Consider Your Agency’s Size and Needs.

The following article is the second part in a three-part series written by Tim Rowan, Founder & President of Rowan Consulting Associates.  In part 1, Tim describes the need for home care agencies to carefully plan their next technology purchase.  In this installment, Tim goes deeper into the Home Care Business Planning Process.

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The Home Care Business Planning Process

You do not need an elaborate planning process to develop the statements of direction and business objectives discussed below. Consider your agency’s size and needs. Step back from day-to-day activities. Determine your future business and systems direction and continuously assess your performance.

Though once it was possible to run a successful home care agency on intuition and common sense, the marketplace has matured. Formal home care business planning is crucial in today’s competitive home care environment. It requires that you:

  • evaluate the environment in which your organization operates,
  • define business goals and objectives,
  • monitor progress toward achievement of these goals and objectives and
  • review and revise plans to reflect performance or environmental changes.

Home Care Business Planning takes place on several levels. Strategic plans typically look three to five years forward and set forth broad statements of business direction. Shorter range operational plans usually cover a one- or two-year period and include specific performance objectives. Action plans routinely cover periods of less than a year and identify steps, activities and milestones associated with specific projects or initiatives undertaken to advance operational plans.

Presented below is a brief discussion of basic planning concepts and suggested steps to follow in developing a business plan, focusing on the elements that most directly influence systems planning and technology utilization.

Build A Foundation

To begin your business plan, have a picture of where your agency is and a vision of where you want it to go. You must identify and assess forces in your business environment that help or hinder progress toward your destination.

Define Your Business. Identify your starting point – define your current business. At a minimum, characterize your agency on two bases: business focus and corporate assets.

Business Focus. The business focus for most home care organizations can be described along three dimensions.

Populations: Populations served are most often defined in terms of patient demographics. For most traditional agencies, this is the elderly. Target populations are also defined by diagnoses or diseases.

Markets: Target markets are generally defined on a geographic basis. Market boundaries often reflect logistical, licensing or resource considerations.

Services: The identification of services offered includes core services (your specialty or primary revenue source) and ancillary services (other business lines).

Corporate Assets. These are the key attributes that differentiate your agency from others in your marketplace. They can include:

Reputation: A good reputation – a marketplace image of caring, reliability, a low hospital recidivism rate and cost-effectiveness – may be your organization’s primary asset, particularly if you enjoy longevity in your market.

Linkages: Linkages can be organizational or personal. They include relationships with referral sources, other healthcare providers, payers and suppliers or vendors.

Staff: Home care is a labor-intensive, service-oriented business. Staff skills and experience often determine business direction.

Financial Resources: Generally, home care is not capital-intensive. Access to financial resources, however, can be a significant consideration for organizations planning expansion.

If you have not already done so, take time to identify your business focus and inventory your key assets.

Evaluate The Environment. Next, assess your organization’s business environment. This assessment should take place on both macro (industry-wide) and micro (target market) levels. Your goal is to identify the environmental factors and industry or marketplace dynamics beyond your control which you expect will impact your business.

On a macro level, your challenge will be to identify the three or four market factors that will have the most direct impact on your business. A variety of resources is available to help you examine macro-level trends (e.g., changing demographics, managed care) and forecast their impact on home care. Look to government and trade association sources for much of this information – the Internet will be invaluable.

Micro-level assessment of your business environment requires that you identify and examine local factors. Focus primarily on competitors, other healthcare providers, local regulatory bodies and major payers in your market. Identify the factors that you expect will have the greatest impact on your business direction.

Develop A Plan

Business planning is an iterative process. It takes place first on a strategic level, where you formulate your vision of the future. Then, on an operational level, you develop increasingly specific plans, covering shorter time periods. Finally, you identify the near-term steps necessary to put your plan into action.

Formulate a Strategy. Begin by developing a picture of your business three to five years in the future. Then, using your business definition and environmental assessment, review your focus and key assets and specify the broad goals you hope to achieve over the next three to five years. Within the home care context, goals might include patient census growth, expansion in breadth of services (diversification) or extension of services to broader populations or geographic markets.

The product of this process should be a brief list of no more than three to five key organization goals on which management will focus attention over the longer term. Each goal should include a brief explanation of your reasons for pursuing it and the assumptions made regarding market factors and resource requirements that you expect to influence your ability to achieve that goal.

Re-visit your goals at least once per year. Assess progress toward achievement and identify any significant changes in market conditions or operating assumptions that may require change in strategic direction.

“Acquiring and implementing new technologies can be a significant undertaking – developing objectives will keep management’s attention appropriately focused. ”

Develop an Operational Plan.

This is where the action is – where you define your key objectives and develop specific plans to achieve them. Unlike planning at a strategic level, here you consider a horizon of no more than one to two years. Establish specific criteria for measuring accomplishments, and monitor performance continuously rather than periodically.

For each long-term goal, you should also develop a limited number of objectives related directly to achievement of that goal. The objectives should focus on what you hope will be key accomplishments in the next year or two. Each objective should specify a time period for achievement and criteria for measuring performance.

Operational planning can extend to increasingly specific levels, including detailed action plans and schedules developed for specific projects or individual objectives. The depth to which you pursue this planning process will be primarily a function of organization size and management interest in monitoring and controlling subordinates’ activities.

In the final installment of this three-part series, Tim discusses how business plans drive systems plans.