During medical school and residency, my mentors told my peers and me that we could carve our own paths in medicine—choose our specialties, develop niches and provide the services we were passionate about.
Not so much, anymore. Doctors still have specific expertise and enthusiasm for expanding their offerings, but most doctors today haven’t got the authority to make it happen. Indeed, in a recent report looking at exercise prescription by sports medicine physicians, my co-authors and I found that “only 17% of respondents had decision-making authority to hire staff or change their practice”. In our survey, 72% of respondents were employed.[Moore]
If you’re in such a situation, wanting to launch new services and frustrated at not being able to get traction among administrators, this blog is for you.
The most important thing is to persuade the C-suite to support your idea. Most important, you’ve got to win over the CFO because, well…it’s always about the money. But how to do it??
Setting the Hook
In 2006, I was recruited by a hospital to start up a cardiac rehab program. The Dept of Health was mandating that the hospital provide cardiac rehabilitation in exchange for being granted permission to provide interventional cardiology. I had been medical director of cardiac rehab at UPMC’s Montefiore Hospital during the 1990s, so the hospital’s CFO came to me. I knew there wasn’t much for me in that job, so I proposed creating a center for patients who didn’t meet the narrow eligibility criteria for cardiac rehab, but who needed similar services. I’d observed that they named everything “Cayuga _______”, so I suggested calling it the Cayuga Center for Healthy Living. The idea intrigued him.
→ “Setting the hook” includes catchy branding that the C-suite members can’t resist. Observe how your organization positions its entities, capitalize on emotional soft-spots and get your idea in front of the CEO or CFO.
Allaying Anxieties
Health system administrators know they get paid for taking care of sick people. The notion they might prevent disease feels like climbing out on a limb and sawing it off. The CFO of my hospital admitted as much, noting that he wanted to do the “right thing for the community”, but not at the risk of undermining the hospital’s business model.
I got the discharge diagnosis statistics of the hospital as well as the population health data of the hospital’s primary service area (county-level surveys from the Census Bureau, Centers for Disease Control and the NY State Dept of Health). Those numbers dwarfed the potential volume of my proposed program, especially since my focus was on rehabilitation and disease reversal (secondary prevention as opposed to primary prevention).
→ “Allaying anxieties” about preventive services involves demonstrating that your services will win warm fuzzy feelings from community leaders and provide good marketing material, but won’t affect the hospital’s procedure-based business model. Particularly if your services are configured downstream of hospital services rather than upstream.
Sealing the Deal
The CFO asked me to draft a business proposal. I had written many research proposals and converted that approach to a business proposal. It wasn’t what he wanted. Instead, he demanded a pro forma and emailed me a sample spreadsheet. This was new to me, but I had experience managing data and “reverse engineered” what he wanted.
A pro forma is a document of multiple interlinked spreadsheets, one for assumptions on costs and payment rates, one to calculate expenses, one to calculate income, one to model network expansion (if planned), one to model payer mix, one to summarize it all. Expense calculations include all costs devoted to a particular service (scheduling time, intake/record-keeping time, staff time during the visits, time for documentation, etc.). Revenue calculations must model the number and value of services, how many patients will participate, what each encounter generates in revenues, etc. Private payers pay more than Medicare (no two companies pay the same amount for a particular service), so “payer mix” must be modeled.
A pro forma is a straight forward but extremely complicated interlinked document that models how a business is going to generate its balance sheet and profit & loss statement. Something that can’t be visualized from words. Creating a pro forma is very labor-intensive, and you’re probably looking at a solid month’s worth of work, maybe more. It’ll require you to visualizing your clinic operations in great detail, including estimates of inefficiency such as “water cooler time”, no-show rates and being realistic about the percentage of eligible patients who actually enroll. Most important, it will show administrators how you will operate in the black.
→ “Sealing the deal” means convincing your senior leadership on the financial merits, which you MUST express in a pro forma. For the C-suite, it’s all about dollars and cents. Without a detailed financial model, you will not make much progress - especially if you haven’t got a champion in the C-suite.
Summary
Convincing hospital administrators may seem overwhelming at times, but it boils down to a few key strategies:
• Secure a powerful champion in leadership (ideally the CEO or CFO),
• Present a compelling financial model through a detailed pro forma, and
• Use trusted data sources to alleviate concerns about potential impacts on existing services.
If you haven’t got a lot of experience in drafting a pro forma, you probably should get help. They’re sufficiently complicated that doing a convincing job takes expertise. My team and I at Sustainable Health Systems would be happy to help out.
By weaving together an engaging idea with solid financials and strategic branding, you can pave the way for launching your innovative lifestyle medicine services.
– GEMoore
REFERENCES
1) GE Moore, C Carlson, JP Bonnet, EM Phillips, EA Joy, C Collings, W Kraus, WO Roberts. Implementation of Exercise Management Services Among Sports Medicine Physicians in the United States. Clin J Sport Med, February 8, 2024. DOI: 10.1097/JSM.0000000000001209
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