This is the second in a series of posts on practical and legal considerations for physicians in deciding whether to sell, merge or stay the same. Before making any major practice decision along those lines, physicians should engage in some careful strategic planning. Simply put, before you can know which or whether one of these transactions will help you to achieve your goals, you must first know what those goals are.

From a practice standpoint, here are some basic “strategic planning” questions you should try to answer:

1. What are the greatest short term and long term challenges faced by your medical practice?

2. What are the greatest opportunities available to your practice?

3. If you were able to overcome your practice challenges and take advantage of your practice opportunities without selling, merging or affiliating with any third party, would your practice be where you want it to be from a financial and lifestyle perspective?

4. What are your options for overcoming your practice challenges and taking advantage of your practice opportunities and could you do that without selling, merging or affiliating with a third-party?

5. If you determine that sale, merger or affiliation is necessary to overcome your practice challenges and take advantage of your practice opportunities, which of these options is readily available and would enable you to achieve your professional, financial and lifestyle goals with the least amount of expense and disruption?

Answering these questions may not be so simple. Effective strategic planning often involves gathering and analysis of data regarding the practice and your specific market. Among other things, you should have a firm grasp on your income and expenses over the last several years to know how they are trending and why they might be trending that way. Similarly, you should understand your practice utilization and referral patterns (including the number of referrals in and out, what those referrals are for, where they come from and where they go). Finally you should have an understanding of what is happening in your market, who your competitors are, what your competitors are doing, who your allies are and how you can improve those relationships.

The above represent only a few of the important considerations for developing a strategic plan for your practice. Even if sale, merger or affiliation is not on your radar screen at present, one way to help ensure that you are prepared for change is to develop a three-year strategic plan and revisit it annually to see whether modifications are necessary and to evaluate whether you are fulfilling that plan.

These are uncertain times for physicians. Under the looming threat of major Medicare reimbursement cuts, rising administrative costs and an increasingly complex regulatory environment, many of the physicians I speak to feel paralyzed in their professional lives. They are afraid to make capital investments in equipment or technology or recruit new physicians to expand their practices for fear that the government or third party payors may pull the rug out from under them. Physicians are desperate to change their situation but unable to see a clear path forward.
If you share the above sentiments, consider that one of the best ways to overcome the anxiety associated with the present uncertainties in medicine is to develop a strategic plan for your practice. Developing a strategic plan requires that you take a hard look at where your medical practice is today and that you give real thought to where you want your practice to be in the future.

At a very basic level, a strategic plan should answer the following three questions:
1. Where are you now?
2. Where do you want to be?
3. How will you get there?

The more specific you can be in answering these questions, the more successful you are likely to be in developing and implementing your strategic plan. Moreover, a strategic plan need not necessarily be set in stone. Rather, you may find it necessary to modify your plan from time to time and, in fact, you should revisit the plan on a regular basis to see how you’re doing. A medical practice strategic plan should address at least the following key issues:

1. Geographic service area;
2. Scope of clinical services;
3. Physician staffing;
4. A managed care strategy; and
5. Strategic relationships and referral sources.

There are certainly many unknowns in the practice of medicine today. One thing we know for sure however is that successful businesses evolve and you cannot get anywhere standing still. If you have never done strategic planning in your practice, consider picking a weekend in the next six months to meet with your partners for this purpose. Meet somewhere away from your practice where you can devote a significant block of uninterrupted time solely to developing a strategic plan. There are plenty of resources available online to help guide you in your efforts and, if you are still not sure how best to proceed, consider engaging a professional who regularly deals with medical practice development to help lead your strategic planning session.