Why every practice needs a business plan

A business plan can help general practitioners to run their practice more efficiently and achieve their business goals. Dr Neville Steer and accountant Sue Prestney discuss the benefits, the process and how technology has made it easy to keep track of progress.

A general practice is a business like any other, and every business needs a plan.

“A business plan is the key to a more efficient and productive practice,” says Dr Neville Steer, a general practitioner (GP) and member of the Royal Australian College of General Practitioners’ (RACGP) national standing committee on GP advocacy and support. “It can help you to navigate changes within the practice with minimum disruption and make it easier to get finance from banks and investors. And a GP without a business plan is more likely to waste time fighting fires such as staff issues, unexpected expenses and changes in government health policy. A plan can help you to anticipate those kinds of issues and prevent the fires from starting.”’

Short and simple

A business plan doesn’t have to be long and complicated.

“I’m a fan of keeping it on one page because that forces you to focus on high priority areas,” Dr Steer continues. “You can also pin it on the wall so you’re more likely to refer to it.”

Sue Prestney, Private Clients partner at PwC, also recommends creating a one-page summary of where the practice is now, where you want it to be in a particular time frame, the strategies that will take you there and the actions that will implement those strategies.

“It’s very important to envisage your goal in detail, including the kind of practice you want and the people you’d like to treat,” she says. “You can then develop strategies for meeting these people’s needs in a way that sets you apart from your competition. This is your sustainable competitive advantage, which is something every business needs.”

If you had a goal of treating time-poor professionals, for example, she suggests your strategies might include:

  • moving your practice to a commercial centre;
  • reducing waiting times by scheduling longer consultations or extra time between consultations;
  • sending a text message to patients when you’re running late so they can spend time in their office rather than waiting in your surgery;
  • setting up close to a pharmacy and pathology service for greater patient convenience.

Getting started

Dr Steer was one of the main authors of the RACGP’s General Practice Management Toolkit, which includes a module on business plans.

“This is available to members as an electronic document,” he says. “It contains a lot of practical information so it could be a useful place to start.”

However, both he and Prestney recommend working with a facilitator when you’re developing or reviewing a plan. This might be a financial planner, a management consultant or an accountant who, like Prestney, is trained in business planning.

“A professional can lead you through a simple step-by-step process to help maximise both your profit and your cash return,” she says.

Asking “what if?”

At this stage, an accountant can help you to put your strategies to the test by applying a “what if?” analysis.

“This lets you work through all of your critical line items and consider the impact of any change,” says Prestney. “For example, what would happen if you employed extra support staff so you had more time to focus on the things only you can do? Or what if you reduced waiting times by scheduling fewer consultations – how much more would you need to charge for each one in order to maintain your income?”

Keeping track

Establishing measurable key performance indicators (KPIs) will allow you to keep track of your progress.

“You can set up your systems to report your KPIs on a monthly basis against target and against budget,” says Prestney. “Many affordable accounting systems are very good at this, particularly those that are based in the cloud. Some have a reporting dashboard that provides information such as how many patients you’ve seen, the average time they had to wait and how your actual overheads compare with those in your budget. You can drill down deeper whenever you want to – and you can even check the figures on your phone. These days it’s easy to check that your strategies and actions really are taking you towards your goals.”

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