We’ve all heard it – strategic planning is a must for businesses to excel and move forward. In order to determine where the practice is going, you need to know exactly where it stands, then determine where you want to go and how to get there.
Strategic planning puts you in the driver’s seat – firmly in control of your direction rather than reacting to the next bump or curve in the road. Yet in spite of good intentions, too often the year slips away and the new one begins without practices taking this critical step. Why? Reasons include lack of time, lack of clarity about who is involved and how to conduct the meeting, and lack of follow through with the decisions made. So sit back and follow the road map of Hope Veterinary Center (composite practice) to reach your strategic planning destination.
Hope Veterinary Center (HVC) is a seven doctor practice co-owned by Drs. Linzell and Davis. They hold their annual, two-day Strategic Planning Conference in November facilitated by their management consultant at a local hotel and conference center. The owners and the management team, consisting of the practice manager, the financial and compliance manager, the IT manager, and the reception and technician team leaders attend, along with future owner, Dr. Rose.
Results from the 2013 Strategic Planning Conference follow:
The Agenda
Review Vision Statement and Mission Statement.
- The existing Vision Statement resonated and will remain, “Happy, healthy pets and cheery, satisfied clients.”
- Modify the Mission Statement to incorporate a client focus. The revised Mission is “We preserve and protect our patients’ health and nurture our client relationships.”
Accomplishments in 2013: Each segment of the management team presented their list of accomplishments (see Figure 1).
Results of 2013 operations: The Financial Manager presented the results of operations (see Figure 2).
SWOT Analysis: HVC developed a list of strengths, weaknesses, opportunities and threats and then developed the goals and action plan for 2014 based on the SWOT.
Goals and Action Plan for 2014: The consultant facilitated the discussion about the practice goals for 2014 and assisted in developing the action plan to accomplish the goals. The group settled on the following goals and action plan:
Goal #1: Update the HVC Operating and Shareholder Agreements
Action Plan
- Linzell and Davis will review the current Agreements and meet January 10th to discuss possible changes
- The owners will meet with the attorney on January 20th to discuss and seek input on the changes
- The attorney will update the documents by March 15th
Goal #2: Plan for Dr. Rose’s buy-in with a target date of 2015
Action Plan
- Continue to mentor Dr. Rose. Include a discussion of “Building Blocks that Create Successful Owners” and “Topics to Discuss before Becoming Partners” from Benchmarks 2010: A Study of Well-Managed Practices®. Assign Medical Development to Dr. Rose; explain the responsibilities, resources available, time allotment, and compensation. She will receive 10% of the management fee, or $10,000, for her management responsibilities
- Value practice at 12/31/13 for planning purposes and work with consultant to identify opportunities to improve profit and value
Goal #3: Review and approve 2014 Budget presented by Financial Manager (see Figure 2).
Action Plan
- Fee increase of 3% on non-shopped services (projected revenue: $100,000)
- Recapture of missed charges (projected revenue: $50,000)
- Focus on improved healthcare compliance with six-month exams, wellness lab work, fecal testing, and dentistry (projected revenue: $200,000)
- New services – see Goal #4 (projected revenue: $100,000)
- Reduce inventory cost (projected savings: $70,000)
- Reduce the amount of outsourced IT support (projected savings: $13,000)
- Pay increases for existing staff; hire two additional receptionists and two additional technicians (projected cost: $198,100)
- Budget approved
Goal #4: New services for 2014
Action Plan
- Laser therapy (Dr. Rose)
- Rehabilitation therapy (Dr. Davis)
- Acupuncture (Dr. Linzell)
Goal #5: Hold quarterly Strategic Planning Conferences in 2014
Action Plan
- Schedule one day conferences in March, June, and September
- Discuss progress with implementation of annual Action Plan and make adjustments as necessary
- Hold annual SP conference in November
If you’re not yet taking the time to plan the trip for your practice, now’s the time to start. Any road will get you somewhere. Make sure you’re firmly in control of the road map for your practice, so you end up where you intend. And remember to celebrate your successes along the way!
Figure 1 –Hope Veterinary Center 2013 Accomplishments
Owners
- Weekly management team meetings
- Received certifications in Acupuncture and Rehabilitative Therapy (Drs. Linzell and Davis)
- Started the business Mentorship Program with Dr. Rose
Dr. Rose
- Participated in the weekly management team meetings
- Participated in developing a plan to reduce 2014 inventory cost
- Working through the management reading list provided by Dr. Linzell
Practice Manager
- Updated the HVC employee manual
- Developed customized training and education schedules for the staff based on the results of evaluations; mapped out the 2014 CE plan
- Participated in preparing the 2014 budget
- Participated in developing a plan to reduce 2014 inventory cost
Financial Manager
- Successfully met the 2013 budget in all categories except inventory cost
- Participated in developing a plan to reduce 2014 inventory cost
- Developed the 2014 budget
- Compiled a monthly financial management workbook for the owners’ use
IT Manager
- Set up an internal e-mail account for all doctors and staff to improve communication
- Upgraded the network server and hardware
- Installed the latest updates for the practice management software
- Established additional internal control protections
Reception team leaders
- Participated in developing the 2014 reception training and CE education plan
- Terminated a receptionist who wasn’t happy in her position; successfully hired replacement
- Developed a receptionist CE program to market to area practices
- Submitted a request to hire two additional receptionists in 2014 to further strengthen customer service including the estimated cost and summary of how the new people will be utilized to improve customer service
Technician team leaders
- Participated in developing the 2014 technician training and education plan
- Terminated two technicians who weren’t happy in their positions; successfully hired replacements
- Participated in the development of the technician CE programs marketed to area practices
- Submitted a request to hire two additional technicians to assist with the new services for 2014 including the estimated cost and summary of how the new people will be utilized
- Participated in developing a plan to reduce 2014 inventory cost
Figure 2 – Results of Operations for 2013 and Budget Projections for 2014
Annualized Budget Projections
2013 2014
Revenue $4,900,000 $5,350,000
Variable $1,274,000 26% $1,284,000 24%
Fixed 441,000 9% 428,000 8%
Staff 1,313,200 27% 1,511,300 28%
Facility 441,000 9% 450,000 8%
Total Operating $3,469,200 71% $3,673,300 69%
Amount Available
for Doctor Comp. $1,430,800 29% $1,676,700 31%
Doctor Comp.* $733,200 15% $800,500 15%
Management Comp. 98,000 2% 107,000 2%
Total Doctor Comp. $831,200 17% $907,500 17%
Owner Return on
Investment $599,600 12% $769,200 14%
Reinvestment $147,000 3% $100,000 2%
Remaining to Owners $452,600 9% $669,200 12%
*Medical revenue represents 85% of total revenue, and doctors generate 85% of the medical revenue. Doctors receive 19% of doctor-generated revenue.
