Most healthcare practitioners aren’t trained to develop a career as a successful entrepreneur. They’ve built their careers around their passion for health and wellness, not analyzing financial statements and maximizing profits. But if they choose to deliver their services through their own private practice, they’ll greatly benefit by developing a bulletproof business foundation.
Some health practitioners are tempted to just launch into action and figure out the process of building a business as they go — what might be called “building the airplane while flying it.” Simply put, this isn’t an effective or efficient approach. Those that use this approach may account for why 43 percent of healthcare-related businesses fail within five years.
Often the owners of businesses that fail attribute it to bad luck. But truthfully, the collapse is more likely caused by a lack of preparation and by not understanding the factors that influence the private practice environment.
By doing sufficient strategic planning on the front end, healthcare practitioners can ensure their private practice will thrive. Here are some of the first factors to consider in formulating a business plan:
Define your vision of success.
Take a moment to consider your true intentions. It’s essential that you define your professional and personal goals, and your ideal vision for success. Begin the vision process by naming your net financial goals so that they’ll lead you to the follow-up step of identifying the how and when. Determine whether your private practice vision involves using other practitioners in your service delivery method, or if you intend to become a sole proprietor.
Clearly understand why you wish to open your own practice.
Part of defining your why is identifying its relationship to other key questions, including: Who is the target demographic? What is your core service or product? When are you looking to start? And how are you going to execute your vision? Be as specific as possible with your goals. Besides thinking through your who, what, where, when, why and whichquestions, define what will be the measurable metrics that will tell you when you’ve arrived at your goal. They should include a time limit — when are you going to achieve that goal?
Examine your own risk tolerance.
While there’s no right or wrong, it’s essential to evaluate your risk tolerance and comfort zone as it relates to your entrepreneurial spirit. If you were walking into a casino and knew you had $1,000 to gamble, how would you behave? Would you bet all $1,000 on your first game, or the spread it out over several? You should understand your risk tolerance when you create your strategy, and with an understanding of when it’s time to walk away from the poker table. The better you’ve defined your “breaking point,” the more strategic you can be in aligning your business model within your risk tolerance comfort zone.
Know how healthcare insurance works.
The first fundamental that all “private practice-preneurs” must realize is that there’s never a guarantee of coverage. Do a little exercise: Pick up the phone and call the number on the back of your health insurance card to verify your own benefits for whatever service you’re offering. The bottom line is that you must understand the limiting factors and trends related to medical billing depending on your patient demographics, diagnosis, service offering and so on. Carefully weigh the pros and cons on of becoming an in-network provider or not.
Your attention to these key considerations in planning your private practice will help set the stage for a more fleshed out business strategy. As you proceed with its implementation, you may have to adjust your plan as the market and your purpose evolve, but you can do so in a way that adheres to your fundamental vision of success.
**Originally posted at CEO World Magazine