MA DipEd DipTM
4 Health Ltd
Wendy is managing director of 4 Health Ltd, a training and development consultancy firm based in the West Midlands. She is an organisational development specialist and architect of learning organisations, and has authored several books and publications on healthcare development
As any professional practice manager knows, a business plan precisely defines the goals and objectives of an organisation. It can help the leader of the business allocate resources properly, handle unforeseen complications and make good business decisions. It provides specific and organised information about the business and how it will repay borrowed money; a good business plan is a crucial part of any loan application. Additionally, it informs suppliers and others about your operations and goals.
The core elements of business planning are relevant to any sort of planning (see Figure 1 overleaf). The basic planning process is a cycle of activities that systematically organises work, establishing a logical order, a way of identifying problems and discovering potential solutions. It also establishes an effective way of measuring achievements/outcomes.
The responsibilities of GP commissioning will carry a heavy emphasis on planning, owing to the complexity and sheer scale of the commissioning concerned. Practice managers who remember fundholding with fondness may recall how skilled practice managers were able to contribute significantly to the commissioning and contract management activities it involved.
Hospitals were in their infancy in terms of understanding payment by results and were beginning to build information systems that helped them to report and manage activity more productively.
The world has moved on significantly since then, and foundation trusts and independent service providers have spent time and effort developing commercial expertise in constructing and negotiating contracts. With that level of sophistication comes responsibilities for GP consortia to evidence their planning when considering service redesign or new service developments.
It will not be enough to ‘know’ anecdotally that services should be provided in a particular way. GP consortia will need to demonstrate identified need, clear gap analysis and solutions that have been tested for their viability and practicality. All of these steps are part of a robust planning cycle.
The importance of comprehensive, thoughtful business planning cannot be overemphasised. Much hinges on it: funding; management of the operation; risk and finances; and achievement of organisational goals and objectives. As consortia come to terms with their statutory responsibilities for commissioning worth millions of pounds, there will be a requirement to demand high levels of planning from the providers of services.
One of the difficulties is how time intensive planning can be. Many consortia GPs will be far too busy to do this for themselves. It is a reasonable assumption to make that they will turn to planning experts to do some of that legwork. But consortia will not be able to put off preparing written plans. Just as a builder would not begin construction without a blueprint, commissioners shouldn’t rush into any venture without a business plan.
The planning process is a framework for organising work. It clearly creates a context for the work by establishing a baseline of the current situation and a goal for where the endpoint will be. Implementation is supported by clear stages for measuring need and setting objectives (small stages that will ultimately achieve the goal) and a monitoring mechanism for spotting improvements and amendments to keep the work on track.
Practice managers use business plans frequently in their work not only to shape how the practice develops and grows, but also to support the many changes practices routinely go through.
This might include building or moving to new premises, implementing new IT systems or changing the structure of the partnership. Many will be familiar with writing a business plan with the following characteristics:
- A detailed description of the issue or problem that the plan seeks to resolve.
- An indepth understanding of the issue, key stakeholders, risks and desired outcomes.
- A detailed financial breakdown including set up, running costs, resources required, etc.
- A detailed operational plan that illustrates the management and technological requirements of the overall plan.
What should the business plan achieve?
As a communication tool, a business plan is used to attract investment capital, secure loans and assist in attracting strategic business partners. The development of a comprehensive business plan shows whether or not a business has the potential to make a profit. It requires a realistic look at almost every phase of business and shows that potential problems have been properly considered. All these will apply to the work of commissioning consortia.
As a management tool, the business plan supports the tracking, monitoring and evaluation of progress. It is a living document that should be modified as the business develops.
By using the business plan to establish timelines and milestones, leaders can gauge progress and compare projections to actual accomplishments. All of these aspects will apply to the work of commissioning consortia.
As a planning tool, the business plan guides leaders through the various developments of the organisation. A detailed plan will help identify threats and obstacles, and establish alternatives. Many business owners share their business plans with their employees to foster a broader understanding of where the business is going. All of these apply to commissioning consortia.
Effective business planning should be completed at three levels:
- Meta or strategic level is the overview of the environment that the business operates in (local health economy) and will be where most commissioning cluster activity is focused on.
- Macro or tactical level details the main areas of operation for the business, ie, contracts, providers and commissioning consortia, and establishes how they need to co-operate or inter-operate to contribute to the overall success of effective healthcare delivery.
- Micro or operational planning sets out the detailed picture for a provider or service of how to achieve their objectives.
One of the challenges for commissioning consortia and practices will be to ensure their planning and activity is done at an appropriate level and that they do not get drawn into planning or acting at the wrong level. This could lead to them becoming consumed with too much detail, or being too removed to make a practical difference to the population they are commissioning for.
These risks need to be identified and managed, which is a very important part of business planning. A simple definition of a ‘risk’ is a problem that could cause some loss or threaten the success of a service or project, but which hasn’t happened yet. These potential problems might have an adverse impact on the cost, quality, responsiveness or overall success of the service.
Risk management is the process of identifying, addressing and eliminating these potential problems before they create havoc.
Practice managers are used to differentiating risks as potential problems from the current problems facing the practice, because different approaches are taken for addressing these two kinds of issues. For example, a staff shortage because you haven’t been able to hire people with the right skills is a current problem, but the threat of your top people being hired away by a neighbouring practice is a risk.
Whether they are tackled head-on or ignored, risks have a potentially huge impact on many aspects of the business, for example, it is very common for project plans to exceed their planned timescales or budgets because the unforeseen risks were never considered and factored into the work.
The tacit assumption that nothing untoward will derail projects/services is simply not realistic. Professional managers understand that plans not including an analytically derived contingency budget of money and time are not for the real world, and certainly not for the new world of GP consortia.