Show Me the Money: The Finances of Strategic Planning

Show Me the Money: The Finances of Strategic Planning

Why it’s Critical for Planners to Keep Budget Top-of-Mind

By Aaron Frazier

As strategic planners set their course for growth in the new year, it’s critical for finances to be top-of-mind. Often, the budget isn’t always a primary focus for planners, who are more locked in on market share and growth opportunities. But it’s an important step worth remembering and in this post, we’ll discuss why. We’ll review the following two areas of consideration:

  • Do you have all the resources you need to fulfill your plan? If not, what will the cost be to acquire the necessary resources?
  • Will the new idea you have planned be profitable? Is it worth the financial risk?

Mindful examination of these questions on the front end will pay off through the year. You’ll hit fewer roadblocks and see more success as you execute upon your growth goals and ideas.

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Have You Accounted for the Necessary Resources?

Executing a strategic plan requires funding, staffing, and other resources to be allocated to each of your strategic objectives. If the resources don’t exist, calculate the cost to acquire them. If you realize you can’t afford the needed resources, you may have to revise the timeline for that objective or eliminate it entirely. Here are some top costs to keep in mind. 

  • Will additional physicians be needed to successfully launch the new service or product line you have planned? A Physician Needs Analysis (also referred to as a Medical Staff Development Plan), which outlines the inventory of providers in a market, may be needed to know for sure. If it’s determined that more providers are required, what will be the cost of recruiting and training them? Is that a cost you can accommodate? 
  • What new equipment will be necessary to achieve your goals? If you’re starting to offer a new service, it’s important to consider the internal equipment resources involved to successfully launch that service.

As every plan will be routed through the CFO, there’s a higher likelihood of getting first-pass approval if costs have been calculated upfront. So, make sure to include the cost of these resources in your strategic plan. For a complete cost picture, it may be helpful to work with experts in areas of data analytics, legal, marketing, and finance. 

 

Is It Worth It? 

As you consider every initiative outlined in your plan, make sure you feel confident financially before moving forward—are your goals worth the financial risk? If you don’t have the coverage to go after a new service line, is it worth it? 

The answers to these questions aren’t always black and white. For example, you could have a great idea for expanding your cardiology offering. But if this service line is already struggling financially, there may be a reason to be cautious as it can be a tough service line to turn around. On the flipside, obstetrics and gynecology are service lines where many hospitals break even or lose money. But, it’s an offering that’s often still worth investing in as it creates brand loyalty with women who are many times the healthcare decision-makers for their families. 

Realistic cost considerations will provide trackable measures that can be reviewed throughout the year to gauge how successfully a new initiative is performing. A cost accounting tool can be useful in this endeavor. This will allow you to review your system’s performance and determine the net revenue you’re making off a particular product line. From there, you can set goals knowing what you already make per procedure and calculate how many more times you’d have to perform that procedure to hit your target. This exercise makes your goals SMART. SMART goals are concrete targets for which you can easily take aim. They’re realistic, quantifiable, and focused, so you know exactly how and what it takes to accomplish them. SMART goals are more clearly defined and trackable, making it more likely to produce real results.

 

The Takeaway

The execution of your strategic plan is an opportunity for everyone in your organization to work together toward a clearly expressed growth outcome. It takes a strong, organization-wide commitment to execute a plan successfully. But with the right financial planning on the front end, it can be done.

For more information about how Stratasan can support your strategic planning process, schedule a discovery call today. Find out how we can make data-driven decision making more accessible for your team so you can realize greater growth potential in less time.

Article by Aaron Frazier, Customer Success Manager for Stratasan

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