Business Planningfor Health Organizations

ID 536

Spring Term, 2009

Paul Campbell, MPA, ScD

Harvard School of Public Health

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Agenda for First Session

• Course goals and organizational issues;

• Entrepreneurial Management;

• Business Plan Outline; and,

• “Quali-Care” Case.

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Course Learning Objectives

Students will be able to draft a business plan that will:• Provide evidence of the need for and economic

feasibility of the project, including plans to address potential risks;

• Identify the financial and other resource needs and the potential sources to meet those needs;

and,

• Effectively communicate benefits as well as economic feasibility to potential financial supporters, partners, employees and ultimately customers.

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Student Responsibilities

• Reading and homework assignments;

• Preparation of draft written business plans, which are due at class, Friday, May 22

(2 hard copies).

• Plan presentations (for those selected) May 15 and 22.

• Written and oral feedback on presentations.

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Grading

20% Class Participation

20% Homework Assignments

10% Business Plan Feedback

50% Written Business Plan

100%Total

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Student Business Plans

• Not expected to be “Fortune 500” in form or content;

• Expected to be easily readable draft;

• Content more important than polish;

• Expected to contain information related to all elements of the Business Plan Outline.

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Contact Information

Paul Campbell Phone: 617-429-6614 *Email: pcampbel@hsph.harvard.edu

John Quattrochi *Email: jquattro@hsph.harvard.edu

Discussions about case development:• By email appointment

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PolandTraditional Health System

MOH MOF

Med.

Schools

Voivodships (49)

ZOZs Hospitals Specialists

Hospitals PHC Clinics

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Decentralization

Central Government

Legislated Transfer of Authority

Regional & Local Governments

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Separation of Payer and Provider

Government Payers

Contracts with Providers

“Independent Units”

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Transformation of Polish Health System

System

Bureaucracy Quasi-Market

Institutions

Bureaucratic Competing

Units Organizations

Managers

Administrators Entrepreneurial

Managers

Performance

Quality

Efficiency

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The Transition

Entrepreneurial

Administrator Manager

Low Autonomy High

Little Accountability Great

Little Mgr. Competence Substantial

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Advantages of Shift to Markets and Entrepreneurial Management

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Disadvantages of Shift to Markets and Entrepreneurial Management

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International Evidenceon Contracting for PHC

“Contracting for the delivery of primary care can be very effective and that improvements can be rapid.”

Loevinsohn, Harding

Lancet, August 20, 2005

Study of 10 Contracting Programs

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Entrepreneur

Webster’s Dictionary Definition:

1. An organizer or promoter of an activity.

2. One that manages and assumes the risk of a business.

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Social Entrepreneurs

Skills include:

• Leadership

• Strategy

• Marketing

• Financial

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A Delicate Balance

Mission Economics

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Business Planning

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Business Plan

Defined:

“A detailed plan for a proposed program, project or service including information to be used to assess financial feasibility.“

Steven Finkler, PhD, CPA

2002

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Purposes of Business Plans

• External – Equity investment– Loan

• Internal– Organizational assessment– Individual (Personal) assessment

Joseph Mancuso, 1985

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Reasons for Developing Business Plans

1. Process forces objective critical assessment of project;

2. Completed plan helps you manage; and,

3. Completed plan provides a means of communicating with others.

Joseph Mancuso, 1992

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Business Plan Outline

1. Table of Contents

2. Executive Summary

3. The Business

4. Finance

5. Marketing

6. Supporting Documents

QUALI-CARE

A Business Plan

Damascus, Syria

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Positive Attributes of the Plan

• Being first can be an advantage

• There appears to be an unfulfilled demand for quality/coordinated and comprehensive care in Syria

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Positive Attributes of the Plan

• The key initiator appears to have the personal/family financial

resources to launch the new venture

• The high cost of facility, equipment and working capital pose barriers to potential competitors

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Negative Attributes of the Plan

• Three important skills are required: Yet the individuals to manage facilities,

actuarial projections, and financial issues are not identified

• Plan design provides for very limited control over quality of in-patient care

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Negative Attributes of the Plan

• Plan design requires partnership with physicians who may be threatened by Quali-Care.

• Plan targets small wealthy segment of the population that can already afford all services they need (without Quali-

Care). Why should they opt for HMO-limited services?

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Additional Info Needed and Recommendations

• Management structure – who will be accountable? Who are the key individuals implementing the plan and what are their relevant skills?

• Budget assumptions and justifications

• Information regarding financing structure and ownership

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Important External Factors

• Strength of the economy: Will the potential market expand for Quali-Care or contract?

• Cooperation by medical association and individual physicians: Will

the necessary providers partner with Quali-Care?

Will You Make the Investment?

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Remember

• There is no one “right” way to organize and write a business plan.

• The first business plan you write is perhaps the hardest.