Strategic Planning for Practice Executives

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Strategic Planning forPractice Executives

• AAOE Annual Meeting
• San Francisco, California
• 2009

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Your Presenters

• Maureen Waddle, MBA
• Senior Consultant, BSM Consulting
• Consults with practices on strategic planning
• Derek Preece, MBA
• Senior Consultant, BSM Consulting
• Consults with practices on strategic planning

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What to do?
Your practice has 3 doctors, all very busy

• One doctor wants to hire another physician to
  help carry the overhead burden

The third doctor has been pushing to open a
satellite office in the town where he lives
Another doctor thinks that 2010 is the year to
add EMR to improve efficiency
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Attributes of Successful Practices
A healthy practice environment
Exercise of financial discipline
Service commitment to all stakeholders

• Commitment to planning and execution

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What is Strategic Planning?
A process that produces a plan for how the
practice will accomplish its goals
The beginning of implementation
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Why a Strategic Plan?

• To expose and reconcile differing goals
• To be pro-active rather than reactive
• To help prioritize resources and choose between
  mutually exclusive goals
• To set agreed-upon objectives for practice
  administration
• To avoid project whiplash
• To set a foundation for department and individual
  employee goals

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Practice Vision Mission
Why do we exist?
What goals will help us serve our mission?
Overall Practice Goals
What is our plan for accomplishing our goals?
Strategy
What actions do we need to take to fulfill our
strategy?
Tactics
Who is going to be in charge of which tactics?
Assignments
What can our employees do to help reach practice
goals?
Department Individual Goals
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Strategic Questions
What do you want your practice to look like in
the future?

• Strategic Model
• Number mix of providers
• Products and services offered
• Geographic reach and locations
• Positioning in the mind of customers
• Environmental factors that affect your future
• Actions required to maximize your practice
  opportunity

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Nine Basic Strategic Models
Comprehensive Solo
Comprehensive Group
Subspecialty Solo
Referral Center
Multi-Subspecialty Group
Subspecialty Group
Multi-Specialty Clinic
OD/MD Practice
Multi-Subspecialty Academic
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Fill Out Form 1
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Products and Services Offered
Broad Strategy

• Offer all or most possible products and services
• Example Comprehensive or multi-subspecialty
  practice

Deep Strategy

• Become the expert in one or two areas
• Example Retina or Lasik-only practice

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Fill Out Form 2
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Fill Out Form 3
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Number and Mix of Providers
Possible Reasons for Adding a Physician

• To optimize use of fixed expenses
• To capture additional patient flow
• Underserved area
• Underserved specialty
• To defend a geographic area
• To replace a departing or slowing physician
• Because a compatible doctor is available

Financial Feasibility

• Project revenues
• Project additional expenses

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Geography
Possible Reasons for Adding an Office

• To capture patients from an underserved area
• To relieve overcrowding at main office
• To discourage other practices from locating there
• To solidify a relationship with a hospital
• As part of a merger or acquisition

Financial Feasibility

• Project revenues
• Project expenses

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Positioning

The process by which a practice tries to create
an image in the minds of its target market.
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Positioning The Battle for Your Mind

• Safety

Highest quality luxury cars
Economical, practical, long lasting cars
Which automobile brand pops into your mind?
Cheap cars
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Automobiles
Average Performance of Car Brands
Data represents 2001 image attribute scores,
except for infiniti and Subaru data, which is
based on 2002 scores Source Allison-Fisher
Barometer of Automotive Awareness and Imagery
Study Booz Allen Hamilton
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What position do you want lodged in the minds of
your stakeholders?

• Caring, family atmosphere
• Highly skilled physicians
• Advanced technology
• One stop shop
• Leading edge treatment
• Place to go for difficult problems
• Specialist in one area of the eye
• Choice of other doctors
• Convenient locations/processes
• Cheapest care

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What positions are most compatible with which
strategic model?
Strategic Model
Positions
Solo Comprehensive
Caring, family atmosphere
Group Comprehensive
Caring, family atmosphere, highly skilled doctors
Solo Specialist
Specialty care, choice of other doctors
Specialty care, advanced technology, choice
of other doctors
Group Specialist
Multi-Subspecialty
Advanced technology, One Stop Shop
Referral Center
Surgical specialist, choice of other doctors
Place to go for difficult problems, highly
skilled doctors
Academic
Multispecialty Clinic
One Stop Shop
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What tactics will help develop the positioning we
want?
Tactics
Strategic Model
Positions
Caring, family atmosphere
Friendly staff, convenient location, home-like
décor
Solo Comprehensive
Latest equipment, modern décor efficient
processes, displayed articles
Advanced technology
Multi-Subspecialty
Highly skilled doctors
Location displayed articles and presentations
research
Academic
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Fill Out Form 5
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Geographic Scope

• Where do current patients live/work?
• What shifts in population are occurring?
• Age, location
• Are there opportunities to capture more patients
  with a different or additional location?
• Will the additional location cannibalize current
  patient flow?
• Are there strategic reasons to move or add a
  location?
• Should the additional location be stand alone,
  shared space, joint venture?
• What does a new location feasibility analysis
  tell us?

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Geographic Scope

• The typical metropolitan/suburban general
  practice gets about 75 of its patients from
  about a 6 mile radius
• Rural practices might have a 60 mile radius
• Urban practices (NYC) might have a 6 block radius
• You can determine your own radius

75 of Patients
6 Miles
60 Miles
???
6 Blocks
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Geographic Scope

• Population centers are like magnets for medical
  care the larger the population, the more
  patients tend to go there for care
• Larger magnets tend to have a stronger attraction
• Patients avoid natural barriers such as bridges
• Patients tend to go in the same direction as they
  do for other activities such as shopping

Patients
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Fill out Form 6
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Competitive Comparison

• Understanding the position your practice has with
  your patients is easier if you also understand
  how other practices in your community are seen by
  area residents.

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Competitive Analysis
Rank each practice in each category enter a 1
for the top practice in each category a 2 for
the second practice, etc.
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SWOT Analysis
Internal
External
O
S
Positive
Strengths
Opportunities
W
T
Negative
Weaknesses
Threats
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SWOT Examples
Strengths
Threats
Opportunities
Weaknesses
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Fill out Form 7
Change to
Practice Model
Add these services
Services
Add these services/products
Ancillary Services / Products
Improve these areas in our practice
Competitive Analysis
Change position to
Position
Make these changes to our office/location
Offices
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Caution

• You cant make a silk purse out of a sows ear.

You cant fool all of the people all of the
time.
To establish and retain a position in the minds
of your stakeholders, you must be what that
position describes.
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National Trends Affecting our Practices

• Healthcare expenditures comprise 16.2 of the GDP
  and convert to an expenditure of 7,500 per
  capita.

At this level, there is no escaping the impact of
changes and trends in the governmental,
technological and political arenas.
Lets look at some of these trends.
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One Imminent Trend
The Boomers Are Arriving Kathleen
Casey-Kirschling Born January 1, 1946 Known as
the 1st Boomer is now on Social Security.
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The Boomer Challenge

• As boomers age, they need more eye care. Seniors,
  in fact, use eight-and-a-half times more services
  than those under 65. Patient flow efficiencies
  must increase in order to keep up with the demand
  thats on our doorstep right now.

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Number of Persons 65 in the U.S. From 1900
2030
In Millions
Numbers in millions Source U.S. Bureau of the
Census
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More Boomer Impact

• One in four voters are over age 60
• AND
• Health care reform is
• at the top of the political agenda.

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Physician Supply May Tighten

• Level residency positions
• Plus
• Retiring boomer ophthalmologists
• Plus
• Changed priorities of new physicians
• Plus
• Increasing patient numbers
• May Well Equal
• A significant reduction in access to care.

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Reimbursement Decline

• Factsreimbursements have declined.
• Providing care is more expensive due to
  advancements in technology and pharmaceuticals.
• The money available for medical reimbursements
  will not grow as fast as the demand for services.
• Therefore, there will be continual downward
  pressure on reimbursements.

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Premium IOLs

• It seems that a surgeon can have the most
  precise biometry, the easiest eye and the best
  technology, but if the patients personality
  doesnt fit a certain profile, the surgeon cannot
  achieve patient satisfaction.
• Rachel Renshaw, Ophthalmology Management, May 2007

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Premium IOLs

• More information to be communicated.
• More physician time for patient selection.
• More physician time to arrive at an informed
  consent.
• Biometry accuracy increases in importance.
• Potential for needed refractive touch-up
  requiring more communication, more consenting,
  more follow-up care.

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AMD Treatments

• Growing numbers of patients to suffer from AMD
• Recurrent treatments required for efficacy
• Leads to increased density in schedules
• Requires intense reimbursement oversight
• Retina specialists in high demand

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The New Breed of PatientThe Eyecare Consumer

• Ophthalmologys fast technological and clinical
  advancements have created a new breed of patient
  consumer.

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Eyecare Consumers

• Premium IOLs result in an out-of-pocket purchase
  which fuels the refractive perfection mentality.
• High deductible plans and HSAs result in patients
  offering checks and debit cards to pay for
  their services.

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Eyecare Consumers and the Internet

• While the internet is not new to us, the
  prevalence of its use has grown exponentially.
• Patients have access with a keystroke to an
  abundance of clinical and technological
  information.

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Eyecare Consumers

• Our patients expect a patient-centered
  experience.
• Well of course!
• But
• We spend a great deal of time looking at systems
  through the lens of what works for the practice.

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EMR

• The march towards EMR
• A forced march?
• The government is influencing the rate of
  conversion to EMR.
• The number of medical practices claiming a
  complete Electronic Medical Record is under 10.
• We have far to go.

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EMR

• The conversion to paperless requires a cultural
  change in the organization that affects every
  employee.

Contrary to vendor assertions, most practices
will not save money by making the initial
change.
It is a highly customized and ongoing development
process that takes a lot of time for a long time.

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Personnel - Technicians

• Shortage of trained technicians
• EMR systems increasing the need for scribes
• Drive for physician efficiency will increase the
  demand for able, efficient and professional
  technicians.

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Costs

• We need to hire the best employees we can afford.
• Benefit costs continue to rise.
• Lease costs, depreciation expense, interest
  expense and contracted labor are all expense
  lines that increase with technological upgrades.

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Increasing Need for Capital
Computer Systems
Imaging Systems
Facility Upgrades

• Better Flow

Strategic Positioning
Growth in Numbers of Providers
Addition of Ancillary Services
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Putting It All Together

• Creating and implementing a successful strategic
  plan that defines the practice in the context of
  our current environment.

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The Strategic Planning Process
Prepare
Meet
Decide
Write
Implement
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Prepare

• Financial
• Revenue history
• PL
• Budgets and variances
• Patient flow
• patient visits
• new patients
• surgeries

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Prepare

• Patient satisfaction survey
• Employee satisfaction survey
• Referring physician survey
• Physician survey
• Critical issues for the practice
• Critical issues for the individual doctor
• Priorities
• Work commitments for following year

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Prepare

• Historical patterns
• Year over year differences
• Comparison to benchmarks
• Internal
• External AAO Benchmarking Project
• Example Your overhead ratio is 72, benchmark is
  62 (Overhead expenses revenues)
• What does this tell you?
• SWOT Analysis

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Prepare

• Reports of key data
• Summarize but have details available
• Use visuals
• Graphs
• Charts
• Pictures

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Visual Presentation
2,255,123
2,351,012
2,401,511
2,499,123
563,780
581,987
601,001
620,437
21,222
23,123
25,600
29,654
1,398,176
1,504,647
1,681,057
1,799,368
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Visual Presentation
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Strategic Planning Meeting
Keys

• Minimize distractions
• Time place
• Retreat?
• Ensure participation by key stakeholders
• Owners
• Administrator
• Employed doctors? Optometrists?
• Supervisors?

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Strategic Planning Meeting
Use an Agenda

• Welcome
• Set the stage purpose of the meeting
• Decide on practice objectives
• Review data and progress reports
• Define strategic options
• Decide on a strategy and tactics
• Make assignments
• Summarize

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Strategic Planning Meeting
Allow discussion, but

• Stay on topic
• Record decisions and assignments
• Distribute summary after meeting
• Decisions
• Assignments

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Decide
What changes are we going to make?

• Services offered
• Internal Processes

• Providers
• Offices
• Positioning

• Marketing
• Assignments

Assignment
Strategy
Tactic
Timeline
Expand geographic coverage
Merge with Dr. Lund
Feb. 08
Dr. Smith
Build office In Smallville
Aug. 08
Marla
Add Subspecialists
Recruit peds doctor
Jul. 08
Dr. Jones
Recruit retina doctor
Jul. 09
Dr. Brown
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Write
Should answer what, who, when, how, and how much
money

• Example Merge with Dr. Lund
• Call Dr. Lund to ascertain interest
• Schedule initial dinner meeting
• Share financial information
• Share existing legal documents
• Analyze financial ramifications
• Prepare proposal
• Make decision
• Prepare and sign new legal documents
• Prepare Pro Forma Budget

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Remember this situation?
Your practice has 3 doctors, all very busy

• One doctor wants to hire another physician to
  help carry the overhead burden

The third doctor has been pushing to open a
satellite office in the town where he lives
Another doctor thinks that 2010 is the year to
add EMR to improve efficiency
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Pro Forma Budget
Current Year
Change
Projected
Revenues
Revenues
3,000,000
3,000,000
Operating Expenses
2,000,000
2 inflation
2,060,000
Add doctor (net expense)
100,000
70,000
Add Staff
Open satellite
175,000
250,000
Add EMR
Total Expenses
2,000,000
2,585,000
Available for Doctors
1,000,000
345,000
Difference 655,000
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Pro Forma Budget

• To stay even with the current year, we need
  655,000 in additional revenues
• At 150 average revenue per patient, we need
  4,367 additional patients
• Do we have enough demand to generate that
  additional patient flow?
• Who is going to see those patients?

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Implement

• Delegate as appropriate
• Establish reporting schedule
• Establish projected budgets
• Monitor progress
• Monthly reports
• Doctor meetings
• Evaluate Results
• Repeat the strategic planning process

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The Ultimate Challenge

• Doing it while maintaining or growing the bottom
  line

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Driving the RevenueWith Existing Resources
Master the Template

• Match primary care patients to optometric
  providers
• Timestudy the patient visit for efficiency
  changes
• Review encounter numbers and sessions worked with
  each doctor
• Triage systems
• Persuade doctors to coordinate time-off

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Driving the RevenueWith Existing Resources
Study the Physical Flow of Patients

• Linear vs. Circular
• In Relation to the Optical Shop
• Bogging down at check-in

Schedule Injection Clinics for Retina Services
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Driving the RevenueWith Existing Resources
Maximize Revenue from Ancillary Services

• Optical shop margins shop the outside lab
• Inventory analysis (T)
• Lab efficiency
• Sales training
• Marketing open ASC block time
• Expanding procedures done in the ASC
• Management fee for outside ASC business mgmt.
• Better handoff to optical print scripts in the
  optical shop (T)

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Driving the RevenueWith Existing Resources
Increase Recall Efforts to Fill the Schedules

• Automated verification (T)
• Automated recall (T)
• Automated follow-up on no response to recall (T)
• Data mining for out of compliance patients (T)
• Plastic procedures
• Refractive procedures including CLE
• Premium IOLs
• Counseling Position?
• High end eyeglasses
• Market patient financing options

Private Pay Services
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Driving the RevenueWith New Resources

• Add an associate ophthalmologist
• Add a sub-specialty difficult?
• Retain a retiring ophthalmologist for
  medical-only services
• Add an employed optometrist
• Study Epic-like instrumentation for ability to
  see patients more efficiently (T)

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Driving the RevenueWith New Resources

• Add ancillary services
• ASC Own your own
• Optical Run it yourself
• Testing
• Add a location?
• Remodel for more efficient flow
• Clinical trials
• Develop an interactive website and market it (T)

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Driving the RevenueWith New Resources

• Move to EMR (T)

Move to e-prescribing (T)
Autofaxing of letters and records (T)
Digitize photos (T)

• Do these drive revenue???
• Maybe they drive efficiency
• And that drives revenue.

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Managing Personnel Costs

• Flex time/job sharing
• Bonus programs versus regular increases
• Analyze patient to staff ratios to assure that
  you are utilizing technicians to the fullest
  efficiency
• Design training program or bring in trainer to
  maximize performance
• Persuade doctors to coordinate time off
• Rotate tech assignments
• Shift to pre-registration via your call center
  and/or via the internet (T)

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Personnel All Staff
Front desk staff dealing with the collection of
more payments at the time of service.
IT help needed, contracted or employed.
Need to move from just telephone staff to
advance registration staff.
Every employee must be computer literate, no one
gets a bye.
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Managing Other Costs

• Analyze facility utilization review with
  providers for potential schedule changes
• Analyze performance of each and every satellite
  location
• Consider outsourcing payroll, IT
• Review marketing program for emphasis on
  internal marketing (T)
• Kiosks in lobby, in lane education, handheld DVDs
• New digital phone systems for multiple locations

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Managing Capital

• Look at lease vs loan on every purchase
• Review your buy-in does it represent reality?
• Considerdo you have enough providers in your
  organization to capitalize the type of operation
  you want to have? Should merger be considered?
• Retaining profits eewwwick

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Conclusion

• We are in challenging times.

Some trends are negative.
Some trends are positive.
Strategic planning helps us identify how to deal
with the pressures we face and which roads to
take to achieve our objectives.
Implementation is critical for success.
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Thanks for Attending!
Maureen Waddle mwaddle_at_bsmconsulting.com
Derek Preece dpreece_at_bsmconsulting.com