Still Don't Have a Strategic Plan?
In the current economic downturn, this tool can make all the difference.
By Bruce Maller, Incline Village, Nev.

During the past year, many ophthalmology practices have felt the effects of a weakening economy. An unstable stock market and increasing unemployment, made worse by the events of September 11th, have caused consumers to be more conservative in their spending. As a result, many practices -- especially those with a higher percentage of elective procedures -- have seen significant reduction in volume, revenue and net income.

Doctors who were heavily invested in the stock market also took a personal hit; many physicians have had to change their retirement target dates to accommodate the drop in value of their portfolios. The government has tried to help reinvigorate the economy by lowering interest rates and pumping new money into the system, but any beneficial effects may take a long time to be felt.

The state of the economy isn't the only problem ophthalmologists are dealing with, either. Healthcare today remains in a state of flux. Reimbursement and patient delivery systems, emerging technology and competitive influences are constantly changing.

Because a high percentage of practice overhead is fixed in nature, compensating for changes like these can be a challenge, and quickly creating a new source of practice revenue is often not realistic. So what can you do to ensure practice stability and economic vitality in these unstable times?

Preparing for the future

The best way to respond to these challenges is with strategic planning. Developing a business plan helps to clarify the impact of market dynamics on your practice and ensures the most efficient use of your human and capital resources.

Unfortunately, strategic planning simply doesn't happen in many practices. Ophthalmologists have no trouble coming up with reasons to avoid it, such as "not having enough time," or a belief that planning is too complicated to be manageable. In reality, any time and effort required to create a strategic plan will be more than offset by the tremendous benefits your practice will gain from it.

Some doctors have already tried to create a strategic plan without producing the kind of results they hoped for. This is usually the result of common pitfalls, such as:

• ineffective leadership from the physician shareholders
• attempting to pursue too many initiatives and thereby diluting practice focus
• a lack of buy-in to the long-term vision of the practice from all stakeholders.

Ultimately, the planning process (done correctly) brings order, discipline and focus to practice stakeholders, and it increases the likelihood of meeting or exceeding your practice goals.

Note: A strategic plan is different from an operating or marketing plan. The latter focus on short-term objectives (i.e. within a year) rather than long-term goals. Of course, these different types of planning are related; short-term initiatives should help the practice fulfill its vision and meet its long-term goals.

Setting the wheels in motion

The strategic planning process involves data gathering and analysis, and group meetings to finalize objectives, strategies, and so forth. The process is usually initiated at the request of the practice owner(s).

Responsibility for much of the data gathering, data analysis, and meeting logistics is delegated to the practice administrator. If the practice is large, the administrator, in turn, engages members of the management team in the data collection process.

The most effective strategic plans result from several months of market research, preparation and pre-meeting discussions with the principal stakeholders. To make the process work smoothly, it's important to solicit input regarding individual needs and expectations surrounding the strategic planning process. Surveys or questionnaires can be an effective means of accomplishing this.

Once the groundwork has been laid, the principal practice stakeholders can meet and work out the different aspects of the plan. A strong meeting or group leader can play a critical role in achieving success through the course of the session, although the meeting may be facilitated by someone outside the practice, such as a practice management consultant. Decisions regarding strategy, goals and objectives are normally made by consensus among the stakeholders in attendance.

Steps in the process

To create a strategic plan for your practice, you'll need to take the following steps:

• define your practice's mission and develop a mission statement
• translate your mission statement into specific long-term goals and short-term performance objectives
• complete an assessment of your current environment, including a competitive analysis of your market
• assess the current state of your practice, including a SWOT (strengths, weaknesses, opportunities, and threats) analysis
• identify critical success factors
• develop and refine your practice strategies.

Completing these tasks will enable you to create an action plan that can serve as a roadmap for your practice.

Let's look more closely at each of these processes.

Developing a mission statement

In many practices, developing a mission statement is seen as a trivial or unnecessary task, but a well-designed mission statement can help your practice deal with daily operational issues by setting clear standards for personal and operational behavior. (See the sample mission statement on the facing page.) For example, if a colleague has been acting in an inappropriate manner with a key referral source, or if you notice that when calling the practice you're put on hold without being asked whether it's OK, your mission statement can serve as a reminder that these behaviors are unacceptable. Most important, your mission statement will act as a guide when you choose your goals, objectives and strategies.

Whether you're in solo practice or part of a group, the process of developing a mission statement shouldn't take weeks of deliberation or long unproductive meetings with partners or consultants. The key elements of your mission statement should become clear if you honestly answer these two questions:

• What are our reasons for being in practice?
• What are our professional and personal goals and priorities?

You can use the sample mission statement on the facing page as a guide for organizing your own.

Choosing goals and objectives

Once you've laid out your mission statement, you should decide on specific long-term goals and short-term objectives for your practice. Practices with clear performance objectives and a plan to reach those objectives generally outperform practices whose strategic plans are based on momentary decisions or reactions to competitive influences.

Because a strategic plan is a long-term business plan, creating one involves developing an awareness of the long-range implications of short-term events and emerging trends. You'll need to examine and evaluate options for the future of your practice. You must also be able to separate yourself from the emotional aspects of your current situation.

Answering the following questions will help you to choose specific goals and objectives:

• What do you want your practice to be like in a few years?
• What types of products or services do you want to emphasize?
• How many providers (and what mix of providers) do you envision making up your practice in the future?
• What environmental changes are occurring that may affect your practice in the future?
• What things need to be done now -- e.g., acquiring skills, enhancing the facility, staff development, etc. -- in order for your practice to be successful in the coming years?

(Note: Successful practices develop a "state of mind" characterized by continually asking these questions and evaluating events in terms of their long-range implications.)

To make sure your goals are realistic -- and to ensure that you can meet them -- set your goals with the following guidelines in mind:

• Goals should be consistent with the practice's mission statement.
• Goals should be measurable and time-specific.
• The majority of practice resources should be deployed in support of these initiatives.
• Measurement of practice success should be based on success in meeting or exceeding these stated goals.
• A specific individual should be made responsible for each initiative, to streamline accountability. (Of course, others will be involved in the implementation of the initiative.)

An example of a practice goal with related objectives, laid out in chart form, is below.

Environmental assessment and competitive analysis

In order to create a strategic plan that will take your practice where you want it to go, you need context -- and a reality check. After all, environmental and competitive factors, both internal and external, will determine whether what you hope to accomplish is feasible.

A typical environmental assessment model focuses on market competition, along with a thorough practice analysis. The resulting data will allow you to evaluate your strategic options and guide you in a specific strategic direction.

To perform this assessment, start by asking the following questions:

• What are the demographic characteristics of your market?
• What market share do your key service lines hold?
• Who are your competitors?
• What is their market share?
• What market strategies do they employ?
• What do you perceive to be your competitors' strengths and weaknesses?
• How are managed care trends affecting service delivery?

To get a clear picture of your competitive standing, try filling in a grid like the one above. Pick an appropriate score for each practice in each category using a scale of 1 to 5, with 5 being excellent. This exercise should provide a candid assessment of your practice in comparison with the competition across a matrix of key success factors.

Once you're armed with this information, you'll be better prepared to modify your current marketing and competitive strategies and, more importantly, you'll be ready to define key tasks that the practice needs to focus on in order to improve its competitive position.

Practice assessment and SWOT analysis

To get a clear picture of the current state of your practice, answer the following questions:

• What is the current state of your financial health?
• Are you practicing in an efficient and effective manner?
• How do your employees feel about the work environment in your practice?
• Does your existing physical plant meet your current and future needs?
• How do your patients feel about their experience being treated in your practice?

Next, perform a SWOT analysis. SWOT is an acronym for strengths, weaknesses, opportunities, and threats. Developing a SWOT analysis is essential if you hope to create an effective strategic plan because your strategies should build upon your strengths, compensate for your weaknesses, take advantage of opportunities and provide a defense against perceived threats.

A sample SWOT analysis, laid out in table form, can be found below.

Critical success factors

Next, list your "critical success factors" -- the things your practice must do well in order to achieve or meet its goals and objectives, as you've now defined them. This list usually includes factors such as:

• enhancing your practice's image
• offering convenient hours and locations
• having well-trained and friendly staff
• implementing effective marketing programs
• practicing in a highly efficient manner
• having the latest and best technology
• having strong physician leadership.

Successfully managing these factors will ultimately determine your success or failure in meeting your long-term goals.

Developing your strategy

Once you've completed your market competitive analysis and practice assessment, most major issues confronting your practice should be clear. Now you're ready to identify or refine major strategy alternatives, with the goal of creating a sustainable competitive advantage.

Ask the following questions:

• Is your present strategy appropriate in light of your current circumstances?
• Is your present strategy helping you manage the critical success factors you've outlined?
• Should you make changes in your strategy to help your practice deal more effectively with external threats and internal weaknesses?
• What opportunities can you pursue to improve the competitive position of your practice?

If this is your first time going through the strategic planning process, or if your practice's circumstances have recently undergone a dramatic change, you may find yourself considering a dramatic change in practice strategy. However, a dramatic change may not be necessary; for most practices, modifying a current strategy is generally preferable to going in an entirely new direction.

Stepping into the future

Now that you've clarified where your practice stands and outlined your goals, objectives and strategies for accomplishing your goals, you're ready to implement your plan. In part two of this article, we'll focus on the key factors involved in successful plan implementation and discuss strategies for effective financial forecasting.

Bruce Maller is founder, president, and chief executive officer of The BSM Consulting Group. He often lectures for medical societies and at national conventions, including the annual ASCRS/ASOA meeting, and he's a frequent contributor to healthcare publications. He can be reached at bmaller@bsmconsulting.com.