A 4-step practice checkup
By Tom Deters, DC

How’s your business going? Are you on target to hit your various monthly and weekly target numbers, such as number of new patient visits, number of referrals, overall revenue, and net profit margin (the percentage of overall revenue that makes it to the bottom line)?

Are your various advertising programs giving you the expected return on investment per dollar spent?

As the fourth quarter of the fiscal year approaches, it becomes time to:

• Evaluate how this year is going and what adjustments need to be made to reach your 2005 goals by year end;
• Begin developing your forecasts and projections for 2006; and
• Assess your strategic plan in terms of what has worked, what hasn’t worked, where the focus of your business needs to shift, and what needs to be re-prioritized.

This is the way that the most successful big-business companies aggressively control and direct their business — and the way that the most successful chiropractic practices can do the same.

RECOMMIT TO STRATEGIC PLANNING

It’s been said that no plan survives contact with reality. That’s particularly true if you have no plan!

Too many doctors don’t have a plan because they were never taught how to build strategic business plans, create a P&L (profit and loss statement), set goals and objectives, create a marketing plan or a competitive set analysis, manipulate selling margins, or construct a business model in order to evaluate a new opportunity (change) in the market.

As a result, the business of most practices is reactive, not proactive.

The bottom line: If you have a plan, update and refine it. If you don’t have a plan, make one!

The following is intended to help you update your plan (if you have one) or help you create one if you don’t.

1. Know where you are. It’s tough to choose a destination if you don’t know your starting point.

Review your business and some of the numbers mentioned above. What are your revenue streams? What percent of your revenue is from personal injury, workers’ compensation, managed care, or cash? What patient group has the most efficient collection?

Since each patient group is different, what types of targeted advertising approaches have you tried? What has worked? What is the annual percent return on your advertising dollars?

This exercise requires some hard thinking and analysis regarding the industry, legislative changes, demographics, the competitive set in your community, and a hard look at your office operations, collections, and efficiencies.

2. Review and refocus your vision. Your five-year vision should be in the form of a paragraph with the following components:

• The positioning of the practice in the marketplace;
• A description of the major components of the business; and
• The target numbers including revenue, profit, and profit margin.

If you have a five-year vision, are you on track and on target?

3. Set your goals and objectives. All businesses generally have three main goals, which should be prioritized and include a five-year timeline.

Goal #1 is to increase revenue in the core business. Goal #2 is to develop or increase new revenue streams, and Goal #3 is to strive for operational excellence. Making your vision real is contingent on reaching these goals.

Under each goal are typically three to five objectives (each with a three-year time horizon).

For example: Under Goal #1 — Increase revenue in core business — the objectives may be to increase revenue in PI, managed care, and cash, while maintaining a lesser reliance on worker’s comp.

Objectives under Goal #2 — Develop new revenue streams — might be to identify services, products and opportunities; develop your analysis and approval process; and develop your implementation process.

Have you set realistic goals and objectives?

4. Get your operations in order. As you drill down from the higher strategic level to more of the business and operational plan level, the details become more clear on what exactly needs to be done and in what order.

Under each objective list five to ten strategies, each with a one- to three-year time horizon.

For example: Some strategies for Goal #1, Objective #1 (above) might be to increase new patient visits, increase the number of visits of current patients with expanded services, increase referrals, and maximize coding and reimbursement.

If you have a plan, do the objectives still support the goals? Are the objectives prioritized correctly or do you need to make adjustments?

Under each strategy, include how you will execute your strategies to accomplish your objectives and goals. The “how” is tactics.

Tactics in the above example under the strategy “increasing existing patient visits” might be to develop an internal marketing plan; create a patient-education protocol and materials, develop corrective-care procedures, and increase interoffice cross referrals.

Under each tactic list the tasks you must undertake — the “stuff” that needs to get done. Give each task a time frame of months or weeks.

For example: Under the tactic “develop an internal marketing plan,” some tasks might include: establish in-house seminars, create brochures and mailings for new services, and develop a patient newsletter.

WRAP IT UP

After reviewing and analyzing your business, you can lay out a plan in a matter of days. Although you should develop the company foundation (mission, purpose, vision) as well as goals and objectives, include your staff to help create the strategies, tactics, and tasks.

This process is the best team-builder I have ever seen. Everyone develops ownership and clarity and becomes more motivated.

Job descriptions and incentive plans flow from the strategic plan and become a cinch. The budget allocations and financial projections also follow right along side the plan. This can offer a map to guide you, and a methodology for results and control of your business. What an incredibly powerful tool!

For further information on seminars, workshops, and consulting on Strategic Practice Development by Dr. Deters, go to his Web site, www.tomdeters.com or e-mail him at info@tomdeters.com.