Business, Practice management

The show must go on – planning on the run

Operating a health practice in the current environment is fraught with uncertainty. KAREN CROUCH explains how to prepare tactically and strategically for the year ahead.

Here’s a novel challenge for practice owners and business planners in general.

The concept of future planning assumes information is available or predictable and even possible to influence for goal setting and stretch targets. But how does one achieve this when the future is a moving target?

Karen Crouch.

In early 2020, we assumed the COVID-19 “distraction” would pass, but here we are without a clear end in sight, regardless of various governments’ best intentions and “future plans”.

The answer is to persist with the traditional business plan to the best extent possible while assuming the need for adjustment and modification will be necessary. Instead of performing these vital actions only prior to the usual financial year, it’s never too late to ensure practices are appropriately prepared for the dynamic 2021-2022 period ahead.

As a starting point, let’s look at the business-as-usual development of the annual business plan.

Business plans typically comprise two main sections: tactical and strategic. While one is short term and operational (micro level), the other aims to achieve longer term objectives (macro vision).

Tactical plan 

This is the ‘business as usual’ framework by which the practice functions (e.g. healthcare services, revenue generation, expense containment) to ensure financial viability and support for initiatives to achieve strategic goals. Features include:

Expenses: line-by-line budgets, based on historical experience or ‘educated guesstimates’ for start-ups. Figures should recognise cyclical peaks and factor in CPI increases.

Income: annual revenues, based on practitioner numbers, working hours, charging rates and consultation/treatment numbers.

Measuring: tracking mechanisms are vital to ensure performance is on track or requires adjustment. Monitoring is achieved through measurement factors that staff and practitioners agree to:

  1. KPIs: performance rates e.g. 90% patient satisfaction, patient numbers;
  2. ratios (e.g. salaries-to-expense, income- to-expense) benchmarked to industry norms;
  3. tracking systems that measure performance to targets, including ‘variance explanations’. Better than budget performance highlights; poorer outcomes present opportunities to analyse problems and remedy them.

Non-financial: it may be necessary to adjust, or introduce new clinical/ administrative procedures to ensure compliance with changing business imperatives or external factors (legislative/regulatory).

Human Resources: this vital element covers plans to develop staff and practitioners, targeting ‘employer of choice’ status.

Capital: if expansion or upgrades are planned, related costs (borrowing) and repayments should be included.

Profit & Loss: ultimately, the net difference between expenses and revenues will reflect the targeted profit for the year. The most convenient method of preparing an annual budget is to extrapolate current ‘year-to-date run rates’ for the following year. Suggested areas for closer, detailed scrutiny relate to landscape changes.

Competition: have other practices opened in the area? What services do they offer that your practice may not? Apart from product or service differentiation, it may be something more client-focused like longer opening hours including weekends? All aspects deserve review to determine whether there is need for changes to preserve competitive edge.

Technology: has new technology improved patient care, productivity or reduced costs? Does the benefit of acquiring new technology justify investment?

Previous year’s results: if objectives have been exceeded, higher goals, including stretch targets, should be introduced to provide greater motivation for success and the practice mantra that ‘satisfactory results are just enough, we aim to exceed expectations’;

Continuous Improvement: have employee meetings and forums been adequately focused on operational productivity and the general theme of ‘working smarter, not just harder’?

Strategic plan 

This section is vital to the growth prospects of a practice, aimed at optimisation of new opportunities, business expansion or reputation enhancement (recognised leaders in a particular field).

If the strategic plan covers a three-year period, business plans should target progressive and realistic completion of stated goals so aspirations are successfully achieved by the three-year period.

As part of measurement/monitoring, it’s advisable to review business plans quarterly to ensure end-of-year tactical and strategic goals are met.

Overall, the annual business plan should correlate with the practice/owners’ strategic plan which, in itself, will probably require adjustment to reflect the current, transient environment. While the above planning actions are expressed in business-as-usual terms, it will be necessary to amend plans, sometimes on the run, to accommodate COVID-19 related business conditions and compliance mandates.

ABOUT THE AUTHOR: Karen Crouch is Managing Director of Health Practice Creations Group, a company that assists with practice set ups, administrative, legal and financial management of practices. Contact Karen on email at

More reading
Send this to a friend