure. It is much easier to stay on course if you have defined, measurable targets. The units for this can be case volumes, market share, revenue scale or raw profitability.
- Your market environment may be changing. This is true for nearly every eye surgeon today, in both good ways and bad. New procedures and products are launched representing opportunity. At the same time, costs are rising and fees are falling.
- You and your partners or managers may disagree about the practice’s strategic destiny. The act of collaborating on a plan may help gain consensus or at the very least highlight the areas of greatest discord.
As you can tell from this list, not every practice needs a plan. Examples include:
- Boutique practices owned more for professional satisfaction than profit by doctors who are already financially independent.
- Practices in noncompetitive markets that generate more than a living wage without any special planning effort.
- Practices that are encapsulated and “well fed” as a department within a multispecialty group, staff-model HMO or health system. (Your planning consists of whatever your institution wants to do with your department.)
There is no need to be overly elaborate. In the vast majority of cases, a document stretching no more than three to five pages will serve your needs just fine.
Step two: Conduct research
You already know (or should know) your own internal practice numbers and trends. What you need now is data from the rest of the world. How large is your natural service area? What is the population mix? How many eye surgeons practice here? How many optometrists? Are the population-to-provider ratios better or worse than the rest of the country? Interview local hospital administrators, managed care officials and the managers of larger noncompeting clinics. Ask them the following questions:
- How would you describe the local health care system today?
- What is your forecast for the next 5 to 10 years of how this will change?
- If you were the CEO of a practice like ours instead of your current organization, what would you do to prepare for the future?
Step three: Write the plan
Try to answer these questions:
- What is our appropriate planning horizon? (For most practices, this should be 5 to 10 years at most.)
- What are the north/south/east/west boundaries of our service area?
- What is our current revenue and our desired revenue in 5 years? What annual growth rate does that work out to? Can we adapt to this pace of change?
- What is our current and future overall market share? Are we aiming to be the No. 1 practice or just in the top five?
- What will our cataract, LASIK and other major case volumes be?
- What is our current and future profit margin? Will our existing partners get a personal pay raise as we grow the company? If not, why are we motivated to grow?
- How many office locations will we have in 5 years?
- How many MDs and ODs will we have? How many of these providers will be partners vs. associates?
- What mix of services will we supply in the future? What services that we now provide might we drop?
- How many lay staff will we employ in the future? What new technology will we adopt? Will we need more space?
- What ancillary services will we offer? Office-based surgery or an ASC? An optical?
- What local health system ties will we make or break?
- If health care reform is slated to be more active in our market, how will we respond?
- What will our succession plan be? Will we have a traditional passing of the baton to young partner-track associate docs or groom ourselves for a private equity or health system transaction?
Step four: Edit the plan
Of course, in today’s fluid world, most “strategic plans” are really “contingency plans” subject to considerable adjustment. Hand out copies to your administrator or office manager, your colleagues in the practice, and your key managers and advisors. Unless your document is for formal external consumption, such as your banker or investors, do not get hung up on the format or length. This document is principally meant for your internal use. Feel free to make it somewhat personal. Address work-life balance issues and discuss any goals you have for sabbatical time, community service or mission work.
Most importantly, make sure your plan reflects the balance you are trying to strike between your practice as a “business,” in which success is measured in sustainable profit dollars per MD-owner hour, and the more foundational aspect of every practice, allowing one to undertake an honorable professional life, irrespective of profitability.
Step five: Refine the plan often
Once you have gone to the effort of preparing a strategic plan, by all means, use it. Here is just a partial list of potential applications:
- Use the plan to reaffirm and secure the endorsement of partners and partner-track associates.
- Distribute the plan — or a sanitized version — to managers and perhaps all practice staff. Hold a special meeting to discuss your goals and get everyone’s input. Prominently label the distributed copy as a “DRAFT” — make sure your staff know that it is a work in progress and that their ideas are valued.
- Share a copy of your plan with potential employee providers. A cogent document will help to assure that their ambitions are a fit with your own.
- Show your outside experts the plan. Your accountants should be drawn in to develop budget forecasts based on any special initiatives in the plan. Chances are that partner admission, new facility development, succession planning and related issues will bring out helpful comments from your attorney and will increase the odds that advice given in other areas will be germane to your interests. If you have a management consultant, they should help you craft the plan and match your aspirations with available strategic resources.
- Show the plan to your banker as part of any loan applications; a plan can help to tilt loan terms in your favor.
- Show your spouse the plan. They are likely to be a valuable sounding board and help you balance your business ambitions with your other responsibilities.
- For more information:
- John B. Pinto is president of J. Pinto & Associates, Inc., an ophthalmic practice management consulting firm established in 1979. He is the country’s most published author on ophthalmology management topics, including John Pinto’s Little Green Book of Ophthalmology: Strategies, Tips, and Pearls to Help You Grow and Manage a Practice of Distinction, UP: Taking Ophthalmic Administrators and Their Management Teams to the Next Level of Skill, Performance, and Career Satisfaction (with Corinne Wohl), Simple: The Inner Game of Ophthalmic Practice Success, and Ophthalmic Leadership: A Practical Guide for Physicians, Administrators, and Teams. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.
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