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Does the world need another start-up physician practice?<br />Daniel James Scott, MS, MBA<br />CTBC, CBA, CRC, CGBP, CMQ/O...
Sandy Lutz, Woodrin Grossman & John Bigalke<br />From Med Inc.<br />“America has twice as many physicians as it needs.” <b...
Dr. Elliott Fisher<br />Center of Evaluative Clinical Sciences<br />Dartmouth Medical School<br />“If we sent 30 percent o...
PCP Concentration<br />FL = #4 in US for Population<br />FL = #4 in US for Physicians<br />PCP&apos;s = 36% of doctors in ...
PCP Concentration<br />6.1% of US population located in FL<br />5.6% of US PCP&apos;s are located in FL<br />FL Population...
PCP Concentration<br />Excess specialist physicians in FL?<br />215<br />Real Current PCP Shortage<br />&lt; 1,500<br />Wh...
PCP Concentration<br />1:780<br />US<br />1:1,176<br />5 miles from USF Health South Tampa<br />1:843<br />FL<br />1:749<b...
Market Focus<br />Find potential locations<br />Analyze competitive practices (within a three-to-five-mile radius)<br />Su...
Wilfred Peterson<br />Author, The Art of Living<br />“Big thinking precedes great achievement.”<br />
Warren G. Bennis<br />Founding Chairman, The Leadership Institute at USC<br />“Leadership is the capacity to translate vis...
Russell Robertson, M.D., Chair <br />Council on Graduate Medical Education<br />Lori Heim, M.D., President <br />American ...
Don Berwick<br />Harvard Medical School<br />“We’re in the Internet age, and the average patient can’t email their doctor....
How Will I…<br />Compete to harness specific word of mouth or internal marketing strategies<br />Maximize the benefit of m...
Competitive Advantage<br />Over the past decade, the key driving force has been specialization, both in facilities and pra...
Specialist?  Concierge? Corporate Services? Preventative? Immediate Care? Technology? Breadth of Practice or Payer Base?  ...
What is the firm’s value above and beyond you?</li></li></ul><li>Advertising<br />Average 0.93% Advertising Budget<br />Do...
Everything you can do I can do better</li></li></ul><li>Some Marketing Advice<br />Have a mission (tell once) and a story ...
Unknown<br />“If you fail to plan, you plan to fail.”<br />
George Van Horn<br />Senior Analyst, IBISWorld<br />“Healthcare practices who thrive and prosper will be noteworthy for th...
Quick Analysis<br />Target Sales = Overhead + Target Income<br />Specialty? Third-party payer mix? Collections via each pa...
Quick Analysis (cont’d)<br />Divide Target Sales by average collections to determine rough # of patient volume<br />Divide...
Trending<br />Some Upside<br />Higher spending levels!<br />Larger profits!<br />Bigger cash reserves!<br />Still a fragme...
Financial Benchmarks<br />100% sales<br />45.23% payroll<br />23.8% owner compensation<br />4.54% rent<br />0.93% advertis...
Cash Flow<br />Collection rate – current collections divided by current charges (60-120 days)<br />Realization rate – curr...
Loan Requests<br /><ul><li>Categorized loan request (equipment, leasehold improvements, working capital, etc.)</li></ul>Me...
Peter Drucker<br />Author & Management Guru<br />“Plans are only good intentions unless they immediately degenerate into h...
A (non-exhaustive) To Do List<br />Conduct a feasibility analysis<br />Retain advisors<br />Prepare a business plan<br />O...
Recap<br />Opportunities are defined by geographic ‘pockets’ – not US or state averages<br />Know what you want, and build...
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Does the world need another start-up physician practice?

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Physician practice feasibility presentation for USF Health, February 2010.

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Does the world need another start-up physician practice?

  1. 1. Does the world need another start-up physician practice?<br />Daniel James Scott, MS, MBA<br />CTBC, CBA, CRC, CGBP, CMQ/OE, CQPA<br />
  2. 2.
  3. 3. Sandy Lutz, Woodrin Grossman & John Bigalke<br />From Med Inc.<br />“America has twice as many physicians as it needs.” <br />
  4. 4. Dr. Elliott Fisher<br />Center of Evaluative Clinical Sciences<br />Dartmouth Medical School<br />“If we sent 30 percent of the doctors in this country to Africa, we might raise the level of health on both continents.”<br />
  5. 5.
  6. 6. PCP Concentration<br />FL = #4 in US for Population<br />FL = #4 in US for Physicians<br />PCP&apos;s = 36% of doctors in US<br />PCP&apos;s = 37% of doctors in FL<br />
  7. 7. PCP Concentration<br />6.1% of US population located in FL<br />5.6% of US PCP&apos;s are located in FL<br />FL Population = 17,922,260<br />FL PCP&apos;s = 21,269<br />Assumed PCP Shortage = 1,708<br />
  8. 8. PCP Concentration<br />Excess specialist physicians in FL?<br />215<br />Real Current PCP Shortage<br />&lt; 1,500<br />What are Florida’s population forecasts based primarily on?<br />
  9. 9. PCP Concentration<br />1:780<br />US<br />1:1,176<br />5 miles from USF Health South Tampa<br />1:843<br />FL<br />1:749<br />5 miles from USF<br />Main Campus<br />
  10. 10. Market Focus<br />Find potential locations<br />Analyze competitive practices (within a three-to-five-mile radius)<br />Survey demographic (especially income) information on the area to be served<br />Note population projections for the area<br />Include any other factors pertinent to the location<br />
  11. 11. Wilfred Peterson<br />Author, The Art of Living<br />“Big thinking precedes great achievement.”<br />
  12. 12. Warren G. Bennis<br />Founding Chairman, The Leadership Institute at USC<br />“Leadership is the capacity to translate vision into reality.”<br />
  13. 13.
  14. 14. Russell Robertson, M.D., Chair <br />Council on Graduate Medical Education<br />Lori Heim, M.D., President <br />American Academy of Family Physicians<br />“When you look at other nations with comprehensive policies with regard to universal access to health, the ratio of generalists to (sub)specialists is about 50/50. But the U.S. physician profile is only 31% primary care and 69% (sub)specialty care.”<br />
  15. 15. Don Berwick<br />Harvard Medical School<br />“We’re in the Internet age, and the average patient can’t email their doctor.”<br />
  16. 16.
  17. 17. How Will I…<br />Compete to harness specific word of mouth or internal marketing strategies<br />Maximize the benefit of my location<br />Build referral sources (schools, local merchants, other health care providers)<br />Reach potential new patients (including leveraging PR, joining and speaking to community organizations, etc.)<br />Plan for advertising and direct mail<br />
  18. 18. Competitive Advantage<br />Over the past decade, the key driving force has been specialization, both in facilities and practitioner offerings.<br />Companies have sought to maximize revenues from what they do best, while outsourcing standardized and nontechnical services in order to lower costs.<br /><ul><li>So what are you best at?
  19. 19. Specialist? Concierge? Corporate Services? Preventative? Immediate Care? Technology? Breadth of Practice or Payer Base? Quality Assurance? Alternative Medicine? Customer Service? Green/Carbon-Neutral Policies?
  20. 20. What is the firm’s value above and beyond you?</li></li></ul><li>Advertising<br />Average 0.93% Advertising Budget<br />Don’t look at it this way…<br />…Look at it as $15,000 per firm<br /><ul><li>Non-hospital advertising expenditures: ~$4.5B US, ~$250MM FL
  21. 21. Everything you can do I can do better</li></li></ul><li>Some Marketing Advice<br />Have a mission (tell once) and a story (tell every day)<br />There is the world’s largest line between a bad decision and an ill-equipped decision<br />People buy emotionally (want) and justify logically (need) – even in healthcare!<br />
  22. 22. Unknown<br />“If you fail to plan, you plan to fail.”<br />
  23. 23. George Van Horn<br />Senior Analyst, IBISWorld<br />“Healthcare practices who thrive and prosper will be noteworthy for their heightened focus on competitive marketplace positioning and for superior cost containment.”<br />
  24. 24.
  25. 25. Quick Analysis<br />Target Sales = Overhead + Target Income<br />Specialty? Third-party payer mix? Collections via each payer? Average Collections per source?<br />
  26. 26. Quick Analysis (cont’d)<br />Divide Target Sales by average collections to determine rough # of patient volume<br />Divide Target Sales by $162,000 to determine rough # of employees<br />Divide Target Sales by 2.3 to determine rough $ of payroll<br />
  27. 27. Trending<br />Some Upside<br />Higher spending levels!<br />Larger profits!<br />Bigger cash reserves!<br />Still a fragmented industry!<br />Demographic shifts!<br />Some Issues<br />Greater competition!<br />Larger offices!<br />Increased effectiveness!<br />Concentrated payers!<br />Internal concerns!<br />
  28. 28. Financial Benchmarks<br />100% sales<br />45.23% payroll<br />23.8% owner compensation<br />4.54% rent<br />0.93% advertising<br />12.1% operating profit<br />9.5% net profit<br />Simple Valuation Techniques<br />0.45 x Net Sales (0.45 x $1.6MM = $720,000)<br />5.04 x Operating Profit (5.04 x $193,600 = $975,744)<br />5.28 x Net Profit (5.28 x $152,000 = $802,560)<br />
  29. 29. Cash Flow<br />Collection rate – current collections divided by current charges (60-120 days)<br />Realization rate – current collections divided by the sum of current collections plus current write-offs<br />Presence of “outside income” – any income not from direct patient care, such as stipends from hospitals, nursing homes, etc.<br />Staff salaries as a percent of collections<br />Occupancy costs as a percent of collections<br />Collection of patient co-pays (should be in the vicinity of 95% or better)<br />
  30. 30. Loan Requests<br /><ul><li>Categorized loan request (equipment, leasehold improvements, working capital, etc.)</li></ul>Medical equipment and supplies<br />Office equipment and supplies<br />Furniture and furnishings<br />Leasehold improvements<br />Insurance needs<br />Operating and personal expenses (aka working capital) – some allowance, possibly 10-20%, should be considered for expense coverage or income shortfalls<br />The advancing loan should have an initial six-month term without scheduled payments of principal, which would be due at maturity. Such terms are typically extended for another six months, allowing time for positive cash flow.<br />Ultimate repayment of three to seven years.<br />
  31. 31. Peter Drucker<br />Author & Management Guru<br />“Plans are only good intentions unless they immediately degenerate into hard work.”<br />
  32. 32.
  33. 33. A (non-exhaustive) To Do List<br />Conduct a feasibility analysis<br />Retain advisors<br />Prepare a business plan<br />Obtain financing<br />Identify a location<br />Negotiate the lease<br />Choose and order furniture, equipment, billing system<br />Hire employees<br />Develop employment policies<br />Develop a filing system<br />Develop marketing materials<br />Advertise for patients<br />Prepare patient charts<br />Develop coding and compliance policies<br />Develop an encounter form<br />Develop a general ledger system<br />Develop a compensation system in a group practice<br />Establish professional relationships<br />Recruit patients<br />Register patients in the billing system (database)<br />
  34. 34. Recap<br />Opportunities are defined by geographic ‘pockets’ – not US or state averages<br />Know what you want, and build structure around those goals<br />Growth potential exists for well-run, flexible and innovative physician practices<br />Working capital is always a concern in healthcare, but no bigger or worse than most other industries – focus on success<br />
  35. 35. Resources<br />FSBDC Healthcare Center of Excellence @ USF<br />Mario Iezzoni, CPA, MBA (Director)<br />(813) 905-5800, miezzoni@coba.usf.edu<br />USF Center for Entrepreneurship<br />Michael Fountain (Director)<br />(813) 974-7900, fountain@coba.usf.edu<br />USF Library System<br />JardHoppenfeld (Business Librarian)<br />(813) 974-6266, jhoppenf@lib.usf.edu<br />Medical Group Management Association<br />(877) ASK-MGMA, http://www.mgma.com<br />Primary Research (done by you!)<br />

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