3. Tom Peters Author, In Search of Excellence and The Circle of Innovation “We spend over $2 trillion on healthcare in America – and it is also our engine of job growth. Increasingly, ‘healthcare economics’ are ‘American economics’. Tinkerer beware!”
4. Sandy Lutz, Woodrin Grossman & John Bigalke From Med Inc. “America has twice as many hospitals and physicians as it needs.”
5. PCP Concentration FL = #4 in US for Population FL = #4 in US for Physicians PCP's = 36% of doctors in US PCP's = 37% of doctors in FL
6. PCP Concentration 6.1% of US population located in FL 5.6% of US PCP's are located in FL FL Population = 17,922,260 FL PCP's = 21,269 Assumed PCP Shortage = 1,708 % of Nurse Practitioners in private practice needed to over saturate market? 20%
7. PCP Concentration Excess specialist physicians in FL? 215 Real Current PCP Shortage < 1,500 What are Florida’s population forecasts based primarily on?
8. Dr. Elliott Fisher Center of Evaluative Clinical Sciences Dartmouth Medical School “If we sent 30 percent of the doctors in this country to Africa, we might raise the level of health on both continents.”
9. PCP Concentration 1:780 US 1:1,176 5 miles from USF Health South Tampa 1:843 FL 1:749 5 miles from USF Main Campus
10. Don Berwick Harvard Medical School “We’re in the Internet age, and the average patient can’t email their doctor.”
11. NP & Physician Offices Moderate seasonality (possible short-term cash flow shortages) Commonly borrow long-term debt to fund fixed assets Customer acquisition primarily driven by referrals and a convenient location Secondarily by PR, speaking engagements, websites, advertising and direct mail Although collection and coding issues, the common level of receivables and bad debts is low when compared against all US firms
12. NP vs. Physician Offices Growth industry vs. mature Smaller offices (revenue and employees) Greater industry concentration Less direct competition, larger ad budgets Less sales supported per employee, creating additional payroll burden, leading to higher overhead Less operating profit, less net profit before taxes and less owner compensation forcing a smaller market valuation
13. Recap Opportunities are defined by geographic ‘pockets’ – not US or state averages Getting started is cash intensive – especially in assets and location Working capital is always a concern in healthcare, but no bigger or worse than most other industries Growth potential exists for small, flexible and innovative NP offices
17. Measures of Viability Against experience Against reason Against averages Against market data Against comparables
18. Getting Started How do you generate volume? Long-term care? Single-visit care? Concierge or corporate services? Financial Goal? Target Sales = Overhead + Target Income Target Volume = Target Sales / Average Billables Target Market? 3-mile radius? 5-mile radius? County? Market Position? Specialist? Concierge? Preventative? Immediate Care? Technology? Non-hospital advertising expenditures: ~$4.5B US, ~$250MM FL
19. Parting Thoughts What is the base level of service vs. competitive advantage? Avoid terms like value, service, quality, etc. Instead, define how you do it vs. everyone else What is your philosophy on insurance? It is tempting to believe you will not accept it BUT, you are not an MD and will not be viewed as a top-tier provider – can you afford not to?
23. Communications Tool George Burns “Define your business goals clearly so that others can see them as you do.”
24. Motivational Tool Leonard Bernstein “To achieve great things, two things are needed; a plan, and not quite enough time.”
25. Execution Tool Peter Drucker “Plans are only good intentions unless they immediately degenerate into hard work.”
26. Ten Q’s – The First Five Who buys and why? Why from you? Roadblocks? Why will Management succeed? Owner contribution ($, time, assets, IP)?
27. Ten Q’s – The Final Five Assets and People required? Required return? Exit strategy? Funding requirement? Clear tie between financial, operational, and marketing plans?
29. Legal Entities Business Names Government Searches Sunbiz.org USPTO.gov Copyright.gov General Searches DnB.com, Thomasnet.com Google.com, Reuters.com SuperPages.com, YellowPages.com Domain Searches
30. Legal Entities (continued) Sole Proprietorship Partnership Limited Liability Company (LLC) A hybrid form that combines elements of partnerships and corporations. In Florida, LLCs may elect whether to be taxed as partnerships or corporations. On the federal level, LLCs with more than one member file a partnership return on IRS Form 1065 unless they elect to be classified as a corporation. Corporation The two types of corporations are the C-Corporation and the S-Corporation. With a C-Corp, the corporation rather than individuals pays taxes and assumes liabilities. Florida’s corporate tax is 5.5%. An S-Corp allows up to 75 shareholders to share income and expenses and to report them on their individual income tax returns.
31. Legal Entities (continued) All legal entities, except sole proprietors operating under their owner's full legal names, must file with the State of Florida at http://www.sunbiz.org. A Fictitious Name Registration is also required of individuals who do business under any name other than either their full, legal personal name or a properly registered corporate name, partnership, trademark, service mark or limited liability company.
32. Legal Entities (continued) It is recommended that all Florida business file for a free EIN number with the IRS. If your corporation or LLC will be electing to be taxed as a S-Corporation, you will make this election with the IRS as well, using Form 8832 and Form 2553. Most Florida Counties and Cities mandate an Occupational Tax for the privilege of locating your business within their limits. To find if your county requires an Occupational Tax, visit http://www.FloridaTaxCollectors.com. To learn if your city requires the tax, visit http://www.MyFlorida.com/cities/.
33. Legal Agreements If more than one individual will be involved in the ownership and management of the firm, or if you are developing a corporation, it is recommended that you seek legal advice in the development of internal agreements. For samples, visit http://www.publiclegalforms.com.
34. Legal Hiring To investigate average pay per position, visit http://WhatPeopleAreAsking.com. To learn about current Worker's Compensation requirements, visit http://www.FLDFS.com/WC/. To report a new employee to the State of Florida, visit http://www.FL-NewHire.com.
35. Resources Florida Small Business Development Center Network Healthcare Center of Excellence at the University of South Florida Mario Iezzoni, CPA, MBA (Director) (813) 905-5800, miezzoni@coba.usf.edu USF Library System JardHoppenfeld (Business Librarian) (813) 974-6266, jhoppenf@lib.usf.edu