Medical Practice Business Plan
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start a new practice and grow their medical private practices. 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 medical practice business plan template step-by-step so you can create your plan today.
What is a Medical Practice Business Plan?
A business plan provides a snapshot of your medical office 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 medical practice business plans.
Why You Need a Business Plan for a Medical Office
If you’re looking to start a new medical practice, or grow your existing medical practice, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your medical practice in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Medical Practices
With regards to funding, the main sources of funding for a medical office 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 operate a successful medical practice. Personal savings and bank loans are the most common funding paths for medical practices.
How To Write a Business Plan for a Medical Practice
If you want to start a medical private practice or expand your current one, you need a business plan. Below we detail what should be included in each of the key components of a business plan:
- Executive Summary
- Company Overview
- Industry Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Management Team
- Financial Plan
- Appendix
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 medical office you are operating and the status. For example, are you a startup, do you have a practice that you would like to grow, or are you operating practices in multiple markets?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the industry. Discuss the type of practice you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing strategy. Identify the key members of your team. And offer an overview of your financial plan.
Company Overview
In your company overview, you will detail the type of medical office you are operating.
For example, you might operate one of the following types of medical practices:
- Group medical practice: this type of medical practice consists of two or more physicians providing medical care in the same facility. The physicians typically have different specialties, which allow them to collaborate and consult with each other.
- Private medical practice: this type of medical practice involves only one physician working along. A private practice usually serves a limited number of patients and operates with a small staff.
- Hospital-based medical practice: this type of medical practice is an ancillary medical office that is owned by a nearby hospital. The hospital will manage the practice and employ the doctors and nurses to work in their facilities and ancillary clinics.
In addition to explaining the type of medical practice 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 is your business model?
- What is your mission statement?
- What major milestones have you achieved to date? Milestones could include the number of patients served, number of positive reviews, reaching X amount of patients served, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your business structure here.
Industry Analysis
In your industry analysis, you need to provide an overview of the medical industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the medical 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:
- How big is the medical 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 medical office? 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 must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, families, seniors, and anyone needing a type of medical service.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of medical office you operate. Clearly, families would respond to different marketing promotions than seniors, 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.
Psychographic profiles explain the wants and needs of your target audience. The more you can understand and define these needs, the better you will do to attract patients and retain current patients.
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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 medical offices.
Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes hospitals, clinics, teledocs, and online health forums.
With regards to direct competition, you want to describe the other practices with which you compete. Most likely, your direct competitors will be other practices located very close to your business 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 medical services do they provide?
- Do they offer any other complementary services (i.e. medical spa treatments)?
- What areas do they serve?
- What types of patients do they serve?
- 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 services that your competitors don’t offer?
- Will you provide faster patient waiting time?
- Will you provide better patient 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 medical office, your marketing plan should include the following:
Product: In the product section, you should reiterate the type of practice that you documented in your Company Analysis. Then, detail the specific services you will be offering. For example, in addition to medical services, will you provide nutrition and diet guidelines, insurance claim processing, family and loved one communication, and any other services?
Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections, you are presenting the services you offer and their prices.
Place: Place refers to the location of your practice. Document your location and mention how the location will impact your success. For example, is your medical office located near a school, a busy neighborhood, an office complex, or an urban setting, etc.? Discuss how your location might be the ideal location for your patients.
Promotions: The final part 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
- Flyers
- Billboards
- Commercials
- Social media platforms
- Local radio advertising
- Word-of-mouth
Operations Plan
While the earlier sections of your business plan explained your goals, your business operations plan describes how you will meet them. It should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your practice, including patient and family communication and scheduling, managing appointments, inventory of medical supplies, accounting, billing, payroll, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to obtain your XXth patient, or when you hope to reach $X in revenue. It could also be when you expect to expand your medical practice to a new office building.
Management Team
To demonstrate your practice’s 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 management team members have direct experience in managing medical practices. 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 a medical practice or a physician or nurse in the local medical field.
Financial Plan
A solid 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 take on one new patient at a time or multiple new patients offering a variety of medical services? 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 $50,000 on building out your medical practice, 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 $50,000, 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.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a medical practice:
- Cost of furniture and build-out
- Cost of medical equipment and supplies
- Payroll or salaries paid to staff
- Business and medical malpractice insurance
- Taxes and permits
- Legal expenses
Appendix
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 list of medical services your practice will offer, types of patients you will be targeting, and the areas your practice will serve.
Free Business Plan Template for Medical Practice Businesses
You can download our medical clinic business plan PDF. We also offer a sample medical practice business plan that you can use to create a solid business plan for your own practice.
Summary
Putting together a detailed business plan for your medical practice will improve your company’s chances of success. The process of developing your plan will help you better understand the market, your competition, and your customers. You will also create a marketing strategy to better attract and serve customers, an operations plan to focus your efforts, and financial projections that give you goals to strive for and keep your medical practice focused.
Growthink’s Ultimate Medical Practice Business Plan Template allows you to quickly and easily complete your business plan.
Additional Resources for Medical Business Owners
- How to Open a Medical Practice
- Practice Innovation Strategies: Time-Saving Strategies
- 22 Tips for Improving Your Practice
- 45 Proven Medical Practice Marketing Strategies for Clinics
Finish Your Medical Practice Business Plan in 1 Day!
Don’t you wish there was a faster, easier way to finish your business plan?
With Growthink’s Ultimate Medical Practice Business Plan Template you can finish your plan in just 8 hours or less!
Click here to finish your business plan today.
OR, Let Us Develop Your Plan For You
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
Click here to see how Growthink’s business plan advisors can give you a winning business plan.
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