Emergency Department Directors Academy Phase III Spring 2020 Business Plan Development DESCRIPTION The language of our hospital “Suite Cs” (CEO, CFO, COO, CNO) is the language of business. Approaching these leaders with considered and impassioned beliefs will not sell the concept. Buy-in requires a thoughtful, well-researched business plan aligned with the institution’s strategic growth plan. The facilitator will briefly describe a business plan in terms of a hospital program, teaching the basic language practical application to the ED setting. OBJECTIVES

• Define language, concept and components of a business plan. • List practical applications in the ED / Hospital setting. • Create a mini-business plan based on a personal project. • Describe presentation of a plan. • Explain effective and profitable implementation, including marketing, key personnel, etc.

2/5/2020, 1:30 PM - 3:00 PM; 3:15 PM - 5:15 PM FACULTY: Kevin M. Klauer, DO, EJD, FACEP DISCLOSURE: (+) No significant financial relationships to disclose

Business Plan DevelopmentEDDA Phase III

Kevin M. Klauer, DO, EJD, FACEPTEAMHealth

Chief Medical Officer, Emergency MedicineChief Risk Officer, Executive Director, PSO

ACEP Board of DirectorsMedical Editor In Chief, ACEP NowClinical Asst. Professor, University of TennesseeAsst. Clinical Professor, Michigan State University University College of Osteopathic Medicine

The Background

• Business Plan: A written document describing the nature of the business and its financial background and containing a projected profit and loss statement. (Entrepreneur MEDIA, INC. 2009)

• Practical: How you get what you want, while proving you’ll provide value for others.

• Stakeholders: The “C suite”

The Purpose

• Policy analysis• Putting your mission into motion• 3-5 year plan for your ED or other project• Projecting needs (i.e. resources)• Projecting outcomes • A road map for success• Tool for tracking critical metrics for success

Language of the “C Suites”

• Accounts payables• Account receivables• Accrual-based

accounting• Accumulated

depreciation• Acquisition costs• Assets

• Break-even analysis• Capital (fixed) assets• Capital expenditure• Capital input• Cash flow• Collection period• Debt and equity• Depreciation

Language of the “C Suites”

• Dual distribution• Economies of scale• Equity• Expenses• Fiscal year• Fixed costs• Fixed liabilities• Future value projections

• Gross margin• Income statement (P&L)• Interest expense• Liabilities• Long-term assets• Loss• Market plan• Market share• Mission statement

Language of the “C Suites”

• Operating expense• Opportunity cost• Payables• Price elasticity of

demand• Pro forma statements• Publicly traded• Receivables

• Return on investment• S & C corporations• Variable cost• Venture capital

Components of a Business Plan

• Cover Page• Executive Summary• Goals• Company Description• Management• Product

• The Market• Competition• Marketing• Financial Statements

and Projections• Summary

Cover Page/Letter

• Title page– Generic introduction information– Name of proposal– Names of individuals involved– Date of presentation– Logo– Etc.

• Letter– Brief introduction and thank you.

Executive Summary

• Brief summary of every major category in the proposal/plan

Table of Contents

• Index of sections

Goals

• What will be accomplished by implementation of the business plan

• Include all relevant stakeholder perspectives• Write goals that the decision makers should

see value in and benefit from

Company Description• Describe your company, group, etc.• Vision statement– “A vision is a statement about what your organization wants

to become. It should resonate with all members of the organization and help them feel proud, excited, and part of something much bigger than themselves. A vision should stretch the organization’s capabilities and image of itself.”(About.com)

– "Year after year, Westin and its people will be regarded as the best and most sought after hotel and resort management group in North America." (Westin Hotels)

Company Description

• Mission Statement– “Mission or Purpose is a precise description of

what an organization does. It should describe the business the organization is in. It is a definition of “why” the organization exists currently. Each member of an organization should be able to verbally express this mission.” (About.com)

Company Description

“Additionally, each person needs a mission for his or her life. The alignment of your life mission with your organization’s mission is one of the key factors in whether you are happy with your work and workplace. If they are incongruent, you are likely dissatisfied with your work choice.” (About.com)

Management

• Who are the key individuals involved• Backgrounds• Skills• History of successful implementations

Product

• Describe your product• What are trying to build and offer

The Market

• Define and describe your market– i.e. Local geographic ED market

• Include:– Number of hospitals– Estimated visits– Assess the need for the proposed service

The Competition

• Identify any like providers in your service area• Discuss strengths and weaknesses• Identify why you can do it better• Discuss why this is not a duplicated service– Doing it better– Serving a different patient population– Capacity in the service market not addressed

The Competition

• SWOT Analysis– Strengths– Weaknesses– Opportunities– Threats

• If you are not aware of these, you’ll be in trouble later

• If you don’t disclose these, it will lead to even bigger trouble

Marketing

• Describe your marketing plan• Probably a short section for an overall ED

business plan

Financial Statements and Projections

• Estimates projected (sales) visits and revenue– 1 yr Annual– 3 yr Quarterly

• Identify and define the resources needed to implement your plan

Financial Statements and Projections

• Financial Statements– Profit and Loss v. Balance sheet– P&L: Activity over a period of time (performance)• Revenue-Expenses = Net profit (zeros out)

– Balance sheet: Reports financial status of company’s value at a particular point in time• How the company is financed• Assets = Liabilities + Equity

Profit and Loss (Income)

Balance Sheet

Summary

• Conclude with a brief summary• Something in between a cover letter and the

Executive Summary• Include– Overall summary of goals– Thank you for consideration of the proposal– Time frames for implementation and follow up

(post presentation)

Primary ED Business Plan• How you propose to run your ED• How you propose to run your ED better than

others• How you propose to run your ED and meet

your goals and those of other stakeholders– Hospital– Patients– Group– Physicians

Key Metrics

• Annual census– Seasonality?

• Avg. Revenue per pt– Facility– Professional

• Admission rate– Percent of ED patients– Percent of hospital admissions come from ED

Key Metrics• Number of shifts• Daily hours of coverage• Hours of physician coverage• Hours of APP coverage• Duration of shifts• Avg Pts/hr• Avg RVUs/hr

Key Metrics• Avg cost per patient• Avg utilization per patient (Radiology/Lab)• Avg LOS– Admitted– Discharged

• Door to doc• LWCT/LWBS rate• # Lawsuits per volume

Scenario

A friend from medical school calls you. He is the VP of Medical Affairs of a non academic, suburban, community hospital. He reports that the CEO has made the decision to change emergency medicine groups. They have decided to initiate an RFP process. Your friend has identified you as a reliable and accountable partner. They have requested you respond to the RFP.

Scenario: First Steps

• Say Yes!?• Maybe? Ask Questions!– Why is the change being made?– Known problems?• Operations• Providers

– Anticipated changes– CEO Longevity

Scenario: First Steps• More Questions– Current staffing• Number of providers?• Staffing expectations?• How many will stay?

– Operational metrics• Census• Avg LOS• Door to doc• Patients/hr• LWBS/LBCT rate

Scenario: First Steps

• Even More Questions– Recruitment issues?– Financial Data• Payer mix (percent Medicare/Medicaid/self

pay/commercial insurance• Collections per patient• Current provider compensation package• Stipend?

– Patient Experience of Care Data

Answers

• 1. The change is being made, as the current group is having trouble recruiting and has patient experience of care scores consistently in the 10th percentile nationally.

• 2. The patient experience of care issue must be corrected, and there are two physicians that the medical staff and CEO say “gotta go.”

Answers

• 3. The current model is a hospital employee model. The CEO no longer wants to manage the process and employ the physicians. He also is considering opening a Fast Track, contiguous to the ED.

• 4. CEO has been in his position for 10 years and plans to retire in 2 yrs.

Answers

• 5. Current: 5 FT EPs + Locums– 4 12 Hour shifts

• 6. Operational metrics• Census: 30,000 visits annually• Avg LOS: Admits: 8 hours; Discharges: 3 hours• Door to doc: 2.5 hours• Patients/hr: 1.7 pts/hr• LWBS/LBCT rate: 7%

Answers• 7. Financial Data

• Payer mix (percent Medicare/Medicaid/self pay/commercial insurance: Unknown• Collections per patient: $78.00• Current provider compensation package

– $135/hr plus full benefits (approx. $35/hr)• Stipend?

– Haven’t considered it.

• 8. Patient Experience of Care Data• ED: 10th percentile for 2 years running

Time to Work!

• Goals• Staffing model– Number of providers– Types of providers– Patients/hr– Compensation Package

• Do you want this contract?

Key Assumptions– 30,000 visits

• 83 per day– 7% LWBS = 2,100 more patients– Current patient’s per hour are 1.7– Physician annual expectation: 1600-1800 hrs– Current: 5-2 = 3 current FTEs– Current: 48 hours of physician coverage– 25% of ED visits of low acuity requiring little to no

testing and primarily arrive between 10 am and 10 pm– Avg collections: $78/pt.– Comp: $135/hr + full benefits

Results

Model Plan

• Projected census: 32,100– 10% increase in 12 months: 35,000– 95 visits per day

• Operational model– ED with contiguous Fast Track

• Staffing model– Physician in ED– APP with physician supervision in FT

Model Plan

• 25% of ED visits of low acuity requiring little to no testing and primarily arrive between 10 am and 10 pm.

• Physician staffing– 8 hour shifts: 3– 12 hour shift: 1 (11-11)

• APP staffing– 10 hour shifts: 2– 9 am – 7 pm and 2 pm-12 am

Model Plan

• Physician hourly $110/hr– Benefits: $35/hr

• APP hourly $55/hr– Benefits: $25/hr

• Physician total: $1,900,000• APP total: $584,000• Director stipend: $10,000/ month = $120,000• Total HR: $2,604,000

Model Plan

• Avg Collections: $78/pt.– Total: $2,730,000

• Administrative cost: 15%?– $409,000

• Malpractice insurance: $10/visit– $350,000

Model Plan

• Total Projected Revenue– $2,730,000

• Total Projected Expenses– $3,363,000

• Budgeted: ($633,000)

Model Plan

• Do you really want this contract?• What can you do to make this work?• Increase income or reduce expenses– Increase income? • More patients?• Revenue per patient?• Stipend?

– Decrease expenses• Physician coverage• APP coverage• Hourly• Benefits

Model Plan

• Additional issues– Recruitment– Physicians would be taking a pay cut– Start up loan• What bank will lend money for a business

proposal budgeted to lose $633,000 annually?

Business Plans for Project Proposals

• Same basic premise• Business plan may be shorter in length• Some items may not be applicable and can be

omitted.

Business PlanIssues Encountered

• Middle management• Cost of achieving goals• Competing interests (find the win)/ROI• Preserving your relationship while

representing your physicians/department• Political Capital– Political Coin– Political Expense

Ultrasound Program

• Background– You are the Medical Director of a rural ED with a

census of 28,000 visits annually. Your site was recently designated a level III trauma center by the American College of Surgeons. You would like to implement an ultrasound program primarily to do FAST exams. You would also like to perform AAA and pelvic studies, as radiology has been fighting you on after hours US utilization.

Ultrasound Program

• Issues– 1. Cost of an ultrasound machine is $40,000 and

training for your physicians is another $5,000.– 2. Radiology does not want you to perform

anything beyond FAST and forbids you from billing for any ultrasounds performed

– 3. Radiology will not provide QA for your program.

Ultrasound Program

• Develop a business plan– Include solutions for the identified issues• Cost• Political issue with radiology• Radiology’s prohibition on billing• QA/credentialing process

Fast Track• Background– You are the Medical Director for a department

that just crested 30,000 visits. You have always felt that a fast track would be helpful, regarding patient experience and patient flow. You need to add coverage anyway. Thus, this may be an opportunity to have your fast track. Your competitor across town does not have a fast track and you have it on good authority that they have a LWBS rate of 15%. However, they have a poor payer mix and collect $50 per patient.

Fast Track

• Issues– Space. Where will you find it. The only options

are to use 4-6 of your 20 ED beds for the fast track or to use 5 examination rooms owned by the outpatient clinic down the hallway from the ED. The clinic is open M-F, 7 am – 2 pm. The physician who runs the clinic leases this space for $4,000 a month from the hospital. The CFO says they need this revenue and will not cancel his contract to help you.

Fast Track

• Develop a business plan– Include solutions for the identified issues• Need to increase staffing• Negotiate use of the clinic space or use existing

ED space• Compare and contrast both approaches

Bedside Registration

• Background– You are the Asst. Medical Director of a 42,000

volume ED. Your LWBT rate is 11%. You have identified “door to bed” time as a critical factor, as the average intake time from arrival to bed is 94 minutes. The hospital requires extensive demographic information in the registration process. Thus, you have identified bedside registration as a solution to improve this metric.

– BTW, your avg. collections is $110 per patient.

Bedside Registration• Issues– 5 COWs will need to be purchased• $4,400 a piece

– Registration personnel will need to be trained• $3,500

– 2 dedicated registration FTEs are needed. Currently, the registration personnel multi-task and are not dedicated to the ED. The registration department currently has 6 FTEs assigned to this area.

– By the way, if you don’t pull this off, you’re out of luck for the Directorship.

Bedside Registration• Issues– The initial proposal is to assign 2 of the existing FTEs

to the ED, covering 16 hours. The remaining 8 hours, from 11 pm – 7 am will be covered with the existing process in which the patient is registered first and then seen.

– The VP in charge of registration says you can’t have them!

– The ED Nurse Manager was contacted by a CMS representative today, advising him of an impending EMTALA investigation. Apparently, one of the 11% of the LWBT patients complained that they did not get a medical screening examination.

Bedside Registration

• Develop a business plan– Include solutions for the identified issues• Cost of implementation• Impending conflict with the VP overseeing

patient registration• EMTALA investigation

Call Back Program

• Background– The healthcare system that owns your hospital

wants every ED to implement a patient call back program to reduce risk and improve patient experience. They want all system EDs to implement this program with existing resources.

– They want to know what types of patients you will call, how many will be called and within what time frame.

Call Back Program

• Issues– Your department is understaffed by 2 physician FTEs

and 2 nursing FTEs. Thus, your staff, nursing and physician, said they will mutiny if they have to take on this task.

– Your CEO has advised you that if patient experience of care scores do not increase from the 2nd percentile within 3 months, he will be looking for a new Medical Director and that 1-800-PACK YOUR CRAP will be the only call back number you’ll need.

Call Back Program

• Develop a business plan– Include solutions for the identified issues• How will you design this program and divide

the labor?• How will you gain support from you staff?• How will you address this program in

conjunction with the patient experience issues raised by the CEO?• Where will you be working 4 months from

now?

Boarding Solution• Background– You are the Quality Director of a 52,000 volume ED.

Your site only has 20 beds to handle its volume. On the average, 6 patients are boarded daily for an average of 8 hours a piece. Thus, effectively reducing your bed capacity between 10 am and 6 pm to 14 beds. Since the boarding issue began 2 years ago, your LWBS rate increased from 3% to 14 %. Avg. collections per patient is $125. Your are looking at space adjacent to the ED to create more ED beds, a fast track or observation unit.

Boarding Solution

• Issues– Decide which works best and justify your answer;

a fast track, more ED beds or an observation unit.– The space you are salivating over is currently ear

marked for radiology to become a bone density center of excellence. They receive $125 per bone density study. Per standard radiology rules of engagement, the center will be open from 9 am to noon Monday, Wednesday and Friday.

Work Time Again!

Results

Ultrasound Program

Fast Track

Bedside Registration

Call Back Program

Boarding Solution

Discussion

Thank you!

kevinklauer1@gmail.com