“By going through these exercises as a Physician-Entrepreneur … you will learn about all the important things you didn’t know and quite possibly find out some things about your medical practice that you are glad you considered. You will also find out who your local competition is … and who in your community and local area will be your potential customers. And yes, you do have competitors, especially in DPC! Don’t let your professional regard for your colleagues fog up your glasses here … everyone has competition!”
What’s the old adage, “Proper Planning Prevents Poor Performance.”
My Dad, probably a lot like yours as well always says, ‘If you don’t put the work in don’t expect good things to happen.’
And, he’s right.
Today however, a lot of Doctors hurriedly rely on pre-formatted business plan templates or even books written by other well-intention but singularly experienced Doctors. Don’t get me wrong, there are nuggets of wisdom in many books but taking any free or written advice in a book you’ve recieved with a grain of salt is also prudent. Those who typically write books usually write about what they know or how they experienced something of how they did it.
These singular experiences are in fact, singular. Meaning, their experience during a start up or growth phase or even a DIY-phase of business won’t be exactly like yours.
After all, you both have somewhat different community dynamics, differing opinions about service standards, different state laws and you probably have a different way you’d like to see your practice run than others who’ve traveled a well-worn path before you.
My encouragement today is simply this, design your membership medicine program the way YOU want, not simply the way others say it should be. Where’s the joy in being the same as everyone else? Isn’t that what you were trying to escape in the first place?
Here’s a few tips and resources you may want to consider whilst you begin your planning for a bright future.
What Is A Business Plan? And, Why Do I Need One?
A business plan is critical for most organizations but it is an absolute must for Doctors considering a change in their revenue model. By writing and thinking about your business plan or more than one, you accomplish a couple of things:
- First, you enable prospective investors, perhaps your spouse or group of Physician business partners (and eventually your Patients purchasing the subscription later on …) that you have a clear vision for getting your subscription or membership medicine program up and running.
- Second, by going through this exercise you will learn about all the things you didn’t know and quite possibly find some aspects of running a medical practice that you are glad you considered. You will also find who your local competition is and who in your community and area will be your potential customers. And yes, you do have competitors! Don’t let your professional regard for your colleagues cloud your glasses here … everyone has competition.
Do Membership Medicine Models Have Competition?
Yes, of course they do, and you do too. Don’t fool yourself into thinking you do not have competition.
Like I’ve often said on our DocPreneur Leadership Podcast many times, “I’m not a Physician, but I am a Patient … so I know what it is like to sit on the other side of you.”
A lot of money, investment, time, energy and intention planning goes into to competing where a Patient will ultimately decide to spend their money. Will it be the Nurse Practioner-led tele-medicine subscription program on my smart phone, the retail healthcare clinic at my local pharmacy or will it be inside your practice?
If anyone tells you that you don’t really need to worry about competition because there aren’t enough of these types of subscription-based healthcare delivery practices around to compete, they are thinking entirely too small. Say thank you for your insights and tell them to do a little more research about why exactly [younger] Patients (eg. age 18-40) are so attracted to connected care, mHealth apps, frictionless primary care and the retail healthcare sector of the free market healthcare delivery marketplace. And, why they are Patients figuratively running away from those things healthcare likes to call, Medical Homes? An hour or two of research and talking to the local community to see how they spend their healthcare dollars just might surprise you.
Here’s one example, The Journal of mHealth just this past year [Sept/Oct 2019] wrote an article entitled “Retail Healthcare Update: Disrupting Traditional Care by Focusing on Patient Needs” in which they stated: Proponents of retail healthcare believe that retail health clinics can help fill the gap of care created by the lack of doctors. A shortage of 12,500 to 31,100 PCPs is projected by 2025 18. There is actually evidence to suggest that retail health clinics will drive growth of PCP practices because retail care will expand the base of patients treated, and identify those that require referrals for chronic care 2, and if the number of referrals increase, the AMA is correct in pushing for retail clinics to have a structured referral system.
So, who exactly is your competition?
Don’t underestimate creativity, it can disguise itself.
And, don’t be dismayed. Local DPC Doctors know who you are. Like in traditional medical delivery competition, everyone is in business to make money. Without it your DPC practice is just a memory. Are there enough patients in your local community to go around? Yeah, probabaly. But believe me, your friendly peers are only going to remain friendly until you have something to offer they don’t. Then those smiles will turn. I’ve seen it happen and you probably have as well. So, don’t kid yourself. Hospitals, retail healthcare and yes, urgent care clinics … they definitely know where you are and what you’re up to. Many membership medicine Doctors we’ve helped and spoken to over the years, particularly young Physicians under the age of 40, don’t have a loyal built-in customer/patient base. That’s a problem and an opportunity for your competition. That’s a issue that is costly for you to overcome, but probably a challenge they solve every day. Your competitors don’t want you poaching patients from them and believe me, they’ll fight hard to keep them.
So, find out as much as you can about your traditional, plan reimbursed family medicine and primary care practice competition. Learn about the demographic statistics in your 5 to 20-minute drive time or 3-20 mile radius. Find out what ERs and Urgent Care are including their service menu for self-pay patients. How are the under-insured and uninsured patients being treated in your area? And, what about those non-profit charity clinics in your area? How are they serving the indigent populus in your area? Maybe you can help them? Maybe not. But take the time in this section of your business plan to explain in a paragraph or two how you will compete with the already established Doctors in your community.
Business Plans Help You Know What You Don’t Know
We’ve spoken and helped enough Doctors over the past nearly two decades and have found helpful education for them about writing unique business plans that stick in both Concierge Medicine, telemedicine, medtail practices and yes, even Direct Primary Care (DPC). Writing a business plan isn’t fun and it’s not always easy.
It’s certainly not something Doctors or your team will look forward to.
But “If you build it they will come” isn’t a business strategy. Young Doctors in particular can fall prey to this emotional tag line in a great movie by the way, but it’s not a helpful nor effective business or marketing strategy that you should stake your mortgage or your marriage on.
A good DPC business plan is especially helpful to those new to the membership medicine economy.
It creates a blueprint for building your services, refining your pricing and building a business worth telling Patients about now and into the future. It will also help you find problems early so that you can jump through for any licensing and compliance issues in your state that may come up with current payor contracts, Medicaid or your Medicare participation opt-out dates and the like.
While most Doctors considering Subscription-Based Healthcare Delivery programs, business plans have the same general structure that other companies do in other sectors of our economy.
According to the Small Business Administration, your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, and your personal liability.
Choose carefully. While you may convert to a different business structure in the future, there may be restrictions based on your location. This could also result in tax consequences and unintended dissolution, among other complications.
Compare the general traits of these business structures, but remember that ownership rules, liability, taxes, and filing requirements for each business structure can vary by state.
|Sole proprietorship||One person||Unlimited personal liability||Personal tax only|
|Partnerships||Two or more people||Unlimited personal liability unless structured as a limited partnership||Self-employment tax (except for limited partners) Personal tax|
|Limited liability company (LLC)||One or more people||Owners are not personally liable||Self-employment tax Personal tax or corporate tax|
|Corporation – C corp||One or more people||Owners are not personally liable||Corporate tax|
|Corporation – S corp||One or more people, but no more than 100, and all must be U.S. citizens||Owners are not personally liable||Personal tax|
|Corporation – B corp||One or more people||Owners are not personally liable||Corporate tax|
|Corporation – Nonprofit||One or more people||Owners are not personally liable||Tax-exempt, but corporate profits can’t be distributed|
Consulting with business counselors, attorneys, and accountants can prove helpful.
The business structure you choose influences everything from day-to-day operations, to taxes, to how much of your personal assets are at risk. You should choose a business structure that gives you the right balance of legal protections and benefits.
- Review common business structures | SBA.gov
- Combine different business structures | SBA.gov
- Compare business structures | SBA.gov
Here’s a quick breakdown of some key sections you should pay attention to when writing your subscription-based healthcare business plan:
The Executive Summary
Think of this section as a brief introduction to your practice. Write it so it keeps your Patients [or investors] attention. Give the reader (eg potential patients and/or potential investors) the basics of your medical practice model. Describe briefly what is the vision and the mission of your practice is and what type of services your new business model will be providing. Write down the name of the new entity (if applicable) and where in your community you plan market and attract patients from.
Keep it brief and to the point. Don’t provide your C.V. or your bio. here. That comes in other sections. Investors, your peers, quite possibly even your spouse and yes, your Patients too — they already know all about your impressive education. That’s not what this section is for. They want to know in this section of your business plan WHAT you plan to do WITH all of that impressive and costly education, how you plan to help people and WHY!
Company or ‘Practice Description’
This part of your business plan explains in more detail (than the executive summary above) the operation location, legal name and the model/concept of the program/practice you want to create and deliver to your local community and target audience. This is also where you will give details on your local competition.
Who is your competition you might ask?
- The standard ‘plan reimbursed’ primary care or family medicine office in your twenty minute drive time
- The local subscription-based (eg DPC; Concierge) medical practices within a twenty minute drive time of your location
- The Urgent Care Center(s) within a twenty minute drive time of your practice
- The ER within a twenty minute drive time of your practice
- mHealth and Digital Apps on smart phone devices and tablets
You may have additional competitors you see in your local community that you want to list but these are just a few you should be aware of.
This part of business plan is awkward for many Physicians because you’ve been taught in medical school that all Physicians are more or less ‘created equal.’ Well, that’s fine if YOU want to think that way. However, Patients can tell the difference between a GOOD Doctor and a GREAT Doctor in less than 15-seconds. Patients today have a choice as to how and where they spend their money. If you don’t see other healthcare facilities and colleagues as friendly competitors, chances are likely you’re going into the wrong healthcare delivery marketplace and this area of healthcare won’t be very enjoyable for you in the future … as your competitors will see you as an easy target.
RELATED RESOURCES | SBA.gov How To Start Writing Your Business Plan | SBA.gov Your business plan is the foundation of your business. Learn how to write a business plan quickly and efficiently with a business plan template. Click Here To Learn More … /business-guide/plan-your-business/write-your-business-plan
Marketing Strategy and the Three Primary Parts to a Market Analysis: Market research helps you find customers for your business. Competitive analysis helps you make your business unique. Combine them to find a competitive advantage for your small business.
Is your medical practice or new program within your existing practice going to serve Medicare aged Patients? Business professionals at lunch time? Are you doing house calls? Are you primarily in a community with middle-aged families with children not in college? Are you in a college town? Explain your target customer and why they are going to be attracted to your medical practice or new program/service and not the competition down the street which they already may have a relationship with or know about.
Marketing and Advertising.
What methods do you plan to use to promote your medical practice of new service program? And, if you simply rely on ‘Posts on Twitter and Facebook’ and sending out an email … you’d better start thinking a little harder. Patients engage with brands they know, like and trust. How are you going to target your true customer? How are you going to get them to switch their routine? Why would they want to walk in your door vs another healthcare provider that may have more to offer?
Many Doctors use free social media services such as Twitter and Facebook. This can create a false sense of confidence. Today, very few Doctors feel comfortable sharing anything more than news stories about flu vaccines and recipes. While these contribute to the ‘noise’ in a persons news feed, they do very little to encourage new or recurring patient visits. So, start doing some research on where your competitors are marketing and think about what message they are communicating and how your messaging will and must be different.
Additionally, relying on social media is unfortunately also more challenging than it might seem. It takes a bit more to make it to the top of someones news feed these day with all of the chatter happening today on these platforms.
What is going to set you apart from your competition? Give specifics examples of messaging, headlines you might use, photos you might post and how you plan to get the word out about your practice to your local audience/customer/patient other than social media.
Management & Ownership
Who is going to run the operations of the practice? Who is going to “intake” new Patients, send the emails, do the billing? Who will run the daily or weekly reports, answer the phone? Who will assume marketing and public relations responsibilities? What role will you play in these daily operations? Are you going to be the accountant, the caregiver, the CEO, the marketing wizard or the Physician? How do you plan to get all of this accomplished? Many new subscription-based healthcare practice Doctors start out on their own while others bring in trusted staff to help with some day to day responsibilities.
Describe in this section of the business plan who is going to do what roles, describe briefly their tasks and how they will assist you on a daily, weekly or quarterly basis. It’s also smart to forecast in this section so you may want to include any potential staff and employees you feel will be needed or have a significant impact on your practice model or program which you plan to implement.
At first, keep it simple. Then as you progressively plan and budget, you can do deeper dives on the spreadsheet to accomplish and design a more complete and accurate financial forecast for your first year, next year and beyond. You may also want to bring in your tax advisor, your attorney, your accountant and/or your spouse in this section to help you.
For most Doctors, this part scares most inexperienced Docpreneurs. How much is this really going to cost you? How much should you charge, really? When do you set in price increases? How little is too little? What are my employee costs, hard costs, fixed costs, expenses? The minefield of obstacles is many that you must solve in this section. But take heart, keep it simple. This is a section in your business plan where at first, you want to list the projected growth of your new medical practice or service-oriented subscription program.
Be sure to include a profit and loss statement that will project how much are you going to spend versus how much you are going to make. Other items you may want to include in this financial section should include:
- Break Even Analysis
- Balance Sheet
- Healthcare-Industry Specific Data
- Possible Risks. Show investors, your accountant, your consultant, your attorney, your spouse, etc., that you understand that all Doctors that enter this subscription-based medicine space don’t succeed. Explain how you plan to pay expenses and overhead if you fall into this category.
In summary, these subscription-based healthcare delivery programs and practices can be great for Patients and the Doctors that enter into these niche models. With that said, there probably isn’t a membership medicine physician alive who wouldn’t add another word to the list once this planning exercise is complete: Necessary.