Four business strategies for CM success
Here’s what it takes to compete
Case managers have the know-how to solve many of the problems facing the health care industry, but they aren’t always comfortable with the business skills necessary to translate that know-how into an action plan that gains the necessary financial backing.
"Case managers have the key indicators for business success listed by most business leaders," says Ann White, RN, PhD, MBA, CNA, undergraduate nursing coordinator at the University of Southern Indiana in Evansville. "They know how to be alliance thinkers and systems thinkers. They know how to negotiate and manage complex relationships. They just aren’t comfortable with the actual business skills — the formulas needed to gain appreciation and support for what they do."
White says case managers must master the following four business skills to succeed no matter what their practice setting:
1. Strategic planning. "Few people enjoy strategic planning, but it’s an essential first step to any new product or business venture," says White. The steps of strategic planning are:
— assessment of current status;
— critical inquiry;
— reflection;
— action plan;
— evaluation.
"People are generally good at critical inquiry. They put feelers out and assess the current market. What they don’t spend enough time on is reflection," says White. "They gather all their information and then rush to put their strategic plan together just to get it out of the way."
White suggests case managers gather their information and then put it away for a while before continuing with the strategic planning process. "I don’t know about you, but I do most of my best thinking in the car. It’s a perfect time to sit and reflect. Let that information sit around and mush around for a while. It’s sometimes difficult to think about where you want to go."
One strategic planning method White says has worked well for several small to medium- size companies she’s worked with is "story boarding."
"Story boarding is an old method, but it works well for some situations," she says. "Once you’ve completed your critical inquiry, bring 10 to 20 staff members together and give them each three index cards. Have them write one idea on each of those three cards in answer to the question: What would you like to see this company doing in three years?"
After everyone has filled out their cards, White says the cards should be grouped by similarity. Each participating staff member then gets to vote on two ideas, using stick pins or stickers to mark their votes. Whichever ideas get the most votes become part of your strategic action plan for the next period. "You’ve vested your employees in the process, and because they’ve been a part of the plan from the beginning, they will be interested, motivated, and work hard to make that plan succeed."
2. Business plans. "The business plan helps you focus on the critical issues of a new project or service. It helps you organize your ideas, market your service, and gain financial backing," says White.
Although every organization uses a slightly different format for its business plans, she says business plans have the following eight sections:
— executive summary;
— description of the present situation;
— objectives;
— management structure or plan;
— product/service description;
— marketing plan;
— finance plan;
— appendix.
"Your executive summary is the first piece that goes into your business plan, and it’s the most important," says White. "I don’t know how many times I have had business executives tell me that the executive summary is all they read. If they don’t like the executive summary, then you’ve slaved more than 20 pages that will never be read."
One way to start developing your business plan is to write what White calls the "unique selling advantage" of your service. "Write in two sentences what the product or service is; you only get two sentences. If you can do that, then the rest of your business plan will flow. If you have trouble articulating your service in those two sentences, then your entire business plan is going to reflect that, and it will be difficult for you to gain the financial support you need."
White often suggests writing the executive summary last. "It really doesn’t matter whether you write it first or last. What does matter is that it must be concise — no more than one page."
The executive summary should also answer these four questions:
• What is the service?
• How will I market the service?
• How will I get paid for that service, and what are my overhead costs?
• Is there a future in it?
"If your executive summary is concise and answers those four questions, then that financial backer is going to say, Wow! I have to read the rest of this because I want to know more about what this person is going to do," says White.
Define your market
Another section of the business plan that seems to challenge many people is the market analysis and target population, she notes. "Whom are you going to sell this service to? If you’ve identified a service for high-risk obstetric patients, that’s nice, but be as specific as possible so that people can really understand exactly what you are trying to do."
Your market must be definable, meaningful, and reachable, she adds. "I worked with a group who wanted to open a health clinic for homeless children. They had all the elements for their business plan except for the reachable’ part. How do you reach a group of children who are homeless? That was a real challenge. You must look at your target audience from every perspective."
The last section of the business plan also gives people difficulty, notes White. "Most financial backers will ask that your business plan include an income and an expense report. Many computer programs can create balance sheets for you, but you still have to know what numbers to put into the computer," she says.
Your income report should include not only the fees you will charge, but any deductibles and discounts, she notes. "Spell everything out. Identify exactly what you are planning."
Case managers don’t have to struggle alone on their business plans, she adds. "Your local chamber of commerce will have retired business people who will assist you at no charge. You can walk in and find a retired banker who can help put your numbers together for you."
A break-even analysis is one common strategy you may choose to use for your financial section. "Most economists apply this method to manufacturing, but I still find it useful. It’s a way to calculate how much money you will need to generate to cover your expenses. It helps you predict what profit you might expect," says White.
In a break-even analysis, Q equals fixed costs over price minus variable costs:
• Q is the break-even quantity, or the number of services you must provide or patients you must see to break even.
• Fixed costs are those costs you will have every month, whether you see one patient or 200.
• Price is the fee for your service.
• Variable costs are those associated with each service you provide.
Here’s an example of that equation: If your fixed costs were $10,000 per month, your fee was $500 per service, and your variable costs were $100, Q would equal 25.
"Using these figures, you must provide 25 services per month to break even," says White. "If you can see doing that, than you have a viable service. If you can’t see providing 25 services per month, then you may want to rethink this service."
White urges case managers to keep each section of their business plan brief. "Busy executives don’t want to read a lot of narrative. Cut to the chase. Keep your patient demographic description to one paragraph. Provide an overview of your service, not a nursing care plan."
Additional detail can be provided in an explanation at the end, she notes. "If you’ve written a cost-benefit analysis, add a subscript and refer people to a note at the end. That note can provide an explanation of how your potential charges were calculated on historical data for the past three years from Institution X. Now, you’ve got their attention. You’ve shown you have the data and you know what you’re talking about."
3. Negotiation. White says there are three basic steps to any successful negotiation: time, information, and power. "It took me a long time to figure out how to negotiate anything until I realized we negotiate all the time — with our friends, our children, our spouses, our co-workers," she says.
Before you even begin negotiating, make sure you’re talking to a decision maker. "Don’t waste your time negotiating with someone who does not have the power to make decisions about using your services," she urges. A tactful way to determine whether the person you’ve contacted has the power to make decisions is to simply ask: Who besides yourself will have to sign off on this decision? "If they say Mr. X, then pull in Mr. X. If they say they have the power to make the decision, go forward," she says.
The first step in your actual negotiation is to prepare. "Have at least three plans ready. Plan A is the Cadillac version. Plan B is your Chevy version. Plan C is your absolute minimum VW version — what you absolutely must have. You have to go into every negotiation knowing that minimum. It’s critical because it helps you establish what you can give up and what you can’t," explains White. "I also encourage people to talk to themselves in the mirror or while driving in the car. Plan out everything you are going to say. If you do, when the actual negotiation begins, you are more comfortable with it."
If you’re negotiating in person, don’t overlook your appearance, she suggests. "You want to feel your best. Put on your best suit. It will give you confidence."
Whether you are negotiating in person or by telephone, always follow up immediately with a written summary of the key points, White says. "If I’m on the phone, as soon as I hang up, I write a letter. That letter simply says, It was nice to talk to you today. This is a summary of the events according to my notes.’ Then send it out as quickly as you can."
If you delay too long before sending a written summary of your negotiated points, the other party may forget key points. "They wonder, Did we really say that?’ If you send that letter immediately, you’ve got them," White notes.
4. Marketing strategies. Marketing is not advertising, White stresses. The goal of marketing is to catch the attention of the person you would like to buy your service without the appearance that you’re advertising, she explains.
"You want to identify the needs of your target consumer and then let them know how you can fill [them]," she says. "If your consumer is an employer and your service is case management, you can send a one-page cost-benefit analysis. An employer will notice that."
White encourages case managers to keep a marketing portfolio of competitors’ marketing materials that appeal to them. "If something grabs your attention, put it in your portfolio. There is no need to reinvent the wheel."
Case managers shouldn’t allow their lack of business skills hold them back from seizing opportunities in today’s health care market, says White. "If your local chamber of commerce can’t help you, go to the business school at your local college or university," she suggests. "I taught a marketing course and required students to do a market analysis and business plan for local companies. It was student work, so it wasn’t the Cadillac version, but it was free information that those companies didn’t have before. You can take it from there and run with it."
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content