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Building effective business development in pharma.
By Mark Lubkeman , André Kronimus , and Filip Hansen
At a time of rapidly evolving scientific breakthroughs and, coincidentally, of the expiration of many blockbuster drug patents, the key to innovation and revenue growth is pharmaceutical business development. While some innovation and new revenue can come from internal pipelines and assets, business development teams are under intense pressure at most companies to supplement internal efforts with external licensing agreements and M&A. Unfortunately, those teams are frequently unable to deliver the transactions needed for innovation and growth.
Often a major reason for this shortfall is that executive team members are not fully aligned on the role of business development in achieving the company’s strategic priorities. They may agree in theory that business development should pursue partnerships, ecosystems, and collaborations, but that consensus falls apart when it comes to making decisions about specific deals.
We have identified six success factors that enable more rapid and effective decision making, which, in turn, will lead to substantially enhanced business development performance.
Shape the Future of Health Care: The latest insights on the future of the industry.
Biopharma m&a and licensing remain strong.
Biopharma M&A deal value more than doubled between 2017 and 2019, from $138 billion to $336 billion, and valuations reached all-time highs. Most of those deals involved midsized biotech companies, for which the average premium paid was close to 70%, with an average EV/sales multiple of nearly 8x. All in all, close to 60% of new therapeutic drugs in the last five years have been externally sourced.
The COVID-19 pandemic slowed biopharma M&A activity in 2020, especially in the first half of the year. But since the core drivers of deals remain intact—scientific breakthroughs, expiring patents, and an increasing focus on key therapeutic areas or on modalities such as cell and gene therapy—deal activity will continue to rebound. A recent example is AstraZeneca’s acquisition in late December of Alexion for $39 billion.
Moreover, biopharma companies can finance transactions cheaply with today’s very low interest rates. They also have significant financial resources to pursue business development. BCG’s ValueScience team estimates that the top 20 biopharma companies have more than $700 billion in cash, short-term investments, and additional debt capacity. But as a result, many companies are pursuing the same assets, driving up valuations and the risk of overpaying.
Six Success Factors for Pharma Business Development While we focus here on M&A, the six success factors we have identified will enable business development teams to create value through both M&A and licensing. (See Exhibit 1.)
1. Prioritize what business development needs to accomplish for the company. Executive team members often have differing views about how to prioritize business units, technology areas, and technology platforms and what types of deals to pursue (early- versus late-stage R&D deals, for example, or transformative versus tuck-in acquisitions). To ensure alignment, it’s critical that team members agree on how and where they want to create value. Will they use business development to generate near-term revenues or to build the pipeline for future innovation? Will they seek to maximize the core, expand into adjacent markets, or explore new frontiers? (See Exhibit 2.)
As part of this prioritization process, the executive team needs to regularly review and agree on how much revenue growth the current internal portfolio or pipeline will deliver. Only then can it determine the revenue gaps that business development needs to address in which specific therapeutic areas or modalities—and with what urgency. It’s astonishing how often management teams are misaligned on this simple setting of objectives, which often results in business development teams wasting time assessing opportunities that are fundamentally unattractive to the executive team and will never get approved. To avoid such situations, the team should ask itself two key questions about every transaction early on: What revenue gap will the transaction fill? And who on the executive committee will champion the transaction from start to finish? By forcing these decisions early, the team can avoid a lot of wasted time.
2. Build relationships with prospective targets. Executive teams should commit to building relationships with potential partners or acquisition targets for two or three years. Proactive sourcing, screening, and relationship building are far better for deal execution than simply showing up at the target’s headquarters with a banker and an offer. An established relationship will give a prospective buyer an edge over other bidders, perhaps even preempting the bidding process altogether. Such relationships can also accelerate due diligence.
Active engagement with potential targets over several years also gives companies a better grasp of the range of potential deals available. It might, for example, make a pharmaceutical company more likely to take small equity stakes in a number of promising biotechs, perhaps supporting Phase 1 trials with its own clinical and regulatory expertise.
3. Agree on how to assess value. Depending on one’s assumptions when valuing a target, the same transaction may seem spectacularly attractive or exceptionally unattractive. So teams need to agree about how they will value all aspects of each deal and then apply that valuation with discipline. Too often, companies end up redoing their analysis and engaging in repetitive decision making because they haven’t agreed on valuation approaches or metrics from the start.
One common valuation pitfall is to focus only on core asset value, that is, the value of the cash flow generated by current and future products in the market. Valuation models need a wider lens, encompassing multiple dimensions of value, including the following:
- Synergies. What is the value of cost, revenue, and capability synergies across the value chain—for example, in R&D, manufacturing, and sales?
- Platform Value. What is the value of the future products a technology platform might make possible?
- Strategic Value. What is the value of preempting a competitor from acquiring an asset, gaining access to a large proprietary data set, or being recognized as a leader in an emerging field?
Because these advantages are less tangible than core assets, large swings in valuation are possible depending on the underlying assumptions. We have found that companies with a clearly defined and endorsed valuation approach are able to use a common “language” in their deliberations, leading to better, faster decision making. These advantages are amplified when the company is highly transparent about the underlying assumptions and entertains a range of scenarios and associated probabilities.
4. Define integration issues early. Executive and business development teams are frequently so focused on due diligence and valuation that they don’t consider the integration process until after a term sheet has been signed. Integration issues should be considered at the outset, when assessing the deal’s attractiveness and viability, and in parallel with due diligence. Teams should ask such questions as: Will the acquired company be a distinct entity or be integrated into the acquiring company? What governance will be applied to the acquired assets? How will cost synergies factor into the valuation?
Knowing the answers to these questions early on is critical to realizing the full potential of the transaction. Our research shows that successful integration can drive 8% to 10% more value compared with the average transaction. Planning for that success right from the start is essential.
5. Enable agile business development teaming and governance. Even when a company has a clear vision for the transaction, it still needs an agile process and governance to execute the deal quickly and effectively. But because the business development process is highly cross-functional (and often involves many junior-level people), it can be unclear who has the authority to make decisions and who will provide the necessary analytical resources. In addition, preexisting governance committees (such as executive committees) often meet too infrequently to keep up with the fast pace of business development decision making.
To address these challenges, we recommend three best practices:
- Designate resources. Within each function, several senior staff members with business development experience and authority should be on call. This will help build continuity and organizational learning.
- Establish clear processes and responsibilities. All members of a business development project team should be aligned on processes, deliverables, and timelines. That should include who is responsible for what and who has what decision rights. For example, who in R&D will calculate the probability of success of a specific asset under review?
- Create nimble governance. A few members of key governance committees should meet more frequently than the entire group (perhaps even on a weekly basis, depending on deal volume) and have the authority to mobilize the entire committee within 24 or 48 hours if there’s an urgent issue to be addressed.
6. Design an organizational structure suited to strategic priorities. Because companies have different revenue gaps and objectives and use business development in different ways, there is no single “right” organizational structure. One company might focus on early-stage and another on late-stage acquisitions. One company might be looking for deals to strengthen the core business, another to build up new therapeutic areas. A company’s business development organization must be suited to its strategic purpose, whatever that may be. There are three main approaches (with various permutations) to consider:
- Centralize business development in one group. A central function maximizes scale, alignment of activities, and resource prioritization. This setup works well for companies looking to make relatively few late-stage or transformative acquisitions.
- Separate R&D and commercial transactions. Assessing an early-stage R&D acquisition requires a different mix of expertise than assessing a late-stage, commercial acquisition. When a company intends to pursue both types of transactions, it’s best to keep at least some of these due diligence activities separate. But such companies can still centralize certain functions—valuation modeling, for example—in order to maximize scale.
- Separate by business lines or therapeutic areas. It can be sensible to separate business development activities by business lines or therapeutic areas at different levels of maturity. This arrangement works well if a company has a mature business area looking for transformative deals and a smaller business unit looking for technology platform acquisitions. Here again, certain aspects of the business development process, such as valuation modeling, can be centralized for scale and efficiency.
Current market conditions present unique opportunities to tap into external innovation and drive revenue growth, but the inherently complex and cross-functional nature of business development makes it difficult for many pharmaceutical companies to execute effectively. As a result, these companies are not winning the transactions necessary for future success. We believe that the six success factors described above can significantly improve business development capabilities and are worth serious consideration by management teams.
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The future of healthcare: Value creation through next-generation business models
The healthcare industry in the United States has experienced steady growth over the past decade while simultaneously promoting quality, efficiency, and access to care. Between 2012 and 2019, profit pools (earnings before interest, taxes, depreciation, and amortization, or EBITDA) grew at a compound average growth rate of roughly 5 percent. This growth was aided in part by incremental healthcare spending that resulted from the 2010 Affordable Care Act. In 2020, subsidies for qualified individual purchasers on the marketplaces and expansion of Medicaid coverage resulted in roughly $130 billion 1 Federal Subsidies for Health Insurance Coverage for People Under Age 65: CBO and JCT’s March 2020 Projections, Congressional Budget Office, Washington, DC, September 29, 2020, cbo.gov. 2 Includes adults made eligible for Medicaid by the ACA and marketplace-related coverage and the Basic Health Program. of incremental healthcare spending by the federal government.
The next three years are expected to be less positive for the economics of the healthcare industry, as profit pools are more likely to be flat. COVID-19 has led to the potential for economic headwinds and a rebalancing of system funds. Current unemployment rates (6.9 percent as of October 2020) 3 The employment situation—October 2020 , US Department of Labor, November 6, 2020, bls.gov. indicate some individuals may move from employer-sponsored insurance to other options. It is expected that roughly between $70 billion and $100 billion in funding may leave the healthcare system by 2022, compared with the expected trajectory pre-COVID-19. The outflow is driven by coverage shifts out of employer-sponsored insurance, product buy-downs, and Medicaid rate pressures from states, partially offset by increased federal spending in the form of subsidies and cost sharing in the Individual market and in Medicaid funding.
Underlying this broader outlook are chances to innovate (Exhibit 1). 4 Smit S, Hirt M, Buehler K, Lund S, Greenberg E, and Govindarajan A, “ Safeguarding our lives and our livelihoods: The imperative of our time ,” March 23, 2020, McKinsey.com. Innovation may drive outpaced growth in three categories: segments that are anticipated to rebound from poor performance over recent years, segments that benefit from shifting care patterns that result directly from COVID-19, and segments where growth was expected pre-COVID-19 and remain largely unaffected by the pandemic. For the payer vertical, we estimate profit pools in Medicaid will likely increase by more than 10 percent per annum from 2019 to 2022 as a result of increased enrollment and normalized margins following historical lows. In the provider vertical, the rapid acceleration in the use of telehealth and other virtual care options spurred by COVID-19 could continue. 5 Bestsennyy O, Gilbert G, Harris A, and Rost J, “ Telehealth: A quarter-trillion-dollar post-COVID-19 reality? ” May 29, 2020, McKinsey.com. Growth is expected across a range of sub-segments in the services and technology vertical, as specialized players are able to provide services at scale (for example, software and platforms and data and analytics). Specialty pharmacy is another area where strong growth in profit pools is likely, with between 5 and 10 percent compound annual growth rate (CAGR) expected in infusion services and hospital-owned specialty pharmacy sub-segments.
Strategies that align to attractive and growing profit pools, while important, may be insufficient to achieve the growth that incumbents have come to expect. For example, in 2019, 34 percent of all revenue in the healthcare system was linked to a profit pool that grew at greater than 5 percent per year (from 2017 to 2019). In contrast, we estimate that only 13 percent of revenue in 2022 will be linked to profit pools growing at that rate between 2019 and 2022. This estimate reflects that profit pools are growing more slowly due to factors that include lower membership growth, margin pressure, and lower revenue growth. This relative scarcity in opportunity could lead to increased competition in attractive sub-segments with the potential for profits to be spread thinly across organizations. Developing new and innovative business models will become important to achieve the level of EBITDA growth observed in recent years and deliver better care for individuals. The good news is that there is significant opportunity, and need, for innovation in healthcare.
New and innovative business models across verticals can generate greater value and deliver better care for individuals
Glimpse into profit pool analyses and select sub-segments.
Within the context of these overarching observations, the projections for specific sub-segments are nuanced and tightly connected to the specific dynamics each sub-segment is currently facing:
- Payer—Small Group: Small group has historically seen membership declines and we expect this trend to continue and/or accelerate in the event of an economic downturn. Membership declines will increase competition and put pressure on incumbent market leaders to both maintain share and margin as membership declines, but fixed costs remain.
- Payer—Medicare Advantage: Historic profit pool growth in the Medicare Advantage space has been driven by enrollment gains that result from demographic trends and a long-term trend of seniors moving from traditional Medicare fee-for-service programs to Medicare Advantage plans that have increasingly offered attractive ancillary benefits (for example, dental benefits, gym memberships). Going forward, we expect Medicare members to be relatively insulated from the effects of an economic downturn that will impact employers and individuals in other payer segments.
- Provider—General acute care hospitals: Cancelation of elective procedures due to COVID-19 is expected to lead to volume and revenue reductions in 2019 and 2020. Though volume is expected to recover partially by 2022, growth will likely be slowed due to the accelerated shift from hospitals to virtual care and other non-acute settings. Payer mix shifts from employer-sponsored to Medicaid and uninsured populations in 2020 and 2021 are also likely to exert downward pressure on hospital revenue and EBITDA, possibly driving cost-optimization measures through 2022.
- Provider—Independent labs: COVID-19 testing is expected to drive higher than average utilization growth in independent labs through 2020 and 2021, with more typical utilization returning by 2022. However, labs may experience pressure on revenue and EBITDA growth as the payer mix shifts to lower-margin segments, offsetting some of the gains attributed to utilization.
- Provider—Virtual office visits: Telehealth has helped expand access to care at a time when the pandemic has restricted patients’ ability to see providers in person. Consumer adoption and stickiness, along with providers’ push to scale-up telehealth offerings, are expected to lead to more than 100 percent growth per annum in the segment from 2019 to 2022, going beyond traditional “tele-urgent” to more comprehensive virtual care.
- HST—Medical financing: The medical financing segment may be negatively impacted in 2020 due to COVID-19, as many elective services for which financing is used have been deferred. However, a quick bounce-back is expected as more patients lacking healthcare coverage may need financing in 2021, and as providers may use medical financing as a lever to improve cash reserves.
- HST—Wearables: Looking ahead, the wearables segment is expected to see a slight dip in 2020 due to COVID-19, but is expected to rebound in 2021 and 2022 given consumer interest in personal wellness and for tracking health indicators.
- Pharma services—Pharmacy benefit management: The growth is expected to return to baseline expectations by 2022 after an initial decline in 2020 and 2021 due to the COVID-19-driven decrease in prescription volume.
New and innovative business models are beginning to show promise in delivering better care and generating higher returns. The existence of these models and their initial successes are reflective of what we have observed in the market in recent years: leading organizations in the healthcare industry are not content to simply play in attractive segments and markets, but instead are proactively and fundamentally reshaping how the industry operates and how care is delivered. While the recipe across verticals varies, common among these new business models are greater alignment of incentives typically involving risk bearing, better integration of care, and use of data and advanced analytics.
Payers—Next-generation managed care models
For payers, the new and innovative business models that are generating superior returns are those that incorporate care delivery and advanced analytics to better serve individuals with increasingly complex healthcare needs (Exhibit 2). As chronic disease and other long-term conditions require more continuous management supported by providers (for example, behavioral health conditions), these next-generation managed care models have garnered notice. Nine of the top ten payers have made acquisitions in the care delivery space. Such models intend to reorient the traditional payer model away from an operational focus on financing healthcare and pricing risk, and toward more integrated managed care models that better align incentives and provide higher-quality, better experience, lower-cost, and more accessible care. Payers that deployed next-generation managed care models generate 0.5 percentage points of EBITDA margin above average expectations after normalizing for payer scale, geographical footprint, and segment mix, according to our research.
The evidence for the effectiveness of these next-generation care models goes beyond the financial analysis of returns. We observe that these models are being deployed in those geographies that have the greatest opportunity to positively impact individuals. Those markets with 1) a critical mass of disease burden, 2) presence of compressible costs (the opportunity for care to be redirected to lower-cost settings), and 3) a market structure conducive to shifting to higher-value sites of care, offer substantial ways to improve outcomes and reduce costs. (Exhibit 3).
Currently, a handful of payers—often large national players with access to capital and geographic breadth that enables acquisition of at-scale providers and technologies—have begun to pursue such models. Smaller payers may find it more difficult to make outright acquisitions, given capital constraints and geographic limitations. M&A activity across the care delivery landscape is leaving smaller and more localized assets available for integration and partnership. Payers may need to increasingly turn toward strategic partnerships and alliances to create value and integrate a range of offerings that address all drivers of health.
Providers—reimagining care delivery beyond the hospital
For health systems, through an investment lens, the ownership and integration of alternative sites of care beyond the hospital has demonstrated superior financial returns. Between 2013 and 2018, the number of transactions executed by health systems for outpatient assets increased by 31 percent, for physician practices by 23 percent, and for post-acute care assets by 13 percent. At the same time, the number of hospital-focused deals declined by 6 percent. In addition, private equity investors and payers are becoming more active dealmakers in these non-acute settings. 6 CapitalIQ, Dealogic, and Irving Levin Associates. 7 In 2018, around 40 percent of all post-acute and outpatient deals were completed by an acquirer other than a traditional provider.
As investment is focused on alternative sites of care, we observe that health systems pursuing diversified business models that encompass a greater range of care delivery assets (for example, physician practices, ambulatory surgery centers, and urgent care centers) are generating returns above expectations (Exhibit 4). By offering diverse settings to receive care, many of these systems have been able to lower costs, enhance coordination, and improve patient experience while maintaining or enhancing the quality of the services provided. Consistent with prior research, 8 Singhal S, Latko B, and Pardo Martin C, “ The future of healthcare: Finding the opportunities that lie beneath the uncertainty ,” January 31, 2018, McKinsey.com. systems with high market share tend to outperform peers with lower market share, potentially because systems with greater share have greater ability not only to ensure referral integrity but also to leverage economies of scale that drive efficiency.
The extent of this outperformance, however, varies by market type. For players with top quartile share, the difference in outperformance between acute-focused players and diverse players is less meaningful. Contrastingly, for bottom quartile players, the increase in value provided by presence beyond the acute setting is more significant. While there may be disadvantages for smaller and sub-scale providers, opportunities exist for these players—as well as new entrants and attackers—to succeed by integrating offerings across the care continuum.
These new models and entrants and their non-acute, technology-enabled, and multichannel offerings can offer a different vision of care delivery. Consumer adoption of telehealth has skyrocketed, from 11 percent of US consumers using telehealth in 2019 to 46 percent now using telehealth to replace canceled healthcare visits. Pre-COVID-19, the total annual revenues of US telehealth players were an estimated $3 billion; with the acceleration of consumer and provider adoption and the extension of telehealth beyond virtual urgent care, up to $250 billion of current US healthcare spend could be virtualized. 9 Bestsennyy O, Gilbert G, Harris A, and Rost J, “ Telehealth: A quarter-trillion-dollar post-COVID-19 reality? ” May 29, 2020, McKinsey.com. These early indications suggest that the market may be shifting toward a model of innovative tech-enabled care, one that unlocks value by integrating digital and non-acute settings into a comprehensive, coordinated, and lower-cost offering. While functional care coordination is currently still at the early stages, the potential of technology and other alternative settings raises the question of the role of existing acute-focused providers in a more integrated and digital world.
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Healthcare services and technology—innovation and integration across the value chain.
Growth in the healthcare services and technology vertical has been material, as players are bringing technology-enabled services to help improve patient care and boost efficiency. Healthcare services and technology companies are serving nearly all segments of the healthcare ecosystem. These efforts include working with payers and providers to better enable the link between actions and outcomes, to engage with consumers, and to provide real-time and convenient access to health information. Since 2014, a large number and value of deals have been completed: more than 580 deals, or $83 billion in aggregate value. 10 Includes deals over $10 million in value. 11 Analysis from PitchBook Data, Inc. and McKinsey Healthcare Services and Technology domain profit pools model. Venture capital and private equity have fueled much of the innovation in the space: more than 80 percent 12 Includes deals over $10 million in value. of deal volume has come from these institutional investors, while more traditional strategic players have focused on scaling such innovations and integrating them into their core.
Driven by this investment, multiple new models, players, and approaches are emerging across various sub-segments of the technology and services space, driving both innovation (measured by the number of venture capital deals as a percent of total deals) and integration (measured by strategic dollars invested as a percent of total dollars) with traditional payers and providers (Exhibit 5). In some sub-segments, such as data and analytics, utilization management, provider enablement, network management, and clinical information systems, there has been a high rate of both innovation and integration. For instance, in the data and analytics sub-segment, areas such as behavioral health and social determinants of health have driven innovation, while payer and provider investment in at-scale data and analytics platforms has driven deeper integration with existing core platforms. Other sub-segments, such as patient engagement and population health management, have exhibited high innovation but lower integration.
Traditional players have an opportunity to integrate innovative new technologies and offerings to transform and modernize their existing business models. Simultaneously, new (and often non-traditional) players are well positioned to continue to drive innovation across multiple sub-segments and through combinations of capabilities (roll-ups).
Pharmacy value chain—emerging shifts in delivery and management of care
The profit pools within the pharmacy services vertical are shifting from traditional dispensing to specialty pharmacy. Profits earned by retail dispensers (excluding specialty pharmacy) are expected to decline by 0.5 percent per year through 2022, in the face of intensifying competition and the maturing generic market. New modalities of care, new care settings, and new distribution systems are emerging, though many innovations remain in early stages of development.
Specialty pharmacy continues to be an area of outpaced growth. By 2023, specialty pharmacy is expected to account for 44 percent of pharmacy industry prescription revenues, up from 24 percent in 2013. 13 Fein AJ, The 2019 economic report on U.S. pharmacies and pharmacy benefit managers , Drug Channels Institute, 2019, drugchannelsinstitute.com. In response, both incumbents and non-traditional players are seeking opportunities to both capture a rapidly growing portion of the pharmacy value chain and deliver better experience to patients. Health systems, for instance, are increasingly entering the specialty space. Between 2015 and 2018 the share of provider-owned pharmacy locations with specialty pharmacy accreditation more than doubled, from 11 percent in 2015 to 27 percent in 2018, creating an opportunity to directly provide more integrated, holistic care to patients.
Challenges emerge for the US healthcare system as COVID-19 cases rise
A new wave of modalities of care and pharmaceutical innovation are being driven by cell and gene therapies. Global sales are forecasted to grow at more than 40 percent per annum from 2019 to 2024. 14 Evaluate Pharma, February 2020. These new therapies can be potentially curative and often serve patients with high unmet needs, but also pose challenges: 15 Capra E, Smith J, and Yang G, “ Gene therapy coming of age: Opportunities and challenges to getting ahead ,” October 2, 2019, McKinsey.com. upfront costs are high (often in the range of $500,000 to $2,000,000 per treatment), benefits are realized over time, and treatment is complex, with unique infrastructure and supply chain requirements. In response, both traditional healthcare players (payers, manufacturers) and policy makers (for example, the Centers for Medicare & Medicaid Services) 16 Centers for Medicare & Medicaid Services, “Medicaid program; establishing minimum standards in Medicaid state drug utilization review (DUR) and supporting value-based purchasing (VBP) for drugs covered in Medicaid, revising Medicaid drug rebate and third party liability (TPL) requirements,” Federal Register , June 19, 2020, Volume 85, Number 119, p. 37286, govinfo.gov. are considering innovative models that include value-based arrangements (outcomes-based pricing, annuity pricing, subscription pricing) to support flexibility around these new modalities.
Innovations also are accelerating in pharmaceutical distribution and delivery. Non-traditional players have entered the direct-to-consumer pharmacy space to improve efficiency and reimagine customer experience, including non-healthcare players such as Amazon (through its acquisition of PillPack in 2018) and, increasingly, traditional healthcare players as well, such as UnitedHealth Group (through its acquisition of DivvyDose in September 2020). COVID-19 has further accelerated innovation in patient experience and new models of drug delivery, with growth in tele-prescribing, 17 McKinsey COVID-19 Consumer Survey conducted June 8, 2020 and July 14, 2020. a continued shift toward delivery of pharmaceutical care at home, and the emergence of digital tools to help manage pharmaceutical care. Select providers have also begun to expand in-home offerings (for example, to include oncology treatments), shifting the care delivery paradigm toward home-first models.
A range of new models to better integrate pharmaceutical and medical care and management are emerging. Payers, particularly those with in-house pharmacy benefit managers, are using access to data on both the medical and pharmacy benefit to develop distinctive insights and better coordinate across pharmacy and medical care. Technology providers, together with a range of both traditional and non-traditional healthcare players, are working to integrate medical and pharmaceutical care in more convenient settings, such as the home, through access to real-time adherence monitoring and interventions. These players have an opportunity to access a broad range of comprehensive data, and advanced analytics can be leveraged to more effectively personalize and target care. Such an approach may necessitate cross-segment partnerships, acquisitions, and/or alliances to effectively integrate the many components required to deliver integrated, personalized, and higher-value care.
Creating and capturing new value
These materials are being provided on an accelerated basis in response to the COVID-19 crisis. These materials reflect general insight based on currently available information, which has not been independently verified and is inherently uncertain. Future results may differ materially from any statements of expectation, forecasts or projections. These materials are not a guarantee of results and cannot be relied upon. These materials do not constitute legal, medical, policy, or other regulated advice and do not contain all the information needed to determine a future course of action. Given the uncertainty surrounding COVID-19, these materials are provided “as is” solely for information purposes without any representation or warranty, and all liability is expressly disclaimed. References to specific products or organizations are solely for illustration and do not constitute any endorsement or recommendation. The recipient remains solely responsible for all decisions, use of these materials, and compliance with applicable laws, rules, regulations, and standards. Consider seeking advice of legal and other relevant certified/licensed experts prior to taking any specific steps.
Before the COVID-19 pandemic, our research indicated that profits for healthcare organizations were expected to be harder to earn than they have been in the recent past, which has been made even more difficult by COVID-19. New entrants and incumbents who can reimagine their business models have a chance to find ways to innovate to improve healthcare and therefore earn superior returns. The opportunity for incumbents who can reimagine their business models and new entrants is substantial.
Institutions will be expected to do more than align with growth segments of healthcare. The ability to innovate at scale and with speed is expected to be a differentiator. Senior leaders can consider five important questions:
- How does my business model need to change to create value in the future healthcare world? What are my endowments that will allow me to succeed?
- How does my resource (for example, capital and talent) allocation approach need to change to ensure the future business model is resourced differentially compared with the legacy business?
- How do I need to rewire my organization to design it for speed? 18 De Smet A, Pacthod D, Relyea C, and Sternfels B, “ Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era ,” June 26, 2020, McKinsey.com.
- How should I construct an innovation model that rapidly accesses the broader market for innovation and adapts it to my business model? What ecosystem of partners will I need? How does my acquisition, partnership, and alliances approach need to adapt to deliver this rapid innovation?
- How do I prepare my broader organization to adopt and scale new innovations? Are my operating processes and technology platforms able to move quickly in scaling innovations?
There is no question that the next few years in healthcare are expected to require innovation and fresh perspectives. Yet healthcare stakeholders have never hesitated to rise to the occasion in a quest to deliver innovative, quality care that benefits everyone. Rewiring organizations for speed and efficiency, adapting to an ecosystem model, and scaling innovations to deliver meaningful changes are only some of the ways that helping both healthcare players and patients is possible.
Emily Clark is an associate partner in the Stamford office. Shubham Singhal , a senior partner in McKinsey’s Detroit office, is the global leader of the Healthcare, Public Sector and Social Sector practices. Kyle Weber is a partner in the Chicago office.
The authors would like to thank Ismail Aijazuddin, Naman Bansal, Zachary Greenberg, Rob May, Neha Patel, and Alex Sozdatelev for their contributions to this article.
This article was edited by Elizabeth Newman, an executive editor in the Chicago office.
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Strategic Planning and Business Development for a large health network
The problem.
Formed in 1994, Citrus Valley Health Partners (CVHP) is a network of three hospitals, a home health agency, hospice care and an ambulatory surgery center that serves nearly one million residents in the East San Gabriel Valley. In 2010, CVHP was facing challenges common to community hospitals across the country, including declining payer mix, an aging medical staff, and competition from other hospitals and physician groups. As an organization committed to delivering quality health care to its large service area, CVHP wanted to partner with its physicians to redefine its vision and overall strategic direction to adapt to the rapidly changing health care landscape and ensure long-term financial sustainability.
The Solution
To strengthen organizational infrastructure and improve performance, CVHP engaged COPE Health Solutions to provide strategic planning and business development expertise. This engagement led to the development of a system-wide multi-year strategy. In addition to providing project management throughout the entire engagement, COPE Health Solutions focused on the following areas for improvement: clinical programs and service lines, physician alignment, facility and capital planning, government relations and advocacy, and research and teaching opportunities. Further, our team identified and pursued strategic partners for growth and built relationships with key stakeholders – particularly physician and medical staff leadership and IPAs.
Working closely with CVHP leadership, COPE Health Solutions helped establish the Transformation Partnership Task Force, which was a joint physician-hospital led team organized around the development of the 10-year vision and multi-year strategic plan that incorporated eight pillars for strategic objectives focused on clinical outcomes, customer experience, physician alignment, economic drivers, community health, business mix, partnerships, and demographics.
Notably, our team facilitated the successful alignment of physicians with CVHP through the proactive engagement of physicians and key CVHP leaders in joint strategic planning, and explored potential opportunities for joint ventures and coordinated care activities.
- Established a “Transformation Partnership Task Force” comprised of CVHP and its physician partners to engage and educate stakeholders, conduct community assessments, evaluate best practices, and develop and implement action plans
- Completed market and competitive analyses
- Assessed current organizational performance of CVHP using SWOT analysis
- Developed a 10-year vision and outlined a visual roadmap for achieving vision
- Established work groups to implement objectives
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How to Write a Business Plan for an Outpatient Medical Practice
You probably have many good reasons to open a private practice. Private practices can be lucrative, although it requires you to spend time building relationships with patients while also attending to all business processes that are part of running your practice .
Maybe you want more autonomy over your practice and your workflow. Or maybe you hope to expand your services to underserved areas or specific populations based on your expertise.
If you’re thinking about starting an outpatient medical practice, one of the first things you should do is write a business plan. Even if you’re able to self-fund your practice and don’t need outside investment, your business plan is a great tool for thinking through all the different aspects of building a profitable and sustainable practice.
There are a few different types of business plans , depending on how you intend to use it. If you’re seeking investment or business loans, you’ll need a traditional business plan . They tend to be lengthier and more detailed. A Lean Business Plan might be a better fit if you simply need to think through all the different aspects of your business. A Lean Plan will be shorter, and it lends itself to quick revisions, but both types follow the same general outline.
In the medical field, this Lean Plan idea is also sometimes called a proforma, though a proforma sometimes refers specifically to the financial part of the plan.
Ultimately, no matter which type of business plan fits your practice’s needs the best, remember: keep it short, know your audience, and don’t be intimidated.
Once you consider these factors, then it’s time to sit down and write your business plan. You should go into this thinking about your business plan as a living document, not something you do once and then file away forever. Use it as a tool, especially around your financials. Revisit and update it regularly by comparing your forecasts to your actuals and adjusting as necessary.
To help you get started, you can download our free traditional business plan template or our Lean Plan template . If you’ve never written a business plan before, Bplans also offers a library of sample medical business plans that you can review or even download to use as a model.
Executive summary
The first section that will appear in your business plan is the executive summary . But before you dive right in, it’s the section of your plan that you should actually write last. It’s a summary and an overview of your outpatient medical practice and your plans, so it will be easy to put together after you’ve written the rest of your plan.
Executive summaries are short—keep it to one to two pages. Keep in mind that if you’re using your plan to get funding, investors and banks tend to read your executive summary to get a sense of whether to read on and consider your request. Do not neglect it; just write it last.
Your executive summary will include the following sections:
- Who you are: Your business name, location, and contact information.
- What you offer and the problem your business solves: What does your practice offer and why is it needed? This is your value proposition .
- Target market: Who is your ideal patient? Do they self-pay or use insurance? Be specific.
- Competition: Who else is offering similar services?
- Team: Who is on your management team?
- Financial summary: Explain your business model, startup costs, revenues, and liabilities to the company. Mention your funding needs.
- Milestones and traction: How have you validated that there’s a need for your practice in your location?
Position your practice’s business opportunity
Now that you’re familiar with what’s included in your executive summary, tuck that information away, and get to work on the rest of your plan.
Think of the next few sections of your plan as the overarching description of your practice’s business opportunity. You’ll cover the problem you’ve identified and the solution that your practice offers. Then you’ll think through your ideal customer , your competition , and your opportunities for growth . This section area should describe the services you provide and how they benefit your patients.
Problem and solution
First, describe the problem that you’ve identified and how your practice solves that problem. Here’s a brief example:
The problem : There is a lack of affordable pediatric and gynecological care available in coastal areas of Lane County, Oregon. Many patients have to travel miles to the closest practice.
The solution : Dr. Gardner plans to open Ocean Lane Outpatient Care to serve smaller Oregon coastal communities scattered outside of major towns with major hospitals. Due to her focus on pediatric and gynecological care, Dr. Gardner’s particular services are especially valuable in this location due to the lack of available service providers in the area. Dr. Gardner’s practice will accept private insurance and Medicaid, as well as a sliding scale for patients in a certain income bracket.
The services section identifies what kind of medical practice you are opening. Restate who your practice serves and what kind of services you specialize in. Talk about how your practice approaches treatment and what goals you have in addition to providing quality care. Here’s an example from a sample business plan for a medical practice.
Include a breakdown of all services furnished by the clinic, being as granular as possible. For example:
Gynecology:
- Annual women’s wellness exam
Pediatrics:
- Immunizations
- Youth eating disorder treatment
Target market
Next, talk about your ideal patients. If you’re in the earliest stages, you’ll want to do some research that verifies your hypotheses.
For example, Dr. Gardner would have needed to verify her assumption that people in coastal towns in Oregon are in need of pediatric and gynecological services—a need that isn’t currently satisfied by available resources.
A formal market analysis can help verify that there’s a need for your particular practice in your intended location.
Your target market section should include:
- TAM, SAM, and SOM: Total Available Market (TAM), Segment of the Available Market (SAM), Share of the Market (SOM). Here, you are looking at the difference between targeting everyone: TAM (all people who need medical care—so all humans in your area), versus your ideal clients: SAM (maybe this is those with certain insurance or ability to self-pay), versus the number of new patients you think you can realistically reach: SOM, especially within your first few years. The idea is that not everyone will be an ideal patient. It matters because you can waste a lot of money with marketing outreach to everyone, instead of targeting a specific population that is more likely to be looking for your services.
- Buyer persona : Imagine there’s one specific patient who represents your ideal patient. Be specific. Maybe she’s 34 years old, has private insurance, is relatively healthy, but needs more regular medical care and advice.
- Competition and competition matrix : List competitors and analyze what makes them competitive. For instance, your competitors might be large hospitals because of the wide range of services they offer. You might also be competing with local chiropractors or other alternative medicine practices that already have a foothold in local communities.
- Future products and services : Name the products/services you will offer as your practice grows and earns more money and as your patients develop new needs. Maybe you will want to open a second location when you gain enough patients. Or maybe you will want to extend your practice’s hours of operation.
Ideal patient profile
Your ideal patient profile identifies the type of patient whom you hope to attract and retain. To clarify, this does not mean you only serve your ideal patient type. Rather, focusing your outreach efforts on attracting your ideal patient will allow you to grow your practice more effectively than targeting a large number of patients who may or may not be in the market for your practice’s specialty.
When developing your ideal patient profile, consider:
- Who you enjoy working with
- Who needs the services you provide
- Who can and will pay your pricing (or have an insurance plan that you want to accept)
For instance, because Dr. Gardner specializes in preventive and curative care, a patient seeking palliative treatment for terminal cancer is not the ideal patient. This patient would not receive the best care for their needs from Dr. Gardner’s services.
Acquiring a new patient is six to seven times more expensive than retaining a current patient. In order to support and retain current patients, develop a strategy to proactively meet their needs and set benchmarks to measure the success of your strategy.
Execution: How your practice will respond to the opportunity
First, your business plan laid out the opportunity at hand. Now, the rest of your plan will focus on how to take advantage of that opportunity. Now is the time to lay out what you’ll do to attract patients and set up a viable business model with healthy financials.
Components of this section include:
- Your marketing and sales plan
- Strategic partnerships or alliances
- Your operations plan
- Your team and company information
Financial plan
- Milestones and metrics that you’ll need to hit to be viable
- Your key assumptions and risks
- Your funding ask and exit strategy, if applicable
Marketing and sales plan
The marketing and sales component of your plan should include how you plan to reach the patients in your target market, how you’ll bill for your services, and what you need to do to bring in the right number and type of patients.
- Positioning : Describe how you will present your company to your customers with your positioning statement . Think about answering these questions: What are you offering your patients that they can’t get elsewhere? Why should they pick you instead of another practice? Where do you see yourself in the competitive landscape? Use this model to help:
“For [target market description] who [target market need], [how our business offering meets the need]. Unlike [key competition], it [most distinguishing feature].”
For [coastal community members] who [require gynecological care], Ocean Lane Outpatient Care [provides both pediatric and women’s health services]. Unlike [other area medical practices], Ocean Lane Outpatient Care is [conveniently located near the communities it serves and can fill the gap between pure pediatric care and full-blown adult care for young women].
- Pricing and billing : Medical pricing is complex, especially if you plan to work with insurance companies. Practice Builders says that “a 10 percent increase in pricing can result in a much better return than a 10 percent reduction in costs—or even a 10 percent increase in patient volume.”
Make sure you price your services at what they are worth and explain your pricing to your patients. Consider the demographics your practice serves when you choose your pricing. Research other practices in the area and learn more about how you can choose the best prices for your patients and your practice.Also, consider how you will get patients to keep coming back to your practice. Sometimes you can increase sales by upselling and cross-selling , or offering complementary services.
If you accept insurance, the contracts you set up with insurance companies for reimbursement will probably dictate your pricing, so this is a good place to talk about your negotiation strategy as well.
- Update your website and social media frequently and ensure your website is mobile-friendly and share-friendly with credible links added.
- Make sure all communications with and about patients are HIPAA-compliant . Download a HIPAA Compliance Guide to ensure you are following regulations.
- Maintain a positive online reputation for your practice as a key management technique. You can do this by claiming your profile on any third-party sites that list it. Encourage your patients to review you online, too.
- Strategic alliances : List any people or organizations with whom you are working. You will most likely need to partner with a regional lab for medical testing. Opening an on-site lab can be costly for a smaller practice. You will most likely need to partner with a nearby hospital as part of a referral system or to share select services and equipment.
The operations section of your business plan covers how your business works, from the logistics to the technology.
- Technology: Describe how your technology works, but do not go into too much detail. Investors can ask for more information if they want to. Will you rent or buy equipment ? The technology you need ranges from simple items like thermometers to more complex items like centrifuges.
- Billing and information storage: Provide a brief overview of how you will manage information technology and patient records to promote safety, efficiency, and compliance with HIPPA regulations and industry standards. Explain your usage of Electronic Medical Record (EMR) software in this section.
- Payment types you accept: Consider payment types such as private pay, private insurance, Medicaid/Medicare, etc. What kind of referrals can you offer to the uninsured or those who cannot afford your services?
Milestones and metrics
In this part of your plan, you set measurable, achievable milestones, such as the number of new patients added per month in the first year of operations. Milestones can be about any aspect of your medical practice as long as they emphasize growth. For metrics , decide which numbers to check regularly to track your company’s health. This area should also include information about traction (past successes) and risks:
- Traction: Look back at major milestones you have achieved. Hopefully, they demonstrate that your business model works and that you are filling a need for your market. If you’re looking to attract private funders, this section is important since it shows your initial success .
- Key assumptions and risks : Acknowledge the assumptions you are basing your business on. Set out to prove them right if you can. Also, discuss risks so that investors know you have considered what could go wrong and that you have a plan for dealing with challenges. Malpractice suits and changing healthcare regulations are risks specific to the healthcare field. Malpractice insurance is a must for addressing the former. Changing healthcare regulations can affect the volume of patients who are able to afford your services.
Your team can be more important than your product or service. Describe your team here, even if it is just you and a receptionist who answers the phone in your office building.
- Management team and qualifications: Address who works for you, what do they do, and how much you pay them. Compile the details of their relevant experience and education.
- Hiring plans : Outline who, if anyone, you need to hire to fill skills gaps in your management team and how much you plan to pay them.
Company overview
The company overview tells about who you and your staff are and appeals to potential investors. Keep it short—it should be the shortest chapter of your business plan but is still very important.
It needs to include these elements :
- Mission statement : Your mission statement articulates your goals for what your company does for its customers, employees, and owners. It will read something like this: “Our mission is to provide X (services) for Y (customers) by Z (methods).” For instance, Ocean Lane Outpatient Care is dedicated to providing quality care for all the inhabitants of coastal Lane County by providing affordable and versatile services.”
- Intellectual property : List any patents you have or have pending, and mention any core technology you are licensing from another company.
- Legal structure and ownership : Explain your business structure and who owns how much of it. More on considerations for physicians and legal structure here.
- Business location : Describe the company’s location and any facilities it owns.
- Company history if it’s an existing company
Having a solid financial plan is critical, whether you’re seeking funding or not. A typical financial plan includes projections by month for the first year and annual projection for the next three to five.
Include these key elements :
- Profit and loss statement : this explains how your business made a profit or incurred a loss in a given amount of time (typically three months) by listing all revenue and expenses, then documenting the total amount of net profit or loss.
- Cash flow statement: documentation of how much cash the business brought in, how much it paid out, and the amount of its ending cash balance (on a monthly basis).
- Balance sheet : snapshots how your company is performing at a given moment by including how much money you have in the bank, how much your customers owe you, and how much you owe your vendors.
- Sales forecast : projections of what you think you will sell in a given timeframe (one to three years).
- Business ratios : Comparisons of your company’s financials with numbers from the industry profile.
- Keep it brief. For example, Dr. Gardner will employ administrative aides and nurses.
- Use of funds : Needed if you’re seeking investment or a loan. This section explains how you will use investors’ money.
- Exit strategy : You only need this if you’re seeking outside investment. An exit strategy is a method by which entrepreneurs and investors, especially those that have invested large sums of money, transfer ownership of their business to a third party to recoup money invested in the business. Common exit strategies include being acquired by another company, the sale of equity, or a management or employee buyout.
When writing your financial plan, make sure to consider startup costs . For a medical practice, average startup costs can include initial fees, malpractice insurance, cost of renting or leasing office space, and the cost of any legal or tax advisors.
Consider submitting your plan to at least five to 10 banks if you need help financing your startup costs. Many banks have divisions designated to providing loans to new dental and medical practices , so submit your plan to that division if you can. Startup costs can be high in the medical field, so make sure not to underestimate them.
Finally, your appendix is the holder for any supporting information such as charts, images, graphs, and more. If you need to include large sets of data or pages of information, put it here. That way, it is available but does not distract from the plan’s most important pieces.
For instance, you can expand on your personnel plan with charts of each employee’s annual insurance costs. You can also include versions of your profit and loss statements and other financials that extend further into the future.
Don’t forget to go back to your executive summary! Remember to keep it brief and write it based on what you have written already.
When you’re ready to write your business plan, there are an array of resources available to you. Download our free business startup checklist to think about the next steps. Also, check out our free business plan template . Reviewing sample business plans in the medical field can help you get a better sense of the process and information you’ll provide. This one for a family medicine clinic will probably be most helpful if you’re setting up a primary care practice.
Remember that this plan is a living document. Schedule a regular business plan review meeting. You should review your trajectory and compare your financial projections to your actuals frequently to keep your practice on track.
Sarah Hovet
Sarah Hovet is a senior English and journalism major and creative writing minor at the University of Oregon Clark Honors College. Currently, she is a content marketing intern at Palo Alto Software, where she writes SEO-researched articles for Bplans. You can learn more about her research and skills at sarahhovet.weebly.com .
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How to write a business development plan: a step by step guide.
So we’ve already tackled how to write the infamous business plan , but now that you’re in the growth stage of your business – what’s next?
Many business owners will look to write a business development plan with the aim to make their business better. Running a business is never a stationary job, you constantly have to be looking to grow and improve.
But what exactly is a business development plan and how do you write one? Let’s find out.
Here’s What We’ll Cover:
What Is a Business Development Plan?
How to write a business development plan, key takeaways.
A business development plan is a document put together by the business owner with the aim to grow and improve their business. The plan will set goals for growth and explain how you will achieve them.
A business development strategy can have a short-term or long-term focus, or both. They should also be constantly reviewed and revised as things shift and your goals may change.
A health plan is one that builds as your business evolves.
A standard business development strategy can be split up into 6 different sections, each one with a different aim and purpose. These sections are:
You should always be looking to grow your business. In this section, you will identify where growth will come from. For example, whether it’s new product development, adding different services or breaking into new markets. Your main business development goals should always point towards growth.
According to a U.S. Bank study, 82% of small businesses fail because of poor cash flow management and understanding. That’s why it’s vital that you have a constant eye on your funding and your bottom line.
You need to understand how you’ll fund your business development. So in this section, you should lay out your current capital, and how much more you will need to sustain growth.
3. Financial Goals
You should have a good idea of your current revenue, costs and profits. These numbers can then be used as a starting point for setting new, more ambitious revenue goals. This is for when you have expanded and developed your business.
4. Operational Needs
When growing a business, your operational needs will change. For example, what started out as a two-person job can develop into needing a whole team of people. So in this section, you will need to identify what things about your business will need to change to accommodate and promote growth.
5. Sales and Marketing
No business can succeed without a strong and stable sales team and marketing team. As your business grows, so will your sales and marketing needs. So you will need to take the time to figure out your target market and what sales and marketing efforts will promote growth. You should then put all of your focus on those efforts.
It’s vital that your sales process and marketing strategies are strong and sturdy enough to support a growing business.
6. Team Needs
Every strong business needs a strong team around it. When you started your business, it’s likely that you shouldered a lot of the jobs and responsibilities. As your business grows, you’ll soon come to realize that you can no longer do this alone.
So as a business developer, you need to think about what jobs and tasks you are best and most effective at. You should then correctly delegate the other responsibilities to the appropriate team members. This is often a good way to figure out if you have the right team around you. If you dread the thought of offloading tasks to your team, you may not have the trust in your team that you should.
Business development plans may seem like a relatively daunting task. But once you figure out the basics then they can almost write themselves.
You need to have an open mindset, a realistic approach and the ability to accept some potential failures.
Expanding and developing a business is hard work, but with the right plan in place, you are giving yourself the best chance possible.
Are you looking for more business advice on everything from starting a new business to new business practices?
Then check out the FreshBooks Resource Hub .
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Hospital Business Planning Best Practices
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Step 1: search for internet resources that are available, step 2: define the healthcare company’s description, step 3: create a competitive analysis and marketing strategy, step 4: clarifying the management and organization, step 5: set up financial as well as strategic objectives, share this post on your network, you may also like these articles, 14+ sample project assessment plan in pdf.
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How to Create a Profitable Healthcare Business Plan for Your Medical Practice
Marketing is crucial for any industry, and healthcare industry is no exception. Whether you are a big hospital or private practice, creating and implementing an effective marketing plan will help to attract new patients, retain the existing ones and maintain relationships with your staff and patients. An effective marketing strategy will play an integral role in increasing revenue, building patient trust, improving online reputation and expanding your reach.
A healthcare business plan can help you define and identify the target audience and key prospects. It can also assist in evaluating and comparing your practice data against your industry. Clearly, a business plan is necessary, so does your practice have one? Here are some more benefits of creating a strategic plan for your medical practice:
- Physician business plan provides clear direction to your marketing initiatives, preventing random activities that may work against each other.
- The process of developing a strategic plan offers an opportunity for everybody involved to collaborate in shaping the future of the practice. Active participation of all the stakeholders ensures the success of projects and priorities.
- A strategic healthcare business plan helps the physician set marketing goals and priorities for the medical practice.
- Clarity of aims and objectives can improve the quality of patient care.
Strategic business planning offers great long-term value. After the initial planning is done, a practice can use it as the benchmark for measuring progress and monitoring areas of improvement.
The process for preparing a strategic business plan is not clear-cut, but it is one of the most important things you should do for the strategic growth of your practice. A well-defined marketing plan will outline how you will retain existing patients and attract new patients, retain staff and communicate your message in the most efficient manner.
You do not need to hire expensive consultants to create a marketing plan for your healthcare practice. All that you need is the willingness to put in time and effort. An ideal healthcare marketing plan should address every aspect related to promoting your practice, and to effectively plan, you must do some research.
Identify your target audience
The first step in any business plan is to figure out who is going to seek your service. If you have a specialty practice, you probably know the answer. According to industry experts, your marketing efforts will be effective only if they are targeted. So to identify your potential patients, start by defining the common characteristics of your current patients. Always remember, your marketing plan is all about reaching your target audience and adjusting your approach to fit their preferences. Beyond demographics, try to learn the reasons why your potential patients will come to your practice, know your competition and understand your competitors’ approach in reaching the target audience. Examine how your competitors market their practice and then compare their approach, services and marketing strategies with yours. You must also determine your unique selling proposition and understand what makes you different from your competition.
Marketing is all about keeping up-to-date. So make sure while doing your research, you stay updated on current affairs. The idea is to keep up-to-date with financial, political and marketing trends that influence the medical community so you can create an effective business plan that responds to changing market conditions.
Time for some brainstorming sessions
After you have identified your potential market and patients, you will need to categorize and address critical operational questions about your medical practice. You may need to set up brainstorming sessions with people you trust, including family, friends, team members or other professionals. During these sessions, try to find answers to these basic but critical questions:
Question: Which marketing platforms will make be most suitable for promoting your services?
Pro tip: You will need to think regarding how to present or sell your services. For instance, consider offering packages that are generic in nature and offer value for money.
Question: What is the best time and frequency of marketing your service?
Pro tip: Too much promotion can create a negative brand image in the minds of potential patients. Too much advertising tends to make patients suspicious. So depending on your target audience, determine the best time for promoting your practice.
Question: What are you trying to achieve from your business plan? How do you plan to measure these goals?
Pro tip: According to experts, your marketing plan should include basic tasks that have short-term goals so that you do not end up compromising on the patient experience. You can consider using big data to evaluate and measure results and their impact on ROI.
Penning the business plan
Now that you have completed the groundwork, it is time to put all your facts and figures into words. Here are some basic steps for creating a business plan for your medical practice:
- Define your mission and vision: This is where you need to determine your goals. You have to understand where you want your practice to be in five to seven years. You will need to prepare a list of all the marketing techniques and tactics and determine what options will work best for your practice. Some of the effective marketing tactics are networking, direct marketing, print advertising, training sessions, media, open houses, social media, blogs, third-party websites and much more.
- Identify your team: In order to build support and generate enthusiasm, you should determine the outgoing personalities in your organization. Find people who will help support your marketing efforts by hosting open houses, patient training sessions, interviews and other public relations initiatives.
- Market segmentation: Consider potential patients think outside the box. Look within your organization first – you may find some of your best customers and marketers there. You must understand where your patients come from and dive deeper into your business model. Is your practice mainly run by physician referrals, or do patients refer directly? You need to create an extensive list of potential patients and categorize them.
- Create patient personas: Patient personas are representations of your ideal patients. You must create patient personas based on your research and reflect on their needs and issues. For instance, if one of your buyer personas is a diabetic, his or her needs will be different from a flu patient.
- SWOT analysis: SWOT matrix is another important component of the business plan. You can use this analysis to assess your practice’s strengths, weaknesses, opportunities and threats. This study will help you understand your market situation better and discover growth opportunities. For a successful SWOT analysis , you must be specific, realistic, compare different situations and keep your business plans and goals updated.
- Prepare a budget: Now that you have all the market information you need and have established the best way to reach your potential patients, focus on your budget to support your marketing campaign. To begin with, it is advisable to stick with the 80/20 rule. According to this rule, 80 percent of your business volume will often come from 20 percent of your patients.
- Share your vision: The first step is to make sure the plan is received and understood by your organization’s leadership. Next, make sure your plan becomes a part of the organizational culture. You must encourage employees to come up with ideas that will support your idea. Always share your plans with physicians, volunteers, employees, board members and top leadership.
- Plan the rollout: To begin with, introduce your campaign internally. Your organization’s leadership and staff are often your best support. If they get the message, your marketing efforts will be successful.
- Measure and evaluate: You should regularly track new patients, physician referrals, leads, website hits and procedure volumes in order to assess the success of your business plan.
Don’t forget the 7Ps
Even the most insightful services, supported by the best business plan, will not survive on the market if they are unable to reach potential patients. That is why practices need to invest in strategies that will bridge the gap between them and the target audience. For your marketing initiatives to be successful, you must address the 7Ps in order to evaluate and measure your business activities. These seven Ps are product, price, promotion, place, packaging, positioning and people. These 7Ps will help you review and define key issues that impact your marketing activities.
- Product: When was the last time you took an unbiased look at your products, service, facility or value proposition? Do your products meet the needs of the patients? Do your products and services deliver value? Is your medical practice properly presented? The ‘product’ for your healthcare practice is the happiness and satisfaction of your patients, which is intangible and cannot be quantified. The only way is to know that customers receive value and comfort by way of your medical practice.
- People: Healthcare is all about people – your current patients, potential patients, staff and management – everyone delivers or receives a service plays a significant part in the product category. Your patients will evaluate the service and satisfaction based on assumptions and interactions. Usually, patients do not have much insight to your medical skills, but they will know if they are pleased based on how you deal with them. Your reputation and your image are not yours alone – it is teamwork.
- Price: It is the amount people pay in exchange for the product received. Therefore, the price must be competitive, enough to generate profit, but may vary when bundled with promotional offers. Sometimes, price is the biggest factor. Therefore, as a practice owner, you must take a serious look at those areas where there is flexibility and be open to adjusting and reducing prices to meet your patients’ needs.
- Promotion: This refers to all the direct and indirect ways of communicating about your product to your people or potential patients. This may include personal and mass interaction. In all instances, promotion should always be carried out in a professional manner. The objective of promoting your practice is to examine how, when, what and where you can offer your service to your target audience.
- Place: This points to presenting your products or services to your target audience in the right place and at the right time. Needless to say, the ‘place’ will be your office where the product will meet the user. However, in healthcare, a change in location can impact the user’s decision to buy.
- Packaging: Take an unbiased look at the appearance of your office, front office, waiting area, brochures and website and the appearance of your medical staff. You might be surprised to see what patients are observing when they walk through your front door.
- Positioning: This refers to the way your brand, products or service are perceived by your target customers. If you could get the opportunity to create the ideal impression in the minds of your patients, what would you want it to be?
For successfully growing their practice and attracting new patients, many practices are working with medical marketing agencies. As a medical marketing agency , Practice Builders knows what is suitable for different medical specialties. We can introduce you to the best marketing tactics that will draw new patients to your practice. Moreover, we know how to develop effective business plans that will lead to significant growth in your medical practice. To find out more, contact us today.
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Sharon has spent 25 years building teams and developing people to work together to help improve the client experience in the markets we serve. This ultimately benefits both customers and staff equally. Sharing best practices and ideas helps clients and team members envision new alternatives, which is quite fulfilling when positive change results. Sharon enjoys working closely with clients to understand the true drivers that are affecting their business environment. By engaging clients in meaningful exploration of their goals and challenges, she often discovers that an issue they asked for help in solving is merely a symptom of something else or something greater. Solving the real issue through truly listening and not just addressing the symptoms helps create true partnerships with clients.
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Veterinary practice business plans.
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How to Write a Business Plan for Healthcare
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Example of a medical transportation business plan, how do i start a home business caring for elderly people.
- How to Create an Audit Template for a Client Account Review
- How to Get Federal Funding for a Clinic Start-Up
Writing a business plan for a healthcare involves preparing a document that outlines the services you plan to provide and how you intend to run your company. Health care businesses usually deal with reimbursement, fee schedules, billing systems, managed care contracts and operational issues. By describing how your company handles these challenges, you can prove to potential investors that your business strategy is sound and worthy of their investment.
Available Internet Resources
Use the resources provided by websites, such as the Business.gov and the Small Business Administration Small Business Planner websites, to get started writing your health care business plan. Use the self-assessment tool provided by the Small Business Administration website as well as other resources, such as free online courses, access to online mentoring and templates.
Description of Your Health Care Business
Write a description of your health care business. For example, list how your service offers elderly or disabled clients non-medical support at home. If you plan to purchase and run a franchise operation, the parent company typically provides information and training that describes the business.
For example, urgent care center businesses typically provide care by a certified physician, on-site lab services, prescription services and extended hours. Describe the skills and experience of your staff, such as technicians.
Marketing Strategy and Competitive Analysis
Use resources, such as the Plunkett Research website, to identify the industry outlook and trends in the health care industry. Identify your competitors. Analyze their strengths and weaknesses. Prepare your own promotional campaigns, which could mean describing your plans to develop a website to advertise your services or conduct an email marketing campaign to attract new customers.
Describe your community and how you intend to obtain referrals, such as making connections with doctors and hospital administrative personnel. These health care professionals frequently refer patients requiring home health care to local reputable agencies providing quality service to discharged patients.
Organization and Management
Add a section describing how you intend to organize your health care business. List the software programs you intend to use for charting and billing. Establish a mechanism for receiving payment and obtaining reimbursement for services. List the licenses required to operate a health care business in your state, using the resources provided by the Business.gov website.
Ensure that you meet the guidelines for providing health care services and that your services can be reimbursed by Medicare, Medicaid and private insurance.
Financial and Strategic Goals
Describe how you plan to finance your company and specify a multi-year plan. For example, state the number of patients you hope to serve by the end of the first year. Classify these patients by type, such as home health care or personal injury cases. Set success criteria, such as 80 percent customer satisfaction as reported by follow-up surveys you conduct with clients.
Use the resources provided by the Business.gov website to pay your taxes and ensure you adhere to all the required regulations.
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Tara Duggan is a Project Management Professional (PMP) specializing in knowledge management and instructional design. For over 25 years she has developed quality training materials for a variety of products and services supporting such companies as Digital Equipment Corporation, Compaq and HP. Her freelance work is published on various websites.
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Business Development in Healthcare
Business in Healthcare: Grappling with truth
A profitable business is what healthcare industry is known to be all about. However it has its own struggles of rising costs, overworked employees and clinicians. Incremental issues such as reducing errors, enforcing practical guidelines and maintaining electronic records. However what the consumer i.e. the patient is looking for is maximum benefit with minimum cost. Thus, focusing on a patient centric system from a volumetric and a profit parameter will not only help healthcare grow as an industry but also build faith in the enterprise. It is very important to restructure and organize the way the healthcare is perceived and delivered in the present scenario as a profit driven enterprise will make an individual or a consumer retract from your doorsteps whereas a value based system will empower an organization. Thus it increases the efficiency and at the same time the growths in market share. The primary game changer in converting this model is primarily a Clinician as the value based, ethical medical practice is provided by them however it has to be supported by healthcare employers as they need to stop pressuring the employees with targets and profitability based incentives which will ultimately over time result in unethical practices leeching in.
Business Development: New strategies for Healthcare
In any business a single strategy doesn’t work. Its a multitude of factors encompassing innovations with the changing times to building a good repute so that a customer even after years of service feels welcome rather than abandoned after a treatment. It is also very important as a business strategist to not compromise on quality by focusing on quantity. Leaders with great knowledge and insights should be part of the talent team and should be from different fields of healthcare so that a representative voice and changes can be brought about.
- Patient Centric
- Strong Database
- Quality maintenance
- Strong, Intuitive and Empathic Leaders
- Integrated/Multidisciplinary Care
Healthcare Management C ourses Online
James Lind Institute (JLI) provides an opportunity for clinicians, graduates for a sound purposeful career as business strategist by providing online courses which are recognized internationally. Apart from having mentors from the industry the institute also provides hands on experience of the job thus make it a lucid opportunity for budding trainees. The courses offered are Advanced Post Graduate Diploma in Healthcare Management . JLI also provides a Master of Science in Health Management in collaboration with Universit telematica internazionale UniNettuno.
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18 Health Care Business Ideas for Passionate Entrepreneurs
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The health care sector is an amazing place for aspiring entrepreneurs to open up shop. Exploring health care business ideas is smart for lots of reasons.
There’s an opportunity to do a world of good by serving an aging American population and helping those struggling with the national drug crisis. There are lots of new medical and technological advances, and widespread interest in health and wellness, too. And those are all great incentives for passionate entrepreneurs.
Plus, these factors combined mean there's a thriving market for health-related businesses. Aspiring new business owners can turn one of many health care business ideas into a viable way to make a living, including those entrepreneurs who want to work remotely.
This list of health care business ideas should get you started — and maybe inspire you to explore starting a business.
18 medical business ideas
Medical transcription services
Medical records management
Physical/occupational therapy center
Develop a health care app
Diabetic care center
Home health care service
Medical foot care
Drug treatment/rehabilitation center
Childbirth services
Medical billing service
Nutritionist/dietitian
Alternative health care
Health information website
Medical supply sales
Stylish uniforms for medical professionals
Hearing aid dispensary
Respite care service for caregivers
Medical marijuana dispensary
Why businesses in health care are worth exploring
Nationwide spending on health is projected to grow at an average rate of 5.5% annually through 2026. That’s one percentage point faster than the national GDP is projected to grow during that same time. And by 2026, health care is projected to account for nearly 20% of the GDP.
Employment in health care-related occupations is projected to grow 18% from 2016 to 2026, much faster than the average for all occupations, according to the U.S. Bureau of Labor Statistics. Nearly half of the 20 occupations projected to have the highest percentage increase in employment by 2026 are in the health care industry.
What that spells is a lot of opportunity.
One big reason for the surge in health care spending: By 2030, the Census Bureau projects, approximately one-fifth of the population will be 65 and older. This will be the first time in history that the number of Americans over age 65 will surpass the number of Americans under 18.
Keep those numbers in mind as you look through this list of health care business ideas.
18 health care business ideas to consider
1. medical transcription services.
Medical transcriptionists transcribe doctors’, nurses’ and other health care practitioners’ voice recordings into written documents for patients’ records. Speech recognition technology has definitely improved the efficiency of medical transcription, sure. But it certainly hasn’t yet replaced the need for human transcriptionists to review and correct the transcriptions to make sure they’re accurate.
This is a great business to run from home because you can make your own hours, and all of the work can be done digitally. Plus, if you’re digitally savvy and can create an efficient (and secure) way to share files, you can really one-up the competition.
2. Medical records management
Start a service that manages medical records for hospitals, clinics and doctors’ offices. You can work with clients to identify the best records management systems, implement them and provide their staff with training on how to use the systems.
Another approach? You can offer full-service medical records management, and clients can outsource the work to you. This can be helpful for boutique practices and sole practitioners who need the organization but can’t afford the in-house staff.
3. Physical/occupational therapy center
Physical therapists help patients recover from injuries to regain their full range of motion and reduce pain. Occupational therapists provide more specific therapy to help patients perform tasks of daily living, such as dressing themselves or feeding themselves. You can specialize in one or the other, or put both under one roof. Note that this does require certification.
4. Develop a health care app
Both health care providers and individuals alike are increasingly turning to mobile apps to track, record and manage medical conditions. The world is your oyster if you’re skilled in app development, so you might want to consider developing your own health care app targeting these markets. Do some field research to find out where your skills can fit a need.
5. Diabetic care center
According to the CDC, 9.4% of all Americans either have diabetes or are prediabetic . Opening a diabetic care center can help diabetic patients improve their quality of life by providing nutrition counseling, dialysis and other medical services. You can also provide preventive help such as teaching healthy eating habits or providing support groups for diabetics.
6. Home health care service
A home health care business provides in-home medical care for recently discharged hospital patients, patients with chronic health conditions, seniors and others who need assistance managing their health.
In states with rapidly aging populations, like Florida and California, not only could this be a benefit to the community — but also a strong business prospect for you.
7. Medical foot care
A growing population of seniors and diabetics means more need for foot care services. Something as simple as trimming toenails can be impossible for seniors and overweight patients who can’t reach their feet. You can either open a foot care clinic or save patients a trip to the podiatrist by providing mobile foot care services in their homes or in a van. You’ll need to train as a podiatrist or hire one.
8. Drug treatment/rehabilitation center
As drug use has escalated to become a national crisis in the United States, legitimate places for people to seek treatment for their addictions and rebuild their lives are needed more than ever. Every day, more than 115 Americans die after overdosing on opioids, according to the National Institute on Drug Abuse .
Open a drug treatment and rehabilitation center to help clients with drug addiction. You can specialize in different types of patients, such as juveniles or more senior patients.
9. Childbirth services
Today's expectant parents want to control every aspect of childbirth, and that often includes having a midwife or doula present at the birth. The use of midwives is increasing , according to the American College of Nurse-Midwives.
Midwives are trained health care providers who assist women during childbirth, while a doula is more like a pregnancy coach who helps couples arrange all aspects of the birth and caring for the newborn. You can either become certified yourself or open a business that employs contractors under your umbrella.
10. Medical billing service
Medical billing requires performing complex coding when submitting insurance claims. Keep in mind, certification is required in this field to ensure that doctors and other health care practitioners get paid.
Although big hospitals and health care organizations often have in-house staff, small medical practices that don’t have time to manage billing and coding themselves are an ideal market for medical billing services. Acquire and learn medical billing software, get trained in proper coding and target these smaller medical practices to take medical billing hassles off their hands. And you can even earn your certification online.
11. Nutritionist/dietitian
If you want to help people improve their nutritional intake and habits, you can build a business as a nutritionist or dietitian. Only nutritionists who get a license with the Commission on Dietetic Registration, or CDR, can advertise themselves as dietitians. Some states regulate nutritionists and others don’t.
You can specialize in different types of clients, such as sports nutrition, nutrition for weight loss or holistic nutrition.
12. Alternative health care
Acupuncture and massage therapy are two alternative health care business ideas that are becoming more popular. Many are using these services to supplement their traditional medical treatment — or as a primary treatment unto itself.
Check with your state to see what the requirements are to practice; they vary across the country. Even when health insurance plans don’t provide coverage, Americans are more willing to pay out-of-pocket for these types of care than they used to be.
13. Health information website
If you have health care expertise — or access to people who do — consider starting a website to provide health care information and advice. You can create all kinds of content, such as podcasts, YouTube videos and even online classes, in addition to blog posts.
You might even be able to get health care experts to contribute content for free in exchange for the publicity your site offers. There are a lot of options; just make certain that you do some market research to figure out the white space to fill, and find viable revenue streams to make your business highly sustainable, too.
14. Medical supply sales
Seniors, people with disabilities and those with chronic illnesses have an ongoing need for medical supplies and equipment. This can include walkers, braces, bedpans and more.
Although you can open a physical store, keep in mind that your target customers will often have difficulty getting to your location, so an online store is likely a better bet. Again, research here will be key so you can make sure that you’re stocking the right products and marketing in the right places.
15. Stylish uniforms for medical professionals
Medical professionals who wear scrubs to work are always looking for affordable and durable uniforms. They’re also looking for stylish options — and those aren’t as easy to find. Start a store selling scrubs, comfortable shoes, lab coats and other gear for health care professionals. You can design the goods yourself or source them from multiple places, and encourage your customers with word-of-mouth incentives to drive sales.
16. Hearing aid dispensary
Because hearing aids generally aren’t covered by health insurance, this can be a lucrative health care business idea if you find the right customer base. You might want to open a location to provide hearing tests, recommendations and hearing aid fittings and care. You could even outfit a mobile van to come to customers' homes to clean and repair their hearing aids as an extra service.
17. Respite care service for caregivers
Whether they’re parents caring for severely disabled children or adult children caring for aging parents, caregivers have a stressful job. Provide a much-needed break for caregivers by starting a respite care business. Your caregivers can come in for a few hours or a few days, giving family caregivers a chance to rest.
18. Medical marijuana dispensary
As a growing number of states legalize medical marijuana, this $8 billion industry is projected to continue its growth, according to IBISWorld . Opening a medical marijuana dispensary can be a profitable business in the right location; however, changing state and federal regulations could affect your startup. (Marijuana is still illegal under federal law.)
Frequently asked questions
How do i start a health care business.
When you start a health care business, it can be helpful to begin by writing a business plan, registering your business and hiring employees. While all businesses need to obtain any necessary licenses, permits and forms of insurance, health care businesses may require earning professional designations or taking out extra forms of insurance. Research what you need to run your business safely and legally before you launch.
How do I start a home health care business?
Starting a home health care business requires a high level of professionalism, even if you’re running a business where the bulk of the work will occur in your clients’ homes. For example, you may still need office space to train your employees. Like starting any business, it is important to write a business plan, register your business and create proper business procedures. You should also obtain any necessary licenses, permits and insurance for running a business in your area, as well as for working within the health care industry.
How do I write a business plan in health care?
In general, a business plan is an organizational tool that business owners can follow when they need guidance. This document can also tell outside parties, such as investors, about your business and its value. A good business plan should include thorough research about your industry, market and competitors, as well as dive into your financials, products and services and your marketing plan. When writing a business plan in health care, it will be important to do heavy research on the industry, as well as outline clearly what medical services or products you will be offering and why you or your staff are qualified to run a health care business safely.
The bottom line
There are a lot of potential great health care business ideas for entrepreneurs interested in the health care sector — and many opportunities for health care business ideas to become real, sustainable businesses.
Be sure to check regulations, licensing, professional training or degrees needed for these businesses before you get started, and do lots of market research. Don’t forget that “care” part, of course.
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The health industry is both a challenging environment and a sector with tremendous opportunities, where positions of various players will change over the coming years and new fundamentals in business development will thrive
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- 1. CREATING SHARED VALUE IN THE HEALTH SECTOR A New Business Development Approach to Seize Opportunities in a Fast- Evolving Health Industry
- 2. setting the scene challenges but also opportunities in health are enormous fundamental changes in the system and in the positions of players in the health sector are already being prepared shared value, innovative business models, a participative economy and consumer-driven health will drive these changes
- 3. top-level challenges in health traditional system balance being challenged growing demand increasing complexity growing expectations pressure on government budgets limited workforce supply technological advances offering tremendous new opportunities traditional business models under pressure social economy
- 4. colliding waves in health consumer-driven health institutional health health system in driving seat funded world of EMR’s focus on cure & care quality & budget control control by funcing mechanism consumer in driving seat free market world of PHR’s focus on health & wellness experience & convenience control by quality labeling
- 5. health spectrum Illness Wellness AcuteChronic Seasonal Allergy Diabetes Elite Athlete Weekend Warrior Repeat Dieter Physical Rehab Flu Pediatrics Young Families Track Allergies, Immunizations Age Related Elder Care Remote Monitoring, Chronic Condition Management Fitness Diet and Nutrition, Wellness, Behavior Modification Injury Encounter Mgmt Physician, Pharmacy, Hospital, Labs, Employer, Health Plan Hans Delporte | InfoClarity bvba | credit: Microsoft
- 6. scope of health industry institutional healthcare health
- 7. envisioning
- 8. envisioning
- 9. health ecosystem more than in any other industry, the health sector touches a wide range of players active in an expanding, subtle and changing symbiotic ecosystem the positions and power of these players in this ecosystem will dramatically change in the coming years
- 10. health ecosystem BioTech MedTech Pharma Traditional SW vendors Telco Insurers Hospitals Resthomes First-line care Regional government Univ. hospitals Mutuals Patients Consumers Academia Knowledge centers Pharmacy Innovative SW vendors Consumer Electronics Start-ups Univ. Spin-offs Home care Retail & Distribution Emerging players Federal government Local government EC Patient organisations Consumer organisations
- 11. eHealth supplier industry wheel eHealth Software industry Telco Consumer electronics MedTech Pharma Insurers Investors Consultancy Retail
- 12. dynamics outcome based funding quality consumerisation do more with less health system
- 13. high-level opportunities • process improvement • automation • efficiency gains • quality improvement optimisation • process innovation • business model innovation • disruptive gains • consumer driven health innovation
- 14. challenges for industry detect real long-term opportunities translate real needs into solutions foresight & insight in dynamics defining ‘shared value’ design adequate business models navigate through & work with ecosystem deliver internationalisation & scale
- 15. to thrive in a social economy, organisations must continously explore, build and capture new opportunies based on new fundamentals in business development
- 16. customer focus participative economy business model innovation shared value
- 17. with a fresh and independent view and sound knowledge of the new standards in business development and of the health system, InfoClarity provides a source of inspiration and supports companies to build new or grow existing businesses in the health sector
- 18. business development methodology Explore Company Customers Market Competitors Build Value prop. Bus. model Internal org. Ecosystem Capture Pilots Market Leads Revenue Manage Validation Control Reporting Evolution
- 19. business development methodology Explore Company Customers Market Competitors internal organisations’ mission, vision, strategy, capabilities, products, value proposition, people, programs customer opportunities and challenges, as-is, explicit & implicit needs, expectations, issues global and industry-specific trends, opportunities & challenges, policies, ecosystem existing competitors’ strengths & weaknesses, upcoming disruptive competitors, differentiation factors
- 20. business development methodology unique value proposition, product tuning or repositioning, new products or services tune existing or design new innovative business models create buy-in, allign business units, coaching & training build ecosystem of partners across the entire value chain, create shared value; train, inform, communicate Build Value prop. Bus. model Internal org. Ecosystem
- 21. business development methodology create & validate early proof, launch, manage & deliver pilots marketing communication, awareness, evangelisation, story telling, PR, social media, capture leads, cold calling, open exec level doors, relationship building, opportunity pipeline feed manage sales execution, consultative selling, drive growth Capture Pilots Market Leads Revenue
- 22. business development methodology continous validation & tuning of explore/build/capture steps project management, progress management report progress & results to management, team, ecosystem, stakeholders manage evolution, next phase, growth Manage Validation Control Reporting Evolution
- 23. methodologies & best practices
- 24. Hans Delporte consultative selling business modeling mediation project management (virtual) team management language skills insightful analytical door opener explorative ability to execute taking the lead general trends in ICT government policies ICT & Health sector ecosystem, trends, needs methodologies business modeling 15+ years experience in business development, product management, marketing management, consultative selling, partner management, program management Experience Knowledge SkillsPersonality
- 25. habitat ICT healthcare & government new business | innovation
- 26. get in touch email [email protected] mobile +32 (0)475 929343 skype hans.delporte linkedIn hansdelporte twitter @HansDelporte
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Home Health Care Business Plan Template
Written by Dave Lavinsky
Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their home health care businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a home health care business plan template step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your home health care business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a home health care business, or grow your existing home health care business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your home health care business in order to improve your chances of success. Your home health care business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Home Health Care Businesses
With regards to funding, the main sources of funding for a home health care business are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a home health care business is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a home health care business. They might consider funding a home health care business with a national presence, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.
Home Health care Business Plan Template
If you want to start a home health care business or expand your current one, you need a business plan. Below are links to each section of your home health care business plan template:
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of home health care business you are operating and the status. For example, are you a startup, do you have a home health care business that you would like to grow, or are you operating a chain of home health care businesses.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the home health care industry. Discuss the type of home health care business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
Company Analysis
In your company analysis, you will detail the type of home health care business you are operating.
For example, you might operate one of the following types of home health care businesses:
- Nursing care business : this type of home health care business is the most common, where the patient is given a doctor-approved plan of care specific to the patient’s clinical needs and delivered within the comfort of their home.
- Physical home health care business : this type of home health care business provides physical therapy to patients who need help regaining their muscle and joint strength.
- Home health care aides : this type of home health care business provides patients with home health care aides who assist them with basic daily tasks, such as bathing, cooking, and dressing.
In addition to explaining the type of home health care business you will operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of home health care patients, growth year over year, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry analysis, you need to provide an overview of the home health care business.
While this may seem unnecessary, it serves multiple purposes.
First, researching the home health care industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy, particularly if your research identifies market trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your home health care business plan:
- How big is the home health care industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your home health care business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your home health care business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: parents of elderly individuals, retired seniors, senior community program managers, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of home health care business you operate. Clearly, parents of elderly individuals would want different service options and would respond to different marketing promotions than senior community program managers, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most home health care businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other home health care businesses.
Indirect competitors are other care options that people have that aren’t direct competitors. This includes hospitals, nursing homes, and people who help relatives with home health care needs. You need to mention such competition to show you understand that not everyone who needs healthcare assistance will utilize a home health care company.
With regards to direct competition, you want to describe the other home health care businesses with which you compete. Most likely, your direct competitors will be home health care businesses located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of patients do they help?
- What types of services do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior services?
- Will you provide services that your competitors don’t offer?
- Will you make it easier or faster for customers to use your services?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a home health care business plan, your marketing plan should include the following:
Product : In the product section, you should reiterate the type of home health care business that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to home health care, will you provide superior customer service, 24/7 call centers, or emergency services?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.
Place : Place refers to the location of your home health care business office. Document your location and mention how the location will impact your success. For example, is your home health care business office operated remotely, located near a main highway, near public transportation, etc. Discuss how your location might provide a steady stream of customers.
Promotions : The final part of your home health care marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Advertising in local papers and magazines
- Reaching out to local websites
- Social media marketing
- Local radio advertising
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your home health care business, including hiring quality home care professionals, training employees, and administrative tasks.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 100th patient, or when you hope to reach $X in revenue. It could also be when you expect to expand your facility or launch in a new location.
Management Team
To demonstrate your home health care business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in managing home health care businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing home health care companies or successfully running small businesses.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you assist 50 patients per month or 100? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $100,000 on building out your home health care business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a local senior living community approached you with a $50,000 partnership contract to provide home health care services for their occupants. Let’s further assume the contract would cost you $50,000 to fulfill in terms of increased staffing costs. Well, in most cases, you would have to pay that $50,000 now for employee salaries, utilities, etc. But let’s say the company didn’t pay you for 180 days. During that 180-day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a home health care business:
- Cost of equipment like standard nursing supplies, sanitary products, and emergency medications
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your Medicaid and Medicare certifications.
Putting together a business plan for your home health care business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the home health care industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful home health care business.
Don’t you wish there was a faster, easier way to finish your Home Health Care business plan?
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Home Health Business Plan FAQs
What is the easiest way to complete my home health care business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Home Health Care Business Plan.
What is the Goal of a Business Plan's Executive Summary?
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of home health care business you are operating and the status; for example, are you a startup, do you have a home health care business that you would like to grow, or are you operating a chain of home health care businesses?
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- 32+ Profitable Healthcare Business Ideas in 2023
Healthcare is a dynamic industry and hiding a lot of future opportunities. But the concerns of cost, complexity, and uncertainty can make this industry an unnerving one ( Mckinsey ). Whether you’re an investor, businessman, entrepreneur or innovator, you should try your luck because the healthcare opportunities are about to grow exponentially in the future.
Here, I’m going to share a list of healthcare business ideas that may inspire you to start innovative tech-based healthcare startups and become rich in a short time . Before I start delving into the list, let me share you with some important healthcare statistics for better understanding.
According to the Global Healthcare Industry Outlook (2018) report, the global healthcare sector will enjoy a 4.82% growth rate during 2018 and it is expected that the growth rate will increase in the upcoming years. In the report, it is concluded that Artificial intelligence, Big Data Analytics, the Internet of Medical Things (IOMT) and robotic inventions will bring innovation and reshape the healthcare industry.
According to WEF, leveraging innovation will assist healthcare practitioners to assist more patients in the future. In this regard, the Word Economic Forum highlighted 5 key trends that will reshape the future of healthcare such as Immuno-oncology, Gene Therapy, Personalised medicine, AI, and Wearable digital devices. Similarly, The wearable market is exploding these days. Statista reports that the wearable market is expected to increase 5.3% in 2021 and it is expected to hit 4.8% by 2024.
It means that the future of healthcare is bright. New opportunities will come for medical as well as for tech entrepreneurs.
Let’s start and discuss healthcare business opportunities one by one.
32 New HealthCare Business Ideas
1. Medical Transcription Services
The internet has opened a lot of gates for people to make money online. From freelancing to setting up your own eCommerce site , you can do it all with the help of the internet.
Similarly, you can also start a home-based medical transcription services business. All you need is to become a virtual assistant and turn the doctors’ and nurses’ prescriptions into digital notes. Patients can easily save these digital prescriptions for their medical records.
At the same time, you can also develop similar apps for medical transcription services. You can make money through selling your subscription or you can sell your app on a one-time bases.
2. Connecting Doctors and Patients
Uber and Airbnb are businesses that are based on sharing economy models. These are internet applications that connect buyers and sellers at their platforms and they charge nominal commissions from each transaction.
You can also make similar applications where local doctors, physicians, ambulances can be listed, and patients can easily explore and acquire their services.
3. Medical Record Management
Maintaining a medical record is hectic work. If you are a good software engineer and able to build good medical record management software, then you can sell it to hospitals, clinics, medical labs and even sole practitioners.
At the same, you can also get complete outsourcing projects because it is difficult for sole practitioners to bear inhouse costs.
4. Introducing New Medicines
With the arrival of Ebola, bird flu, swine flu and zika viruses, doctors, professors and chemists introduced new vaccines to protect patients from deadly viruses.
If you are a good chemist or biologist, then you can do research and introduce new formulas, vaccines and even medicines to cure diseases. All you need is to conduct great research and patent your research work so that you can reap the reward in the future.
There are still some diseases such as cancer that need new medicines and vaccines at an affordable cost.
5. Medical Billing Services
According to Market Research Engine , the market size of Medical Billing outsourcing will be increased to $16 billion by 2024.
Medical Billing is a payment process/practice in the United States. The healthcare providers submit and follow up their claims from health insurance companies in order to get their payments against medical services rendered to patients. There are several tech companies offering their medical billing services by selling their medical billing software in the United States.
This market still needs improvement in the billing process and more tech entrepreneurs can bring innovative solutions. For big software houses and tech companies, it is a golden opportunity to start a new med-tech product.
6. The Supplies of Medicines & Equipment
Do you know that the market worth of Medical Supplies will be $136.63 billion by 2021? It’s true. The report of Medical supplies revealed that the market worth of this industry will be increased to $136.63 billion by 2021. It will be a tremendous expansion of this industry.
People with disabilities, seniors, and other patients having chronic illnesses have an ongoing need for medical equipment and supplies. Medical equipment and supplies may include braces, walkers, bedpans and more.
There is also a market in offering health tests to consumers to help them understand their own health needs without requiring a doctor’s visit. An example of this type of company would be BodyHealthIQ.com .
7. Health care Business Ideas in Manufacturing
Apart from the blend of medical and tech business, there is still a growing need of healthcare products such as Aloe Vera Gel, body oil, coconut oil, diaper, disposal injection syringe, empty gelatin capsule, hand wash products and healthy drinks. You can also produce/manufacture or supply these items to buyers and grow your business.
8. Healthcare business opportunities in Retail
As the population is increasing day by day, the health-related issues are also increased. This trend created a rise in the demand for quality healthcare services.
To fulfill these demands governments from all around the world spend and grant millions even billions of dollars but still, the demand is not fulfilled. If you have a medical background, you can fill this gap by starting the following healthcare businesses:
- Diagnostic Centre
- Fertility Clinic
- Medical Equipment Store
- Medical Shop
The above businesses you can start from small to medium investments.
9. Alternative Healthcare Startups
Apart from normal healthcare businesses, there are other alternatives and traditional healthcare startups i.e. massage therapy and acupuncture, which you can launch in your area. Please note that the requirements for starting these types of healthcare practices may vary from state to state.
10. Big Data & Analytics
The business and financial industries are already enjoying the big data revolution. Similarly, big companies are also investing on big data to revolutionize the health-related industries. Try to figure out gaps in this niche.
11. Drug Development
Conducting research is time-consuming as well as it requires a lot of funds. If you are running a pharmaceutical company and share your data with new researchers, then it can decrease the cost of research and help them to develop new drugs. It will be a win-win situation for both parties i.e. small players as well as for big companies themselves.
12. Figuring out and Predicting Patients’ medical needs
For Physicians and healthcare providers, it is difficult to figure out and predict the patients’ needs in some cases. It is time-consuming work.
With the use of some big data tools, physicians can not only highlight the risk factors associated with the health of the patients, but they can also monitor the health condition of patients. Like Optum, there is a still need of other big data tools to predict the patient’s medical need.
13. AI and HealthCare
Just like other fields, artificial intelligence is also helpful for the healthcare sector. Numbers of startups are using artificial intelligence-based software to improve healthcare services.
They are using AI tools with machine learning features to detect complex diseases. It is a growing niche and techpreneurs can disrupt the market.
14. Improve Medical Research
From the last few decades, a number of new diseases are coming and affecting people. Medical research is very important to find solutions to the problems.
If you are a good researcher, you can contribute to medical studies. You can also patent and sell your research to medical organizations.
At the same time, you can also a start medical research Centre to improve the healthcare sector.
15. AI and Insurance Fraud Detection
As mentioned above, artificial intelligence is improving the business, finance and healthcare centres. Similarly, AI is also helpful for fraud detection in the insurance industry. Sometimes, it becomes difficult for insurance experts to detect fake claims and frauds.
Employing AI tools with access to all data i.e. what information should be used/crawled for analysis and delivering results, can greatly help the insurance companies to detect fake claims and frauds. These types of tools will be a great demand in the upcoming years.
16. Blockchain and Smart Contracts
Likewise, in AI and machine learning, Blockchain is also disrupting almost every industry. It is also possible to integrate new technology i.e. smart contracts to improve drug testing for both practitioners and patients.
With highly secured technology and encrypted with blockchain, companies can attract and motivate employees to participate in drug testing trials with privacy and fairness. There is also a great demand for such tools which much be encrypted with blockchain.
- 5 Reasons why Blockchain Adoption will be Huge
- Top 3 Industries That Can Witness Gigantic Disruption From Blockchain Technology
- How Can Blockchain Technology Help Transform The Finance Industry
More Business Opportunities in Heath Sector
Similarly, there are also other healthcare / medical business ideas and opportunities you can pursue with little to high investment. Some are mentioned below:
17. Building 3D Printing Specialized Equipment’s for surgery
There is an inclining demand for medical equipment, especially during these COVID times. This demand cannot be completely fulfilled by using traditional methods. This situation requires a more fast and cost-effective method for equipment manufacture. 3D printing is the latest and most efficient method so far.
Retractors, forceps, hemostats, scalpel handles, medical clamps, needle drivers, are some of the surgical instruments been produced through 3D printing. The demand for 3D printing is increasing day by day.
18. Blood testing and bank
Blood testing holds a pivotal position in medical diagnosis and treatment. Doctors reply on blood tests to ensure patients well being or to confirm any disease. Blood testing and storing blood in blood banks require high professionalism. Accurate and precise results need proper technicians.
To have a successful entrepreneur lab for blood testing besides the actual work, focus on the lab’s financing, taxing, and business planning.
19. Building Robots To Manage Medical Tasks
Robots are taking over almost every field of life. In medicine, it may improve the certainty of a successful operation. Many robots, such as da Vinci, the TUG, the CyberKnife, the PARO Therapeutic Robot , are being used in highly specialized surgeries. They can change the course of human surgeries by providing more accurate, precise, and life-saving work.
If you are good in both medical and engineering, you can try out your luck in this field. Remember that you will require a good knowledge of programming and engineering as well as medical.
20. Healthcare Finance Planner
Healthcare professionals have quite a lot of load over their shoulders. The responsibility of taking care of other people’s health is not an easy task. Moreover, they also need to take care of their own financial problems. Here the need for a financial planner arises.
A financial planner will look after their financial issues such as paying the debt to manage salary. If you have studied finance, this is a profitable field to get started.
21. Starting a Health Insurance Agency
Insurance agencies earn quite an amount of money by investing their premium amounts. Health insurance is one of the most common insurance domains. People realizing the importance of health as well as insurance definitely opt to have health insurance.
If you have good business knowledge along with your medical knowledge, this field can prove really profitable.
22. Making Wearable Technology Devices
Wearable technology devices have become the new hype in the town. Besides tech knowledge, one also needs a good grip over the medical field because these wearable devices work by interacting with the human body.
If you are good both in medicine and advanced technology get into this field to gain high profits.
23. Opening of Childcare & Eldercare Centre
Opening z childcare centre or an eldercare centre is a good option. Besides providing them other life facilities, taking good care of their health will also be your responsibility.
When opening a care centre, make sure that you have proper knowledge of business planning and implementation. Moreover, you should know how to take care of financial issues.
24. Veterinary Clinic
Veterinarians work for animal care. For opening a veterinary clinic, you should be good around animals. It is a great opportunity for all those animal lovers. Vets are responsible for your pet’s health and will treat him in any case of injury or disease.
Opening a veterinary clinic will demand more than a degree. You must have good entrepreneur skills and business planning skills.
25. Starting a Retail Pharmacy Store
Pharmacy stores are highly profitable if managed properly. For opening a pharmacy retail store, you will need good capital for investment and also a permission permit from the state.
Those interested in pharmaceutical-related jobs and having business plans in their minds should definitely go for it.
26. Opening a Maternity Centre
There are many areas that lack proper maternity centres or also known as birth centres. When in labor, women prefer the nearest maternity centre. Go for areas that lack birth centres around large circumferences. This will attract a higher no of patients.
There are strict rules and regulations for opening maternity centres. Follow them when opting for a business start-up in this field.
27. Start Blogging, discuss medical issues and make a living
Bloggers are earning a handsome amount of money and some are even exceeding the limits. Having a good medical approach gives you the opportunity of writing a medical blog.
Take ideas from different currently well-established bloggers. Establish your blog and keep writing without any gaps.
You can also hire web developers for developing a professional-looking blog. This is one of the entrepreneur ideas that does not require much investment.
28. Medical Cleaning & Waste Disposal Business
Medical waste contains high amounts of toxins and pollutants. If not disposed of properly, it pollutes the environment. Hence, there are strict restrictions regarding medical waste disposal. Every hospital contacts different waste management companies to get rid of their waste.
For a business start-up for medical waste management, get familiar with the rules.
29. Start a Healthcare Management Organization (HMO)
Healthcare Management is a wide business range. There are various opportunities to avail yourself of. Pick a specific and microdomain to focus on your clients and your services in a better way.
For Healthcare MBA graduates, this kind of startup will prove to be much profitable considering their immense knowledge regarding this field.
30. Starting a Wellness Centre
Wellness centres are different from hospitals. Here, medical professionals provide mental and physical healthcare services to their clients in a more casual way.
For starting a wellness centre build a professional and highly coordinated team. Focus on a good business plan. Build a quite attractive and relaxing business place.
31. Starting a Medical Waste Recycling Centre
Medical waste is recycled to make different items that do not require much hygiene, such as urine bags. Hospitals dispose of their medical waste with the help of different medical waste management companies. Coordinated with such companies and recycle the obtained waste.
Build a recycling plant and a team that will take care of every step from collecting waste to delivering the recycled products.
32. Healthcare / Medical Consultancy Business
There are various healthcare professionals running their own independent clinics. Besides keeping an eye on their medical services, they have to supervise their financial and business issues.
Medical Consultants provide services in this regard. They advise medical professionals to take important steps that will increase their patient care and business. Medical consultancy requires good business knowledge as well as medical knowledge.
Wrapping Up
No doubt there are numbers of other healthcare business ideas and medical business opportunities you can pursue, but investment, skills and licenses/certifications are required to start a business . The outcome of this article is that the tech based healthcare businesses will enjoy more success in the upcoming years as compare to traditional ones.
So, what type of business you’re going to start?
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Healthcare Business Plan Sample
Healthcare service business plan guide.
A health care business is involved in the provision of medically related services to people in a particular area. This could include curative, preventive, convalescent, or even palliative services to one’s health.
Executive Summary
Our Products
At WMC our mission is to build a top-notch health care business that provides excellent services to both the high in the society and the low.
However, due to the new reforms in the health insurance industry, health insurance has become compulsory and easier to get.
At Whiteland Medical center, we employ the best hands in the medical center. And we are also taking part in a lot of cooperate social responsibilities.
Here we have it; this is a sample medical business plan for those who are interested in starting a health-related business.
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Hospital Business Plan Sample
MAR.14, 2017
Do you want to start a Hospital business plan?
Starting a business can be very hard and a big responsibility. And starting one that benefits humanity can be an even greater responsibility. However, if you follow the correct steps and stay persistent, it can be very rewarding. Establishing a business like a hospital needs to be very thoroughly planned.
The best way to plan a business is to write a business plan for the hospital. Adding all the right details of your business will attract investors to the business plan and this will help you in setting up your business. If you want to learn how to write a hospital business plan, you should go through as many samples as possible.
Plans like nursing home business plan can be a great resource in understanding crucial things about the hospital business. In this business plan, we will be providing all the details for starting a hospital called Mercy Ltd. You can follow this sample to develop a plan for your business.
Executive Summary
2.1 business summary.
Mercy Ltd will be a private healthcare setup, owned and started by Gillian Hail. It will provide state-of-the-art services to all its patients. Additionally, it will also run a free clinic and fund services for those who don’t have enough money to get treatment.
2.2 About the Management
As a hospital business requires the utmost attention to detail to run well, a business plan is needed ahead of time. It is similar to a business plan for a wellness center in that regard. To make the management of Mercy Ltd smooth, a hospital business development plan was needed. Therefore, we prepared this sample.
If you want to develop an executive summary hospital business plan for your business, you can consult a healthcare business plan template. Otherwise, to write the business plan, you can also hire experts and guide them along.
2.3 Customers of Mercy Ltd
Considering that Mercy Ltd is a healthcare center, its customers will primarily be patients seeking treatment or help with funding for treatment. They will belong to all domains and lifestyles. The primary customers will include:
- OPD Patients
- Emergency Care Patients
- Chronic Patients
- Treatment Fund Patients
2.4 Business Target
The target of Mercy Ltd is to become a trustworthy healthcare center where people can come to get immediate treatment whenever they need it. It will also be a long-term target to expand the business. The financial targets we want to meet within the first three years are mentioned below in this hospital business plan pdf.
Company Summary
3.1 hospital ownership.
The hospital will be owned and managed primarily by Gillian Hail. She completed her MD five years ago after which she served as a head neurosurgeon in a renowned hospital in Baltimore. She then assumed the position of a consultant to start her healthcare setup.
3.2 Why the Hospital Business is Established
Gillian always wanted to make a difference and help people due to which she became a doctor. However, after working in a hospital for so many years, she realized that there was a greater need for a healthcare setup that could deal with patients faster. Therefore, she decided that she would open Mercy Ltd to provide quick care to patients and to gain funding for people whose insurance couldn’t cover them.
3.3 How will Mercy be Established
Step1: Plan Everything
The first step before establishing any business, no matter what the domain or scope, is thorough planning. You will need to map everything required to start the business in a business plan for starting a hospital. Additionally, you will also need to develop a business plan for hospital expansion if you have any plans to extend the business in the future. The process won’t stop here because at some point, you will also be developing a business continuity plan hospital.
Step2: Get Funding
One of the main reasons to develop a startup hospital business plan is to get funds. As Mercy Ltd had the aim to help treat those who couldn’t afford usual hospital charges, Gillian paid special attention to this hospital business plan sample pdf to attract investors.
Step3: Find a Location
To house the healthcare setup, Gillian chose a building in Baltimore. The lower two floors will be for the hospital whereas the top floor will be for management and for housing on-call doctors.
Step4: Developing a Brand
It is essential to make your business as humane as possible so that your customers can relate to it. Therefore, Gillian not only focused on her business model to help people but also described it in a way that is understandable to its customers.
Step5: Promote and Market
To get the word out about her unique business model, Gillian established a partnership with as many local and big hospitals as she could so they refer patients to Mercy Ltd for treatments.
To write a business plan for a hospital, one needs to be clear about the type of business they want to establish. And this is true for every business plan, be it a reiki practice business plan or a private hospital business plan pdf.
To develop a hospital business plan sample, you will need to know the services you want to provide to your customers as your services will form the basis of your setup. Here, we have provided a hospital business plan template that you can follow when writing about the services of your business. You can also look at any other hospital business plan example for reference.
We will provide all the basic outpatient facilities including diagnosis, testing, and providing immediate treatment to patients. This will apply to patients with simple ailments like infection, common cold, fever or pain, etc.
- Emergency Services
Mercy Ltd will also provide emergency services to patients who have been involved in an accident and need immediate care for stabilization. We shall also provide ambulances to transport these patients to bigger hospitals for complete and thorough treatment and recovery.
- Regular Treatment and Therapy
For the patients who have chronic ailments or pain and who need regular care and treatment, we will offer therapy sessions and a complete care package that they can use utilize regularly.
One of our core services will be to provide treatment funding to deserving patients. The cases and situations of the patients will be thoroughly analyzed to ensure that there is no problem.
Marketing Analysis of Hospital Company
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It can be very tricky to gain success as a new business. You need solid hospital strategic goals to ensure a clear direction in all the business operations. A good business owner needs to do a lot of research into hospital business development strategies before starting a business in this domain.
A good business plan covers all details regarding the business such as hospital planning team and business model of the hospital. This information helps in showing the objectives of hospital planning to the investors. And all of this can only be achieved if you have a strong understanding of your target market. This includes your customers as well as your competitors.
In this hospital marketing plan template, we have outlined all the marketing strategies that would be employed by Gillian to ensure the success of her business. You can follow this hospital business plan sample or a relevant plan like a massage therapy center business plan for more guidance.
5.1 Market Trends
According to PolicyAdvice, the healthcare industry is one of the fastest-growing industries in the U.S. and the trend is expected to continue as the U.S. spends almost twice on healthcare when compared with other countries. Right now, the market share of the healthcare industry in the U.S. is at almost $10 billion and it is expected to rise. Therefore, healthcare is one of the best sectors to start a business.
5.2 Marketing Segmentation
The target customer groups of Mercy Ltd will be:
5.2.1 OPD Patients
Our primary services are centered around situations where patients only need immediate care and have straightforward illnesses. Therefore, these patients with simple ailments will be the key customers of Mercy Ltd as they will utilize our services more often.
5.2.2 Emergency Care Patients
Our second target customers will be the people who need immediate care after an accident such as a fall or a crash. Our main responsibility will be to stabilize these patients so that they can be safely transferred to hospitals for full care.
5.2.3 Chronic Patients
We will also get business from people with chronic ailments who only need to go to hospitals for regular check-ups but find it hard to. We will provide them with in-house regular check-ups and treatment facilities so that they don’t have to spend too much time or energy on commute.
5.2.4 Treatment Fund Patients
Lastly, one of our primary services is funding, we will also take up cases of patients who need money for treatment but due to some reasons are not able to. The funding for these patients will come from our investors as well as from 8% of our profits.
5.3 Business Target
- To become the best immediate care hospital in Baltimore.
- To expand our services across the US in the form of multiple small centers.
- To earn a net profit margin of $15k/month by the end of our second year.
- To be the first healthcare service that helps patients with funding.
5.4 Product Pricing
Our prices will be similar to that of our competitors. However, we will aim at boosting our efficiency through efficient load management.
Marketing Strategy
To become successful in a market as tough as healthcare, you will need to work on your hospital business strategy. This strategy will be reflected in your business plan for the hospital . You can also look at strategic plan example for hospital startup for reference.
Understanding all aspects of planning in hospital will help you gain a better view of the market and get your business to succeed. So, whether it is a business plan for healthcare setup or a business plan for occupational therapy , you should look into the market for a stronger plan.
6.1 Competitive Analysis
- We have excellent and unique services
- Our customers can get basic healthcare in half the time as required by regular hospitals.
- We provide treatment funding to people who cannot afford it.
- Our customers can avail of our ambulance and emergency services through a quick phone call as well.
6.2 Sales Strategy
- We will get the word out through partnerships with hospitals.
- We will organize health awareness seminars to get us known.
- We will use social media for a wider reach.
- We will offer discounts to deserving people.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
Personnel plan
A good business plan for hospitals will reflect all the aspects of the setup thoroughly for better management. This even includes the workforce and employees that make it possible to run a setup. In this hospital business plan template, we will be looking at the employee and hiring structure of Mercy Ltd.
7.1 Company Staff
- 1 Co-Manager to help in overall operations
- 8 Certified Doctors
- 3 General Cleaners
- 1 Technician to upkeep the machinery
- 1 HR Executive
- 2 Ambulance Drivers
- 2 Receptionists
7.2 Average Salary of Employees
Financial plan.
The success of a business and its smooth running depends on your research and asset management techniques. Before stepping into the business world, you need to explore various hospital business plans. You need to ensure that you have enough finances to support your operations and range of services. This is where hospital financial planning comes in.
To ensure that everything is running with balance and you’re not going into a loss, you will need to keep proper track of your finances. One way to deal with the overwhelming load of financial management is to make a financial plan. This can act as a guide for you to follow as the business progresses.
Here, we are detailing the financial plan for Mercy Inc. You can also look at similar plans such as a non-medical home care business plan to get a hint.
8.1 Important Assumptions
8.2 break-even analysis.
8.3 Projected Profit and Loss
8.3.1 profit monthly.
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
8.5 Projected Balance Sheet
8.6 business ratios.
a. How do you start a hospital business?
You can start a healthcare setup by reviewing the strategic management in hospitals. This will inform you if you can manage the plethora of responsibilities that come with every healthcare business. After that, you need to plan everything and execute the business operations in steps. For the planning stage, you can take help from the sample business plan provided above.
b. What is a hospital business plan?
A business plan for hospitals is a document that is developed before starting a venture. It is done to ensure that you take the right steps to make your business a success. It helps with planning, management, and problem resolution among other things.
c. What are the 4 types of hospitals?
The basic 4 types of hospitals in the US according to JamaNetwork are:
- Community Hospitals
- Federal Govt Hospitals
- Non-Federal Psychiatric care
- Non-Federal Long-term care
The business plan hospital provided here was written for a private community hospital.
d. How do I write a hospital proposal?
You can write a hospital proposal by going through the private hospital business plan provided above and following all the tips mentioned.
Download Hospital Business Plan Sample in pdf
OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.
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