business plan for health care facility

Healthcare Business Plan Template

Written by Dave Lavinsky

Healthcare Business Plan

You’ve come to the right place to create your Healthcare business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Healthcare companies.

Below is a template to help you create each section of your Healthcare business plan.

Executive Summary

Business overview.

Riverside Medical is a family medical clinic located in San Francisco, California. Our goal is to provide easy access to quality healthcare, especially for members of the community who have low to moderate incomes. Our clinic provides a wide range of general and preventative healthcare services, including check-ups, minor surgeries, and gynecology. Anyone of any age or group is welcome to visit our clinic to get the healthcare that they need.

Our medical practitioners and supporting staff are well-trained and have a passion for helping improve the health and well-being of our clients. We serve our patients not just with our knowledge and skills but also with our hearts. Our clinic was founded by Samantha Parker, who has been a licensed doctor for nearly 20 years. Her experience and compassion will guide us throughout our mission.

Product Offering

Riverside Medical will provide extensive general care for all ages, creating a complete healthcare solution. Some of the services included in our care include the following:

• Primary care: annual checkups, preventative screenings, health counseling, diagnosis and treatment of common conditions
• Gynecology: PAP tests, annual well-woman exam, and family planning
• Pediatrics: infant care, annual physicals, and immunizations
• Minor procedures: stitches, casts/splints, skin biopsies, cyst removals, and growth lacerations
• Health and wellness: weight loss strategies, nutrition guidance, hormone balance, and preventive and routine services

The costs will depend upon the materials used, the physician’s time, and the amount designated for each procedure. Medical bills will be billed either directly to the patient or to their insurance provider.

Customer Focus

Riverside Medical will primarily serve the community living and working within the San Francisco bay area. The city is diverse and growing and includes people of all ages, ethnicities, and backgrounds. Everyone is welcome to visit our clinic to receive the health care they need.

Management Team

Riverside Medical’s most valuable asset is the expertise and experience of its founder, Samantha Parker. Samantha has been a licensed family doctor for 20 years now. She spent the most recent portion of her career on medical mission trips, where she learned that many people are not privileged to have access to quality medical services. Samantha will be responsible for ensuring the general health of her patients and creating a viable and profitable business medical practice.

Riverside Medical will also employ nurses, expert medical staff, and administrative assistants that also have a passion for healthcare.

Success Factors

Riverside Medical will be able to achieve success by offering the following competitive advantages:

• Location: Riverside Medical’s location is near the center of town. It’s visible from the street with many people walking to and from work on a daily basis, giving them a direct look at our clinic, most of which are part of our target market.
• Patient-oriented service: Riverside Medical will have a staff that prioritizes the needs of the patients and educates them on the proper way how to take care of themselves.
• Management: Samantha Parker has a genuine passion for helping the community, and because of her previous experience, she is fully equipped and overqualified to open this practice. Her unique qualifications will serve customers in a much more sophisticated manner than our competitors.
• Relationships: Having lived in the community for 25 years, Samantha Parker knows many of the local leaders, newspapers, and other influences. Furthermore, she will be able to draw from her ties to previous patients from her work at other clinics to establish a starting clientele.

Financial Highlights

Riverside Medical is seeking a total funding of $800,000 of debt capital to open its clinic. The capital will be used for funding capital expenditures and location build-out, acquiring basic medical supplies and equipment, hiring initial employees, marketing expenses, and working capital.

Specifically, these funds will be used as follows:

• Clinic design/build: $100,000
• Medical supplies and equipment: $150,000
• Six months of overhead expenses (rent, salaries, utilities): $450,000
• Marketing: $50,000
• Working capital: $50,000

The following graph below outlines the pro forma financial projections for Riverside Medical.

Company Overview

Who is riverside medical, riverside medical history.

Samantha Parker started the clinic with the goal of providing easy access to good quality health service, especially to those members of the community with low to moderate income. After years of planning, she finally started to build Riverside Medical in 2022. She gathered a group of professionals to fund the project and was able to incorporate and register Riverside Medical with their funding support.

Since its incorporation, Riverside Medical has achieved the following milestones:

• Found clinic space and signed Letter of Intent to lease it
• Developed the company’s name, logo, and website
• Hired a contractor for the office build-out
• Determined equipment and fixture requirements
• Began recruiting key employees with previous healthcare experience
• Drafted marketing campaigns to promote the clinic

Riverside Medical Services

Industry analysis.

The global healthcare market is one of the largest and highest-valued industries in the world. According to Global Newswire, the global healthcare services market is currently valued at $7548.52 billion and is expected to reach $10414.36 billion in 2026. This growth is expected to continue for the foreseeable future.

The biggest drivers of industry growth throughout the next decade will be a continual increase in illnesses and diseases as well as a quickly aging population. With more people aging and needing daily/frequent care, hospitals and medical clinics are bound to be in even more demand than they already are.

One obstacle for the industry is the rising cost of care. Though this results in greater profits, more and more Americans cannot afford basic medical care. Therefore, they are opting out of procedures they believe are unnecessary or unimportant.

Despite the challenges of the next decade, the industry is still expected to see substantial growth and expansion.

Customer Analysis

Demographic profile of target market.

Riverside Medical will serve the residents of the San Francisco bay area as well as those who work in the area.

The population of the area experiences a large income gap between the highest earners and the lowest earners. Therefore, it is hard for middle and lower-class families to find quality care that is affordable. As a result, they are in need of the services that we offer and are looking for accessible medical care.

The precise demographics of San Francisco are as follows:

Customer Segmentation

Our clinic is a general family practice and will treat patients of all ages, incomes, physical abilities, races, and ethnicities. As such, there is no need to create marketing materials targeted at only one or two of these groups, but we can appeal to all with a similar message.

Competitive Analysis

Direct and indirect competitors.

Riverside Medical will face competition from other companies with similar business profiles. A description of each competitor company is below.

City Medical

Founded in 2008, City Medical is a membership-based, primary-care practice in the heart of the city. City Medical offers a wide range of primary care services for patients who subscribe to the practice for an annual fee. Patients enjoy personalized care, including office visits, as well as the diagnosis and treatment of common health problems. The patient membership fee covers the services listed below, and most care is received in-office. However, some additional services, such as lab testing and vaccinations, are billed separately. Furthermore, though the annual fee is convenient for some, it is too high for many families, so many are priced out of care at this facility.

Bay Doctors

Bay Doctors is a primary care practice that provides highly personalized medical care in the office or patients’ homes. Bay Doctors includes a team of dedicated healthcare professionals with dual residency in Emergency Medicine and Internal Medicine. The practice offers same-day/next-day appointments, telemedicine, office visits, and home visits. Some of the medical care services they provide are primary care, urgent care, emergency care, gynecology, pediatrics, and minor procedures.

Community Care

Established in 1949, Community Care is a non-profit regional healthcare provider serving the city and surrounding suburbs. This facility offers a wide variety of medical services, including 24-hour emergency care, telemedicine, primary care, and more. In addition to their medical care, they have a wide variety of fundraising activities to raise money to operate the hospital and help families cover the costs of their care.

Competitive Advantage

Riverside Medical enjoys several advantages over its competitors. These advantages include:

Marketing Plan

Brand & value proposition.

The Riverside Medical brand will focus on the company’s unique value proposition:

• Client-focused healthcare services, where the company’s interests are aligned with the customer
• Service built on long-term relationships
• Big-hospital expertise in a small-clinic environment

Promotions Strategy

The promotions strategy for Riverside Medical is as follows:

Riverside Medical understands that the best promotion comes from satisfied customers. The company will encourage its patients to refer their friends and family by providing healthcare benefits for every new client produced. This strategy will increase in effectiveness after the business has already been established.

Direct Mail

The company will use a direct mail campaign to promote its brand and draw clients, as well. The campaign will blanket specific neighborhoods with simple, effective mail advertisements that highlight the credentials and credibility of Riverside Medical.

Website/SEO

Riverside Medical will invest heavily in developing a professional website that displays all of the clinic’s services and procedures. The website will also provide information about each doctor and medical staff member. The clinic will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.

Social Media

Riverside Medical will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Riverside Medical’s pricing will be lower than big hospitals. Over time, client testimonials will help to maintain our client base and attract new patients. Furthermore, we will be able to provide discounts and incentives for lower-income families by connecting with foundations and charities from people who are interested in helping.

Operations Plan

The following will be the operations plan for Riverside Medical.

Operation Functions:

• Samantha Parker is the founder of Riverside Medical and will operate as the sole doctor until she increases her patient list and hires more medical staff. As the clinic grows, she will operate as the CEO and take charge of all the operations and executive aspects of the business.
• Samantha is assisted by Elizabeth O’Reilly. Elizabeth has experience working as a receptionist at a fast-paced hospital and will act as the receptionist/administrative assistant for the clinic. She will be in charge of the administrative and marketing aspects of the business.
• Samantha is in the process of hiring doctors, nurses, and other medical staff to help with her growing patient list.

Milestones:

The following are a series of path steps that will lead to the vision of long-term success. Riverside Medical expects to achieve the following milestones in the following twelve months:

3/202X            Finalize lease agreement

5/202X            Design and build out Riverside Medical location

7/202X            Hire and train initial staff

9/202X            Kickoff of promotional campaign

11/202X          Reach break-even

1/202X            Reach 1000 patients

Financial Plan

Key revenue & costs.

Riverside Medical’s revenues will come primarily from medical services rendered. The clinic will either bill the patients directly or their insurance providers.

The major cost drivers for the clinic will include labor expenses, lease costs, equipment purchasing and upkeep, and ongoing marketing costs.

Funding Requirements and Use of Funds

Key assumptions.

Below are the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.

• Year 1: 120
• Year 2: 150
• Year 3: 200
• Year 4: 275
• Year 5: 400
• Annual lease: $50,000

Financial Projections

Income statement, balance sheet, cash flow statement, healthcare business plan faqs, what is a healthcare business plan.

A healthcare business plan is a plan to start and/or grow your healthcare business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Healthcare business plan using our Healthcare Business Plan Template here .

What are the Main Types of Healthcare Businesses?

There are a number of different kinds of healthcare businesses , some examples include: Nursing care, Physical home health care, or Home health care aides:

How Do You Get Funding for Your Healthcare Business Plan?

Healthcare businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Healthcare Business?

Starting a healthcare business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Healthcare Business Plan - The first step in starting a business is to create a detailed healthcare business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your healthcare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your healthcare business is in compliance with local laws.

3. Register Your Healthcare Business - Once you have chosen a legal structure, the next step is to register your healthcare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your healthcare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Healthcare Equipment & Supplies - In order to start your healthcare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your healthcare business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Other Helpful Business Plan Templates

Nonprofit Business Plan Template Non-Emergency Medical Transportation Business Plan Template Medical Practice Business Plan Template Home Health Care Business Plan Template

Healthcare Business Plan Template

Written by Dave Lavinsky

There are several types of Healthcare businesses, from family medicine practices to urgent care centers to home health care agencies. Regardless of the type of healthcare business you have, a business plan will keep you on track and help you grow your healthcare business in an organized way. In addition, if you plan to seek funding, investors and lenders will use your business plan to determine the level of risk.

Download our Ultimate Business Plan Template here >

Below is the business plan outline you should use to create a business plan for your healthcare company. Also, here are links to several healthcare business plan templates:

• Assisted Living Business Plan
• Counseling Private Practice Business Plan Template
• Dental Business Plan
• Home Health Care Business Plan
• Medical Practice Business Plan Template
• Medical Spa Business Plan Template
• Non Medical Home Care Business Plan Template
• Nursing Home Business Plan Template
• Pharmacy Business Plan
• Urgent Care Business Plan

Finish Your Business Plan Today!

Healthcare business plan example outline, executive summary.

Although it serves as the introduction to your business plan, your executive summary should be written last. The first page helps financiers decide whether to read the full plan, so provide the most important information. Give a clear and concise description of your healthcare company. Provide a summary of your market analysis that proves the need for another healthcare business, and explain your company’s unique qualifications to meet that need.  

Company Analysis

Your company analysis explains your healthcare business as it exists right now. Describe the company’s founding, current stage of business, and legal structure. Highlight any past milestones, such as lining up clients or hiring healthcare providers with a proven track record. Elaborate on your unique qualifications, such as expertise in a currently underserved niche market.

Industry Analysis

The healthcare industry is incredibly large and diverse, but your analysis should focus on your specific segment of the market. Do you specialize in pediatric healthcare? senior healthcare? emergency medicine? family medicine? Figure out where your healthcare company fits in, and then research the current trends and market projections that affect your niche. Create a detailed strategy for overcoming any obstacles that you uncover.  

Customer Analysis

Who will your healthcare company serve? Are they families? The elderly? What is important to them in a healthcare business? How do they select a healthcare provider? Narrow down their demographics as closely as you can, and then figure out what their unique needs are and how you can fulfill them.

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Competitive Analysis

Your direct competitors are those healthcare companies that fulfill the same needs for the same target market as yours. Your indirect competitors are healthcare businesses that target a different market, or other companies that fulfill a different need for your target market. Describe each of your direct competitors individually, and talk about the things that set your healthcare company apart. Categorize your indirect competitors as a group and talk about them as a whole.  

Marketing Plan

A solid marketing plan is based on the four P’s: Product, Price, Promotion, and Place. The Product section describes the healthcare you sell along with any other services you provide. Price will change according to the specifics of the property, but you can delineate your fees here. Promotion is your means of getting new business. Place is your physical office location, along with your web presence and the areas where you sell. Another category, Customer retention, refers to the ways you will build loyalty.

Operations Plan

Your operations plan explains your methods for meeting the goals you set forth. Everyday short-term processes include all of the daily tasks involved in servicing clients. Long-term processes are the ways you will meet your defined business goals, such as expanding into new markets or new types of service.  

Management Team

The management team section highlights the backgrounds of the key members of your team. Focus on those aspects that prove your team’s ability to build and run a successful company. A business mentor or advisor can help fill in any gaps, provided you can identify the specific ways that your advisor will influence your company’s growth.  

Financial Plan

Investors and lenders heavily scrutinize the financial plan, but it is often the most challenging part of the business plan to write. Healthcare is a strong market, it usually not subject to economic turns. The financial plan requires you to detail your individual revenue streams by implementation timeline and relative importance, and disclose any sources of outside funding. You also need to summarize your past and future Income Statements, Cash Flow Statements, and Balance Sheets, based on key assumptions that must be both reasonable and verifiable based on an analysis of similar companies. You should also provide a solid exit strategy that shows your understanding of the market and your desire to capitalize on profitability.  

Your full financial projections should be attached in the appendix along with any other documents that support your claims, such as letters from key partners.

Healthcare Business Plan FAQs

What is the easiest way to complete my healthcare business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Healthcare Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of healthcare business you are operating and the status; for example, are you a startup, do you have a healthcare business that you would like to grow, or are you operating a chain of healthcare businesses?

Don’t you wish there was a faster, easier way to finish your Healthcare business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how our professional business plan writers can create your business plan for you.

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How to Write a Business Plan for a Private Clinic: Complete Guide

• January 3, 2023

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your private clinic, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in the business plan of your private clinic.

Whether you want to open a primary care or a specialized clinic (e.g. plastic surgery, chiropractor or any other type of medical clinic), use this template to create a complete, clear and solid business plan that get you funded.

1. Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire plan.

Why do you need a business plan for a private clinic?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or a private grant

How to write an executive summary for a private clinic?

Provide a precise and high-level summary of every section that you have included in the business plan of your construction business. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately.

Also make sure that the executive summary doesn’t exceed 2 pages in total: it’s supposed to be a summary for investors and lenders who don’t have time to scroll through 40-50 pages, so keep it short and brief.

The executive summary usually consists of 5 major sub-sections:

• Business overview : describe your medical clinic, where it is located, and what type of inpatient or outpatient care you offer. Also, mention the services and treatments you specialize in and the average price per treatment
• Market analysis : a comprehensive market analysis includes details about your market. Provide information about your target audience (children vs. elderly, health conditions, outpatient care trends and preferences, etc.), as well as the market size , growth and competitors. 
• People : introduce your construction business’ management and employee structure. Provide a brief (no more than a couple of sentences each) of the knowledge and experience of the team. Also, mention how the company will be structured (management roles and reporting lines)
• Financial plan: how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? You can include here a chart with your key financials (revenue, gross profit, net profit )
• Funding ask : what loan/investment/grant are you seeking? How much do you need? How long will this last?

Medical Clinic Financial Model

Download an expert-built 5-year Excel financial model for your business plan

2. Medical Clinic Business Overview

In this section, you should explain in simple terms the type of clinic you wish to open. Here are a few questions you may want to answer:

• Where exactly is your medical clinic located? And why did you choose that location?
• What type of medical clinic are you opening (franchise vs. independent)?
• Are you opening a primary care or a specialized health clinic?
• Which medical services will you provide? For whom (what is your target audience)?
• What is the capacity of your private clinic? How many beds? How many doctors/specialists will there be?
• What will be the legal structure of your company (partnership, corporation)?

a) Rationale

Before we jump into the business, it’s always good practice to give an overview of the rationale behind this project. In other words: why did you decide to open such clinic in your area today?

For example, if there are no plastic surgery clinics in the area despite strong market demand, you could come in to fill the existing market gap after conducting a proper market analysis. 

b) Business Concept

Now, it’s time to explain your business model. Firstly, business owners can choose between independent practices or franchising. 

But that’s not all. You must also decide on the specific type of clinic you want to open. And that’s only possible after answering the following questions; 

• Will you specialize in primary care or specialty medicine?
• Is this a franchise or an independent clinic?
• Is this a solo, group or hospital-owned practice?

What are the different types of medical clinics? 

Here are a few business models commonly used by medical professionals:

• Solo practice : you will be the main partner of the clinic and have full control. A major pitfall of a solo practice is the high startup costs for leasing the property, purchasing the medical equipment, managing administrative functions and marketing your business
• Group practice : you partner with other physicians or practitioners instead. This business model comes with fewer responsibilities, with well-defined roles for every individual. Also, it provides easy access to capital, lowering the startup and operating costs along the way
• Hospital-owned practice : a medical clinic within the hospital premises. Here, you work with a fixed schedule, getting limited freedom compared to a solo practice. But the upside is that you can capitalize on the hospital’s resources, making it easier to establish your practice and market it to your target audience. 

c) Treatments and Services

In addition to the business model of your clinic, let’s now take a look at the services and treatments you offer.

For example, a plastic surgery clinic with reconstructive procedures could offer the following treatments:

• Head/face/eyes (Facelift, forehead lift, eyelid lift, ear pinning, hair replacement surgery, nasal surgery, nose reshaping, etc.)
• Mouth and teeth (oral surgery)
• Breasts (Breast augmentation, breast reconstruction, breast reduction, breast lift)
• Abdomen (Liposuction, tummy tuck, etc.)
• Hand and upper limb 
• Skin (Chemical peel, vein removal, scar revision, tattoo removal, dermaplaning, laser skin resurfacing)

d) Pricing Strategy

Lenders and investors will want to see your pricing strategy . We recommend you create a summary table with the main services you offer as well as their prices.

You can start by determining the average cost of similar medical services in your area before making your pricing list. 

When creating your pricing structure, consider the necessary elements, like the local regulations and whether most consumers rely on insurance bodies to cover their medical expenses or fund them from their pockets.

e) Legal Structure

Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry? 

3. Medical Clinic Market Overview

One of the most important steps when writing a medical clinic’s business plan is understanding the market you’re in. Try to address here the following questions:

• Industry size & growth : how big is the industry in your area? What is its growth/decline rate, and what factors contribute to its growth/decline in the region?
• Competition overview : how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them? 
• Customer analysis : who is your target market ? What type of inpatient and/or outpatient treatments do they need?

a) Medical Industry Size & Growth

The cosmetic surgery industry was worth $20.1 billion in 2022 (+2.3% CAGR from 2017-22).

In total, there were 22.4 million procedures in 2019: that’s an average price per procedure of around $900.

In terms of plastic surgeons, there were approximately 7,000 in the US in 2020 .

b) Competition Overview

In addition to an overview of the market size, you should also describe who are your competitors in the area where you plan to open your clinic.

Find useful information about your competitors’ biggest strengths and weaknesses , products and services , and marketing strategies.

For example, create a summary table that compares your competitors’ treatments, marketing strategies, pricing ranges, target audience, etc. 

c) Customer Analysis

Finally, take some time to understand your target audience. Here are a few elements you must look into:

• What is the average spend per capita on medical procedures (for example plastic surgery)?
• How often do people need such treatments?
• The most sought-after treatments
• What’s the average price of a treatment / service?

4. Sales & Marketing

The next section of your medical clinic’s business plan should outline your customer acquisition strategy. Start by answering the following questions:

• What are the different marketing strategies you will use? 
• What are your unique selling points (USPs)?
• How will you track the success of your marketing strategy ? 
• What is your customer acquisition cost (CAC)? 
• What is your marketing budget? 
• Will you consider any offers or promotions to attract new clients? 

What marketing channels do private clinics use? 

A few marketing channels used by clinics include; 

• Content marketing on social media and blogs
• Email, SMS marketing
• Online local listing (Google Business)
• Word-of-mouth advertisement, recommendations
• PPC ads, Facebook ads, etc. 

5. Management & People

You must address two things here:

• The management team and their experience / track record
• The organizational structure : different team members and who reports to whom?

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of senior managers that you intend to hire to oversee your private clinic.

For the partners of the clinic, describe their duties, responsibilities, and roles. Also, highlight their previous experience and track record.

For the receptionists, personal assistants, office managers, medical assistants, etc. no need to go into a lot of detail, especially as it’s likely you won’t have hired them yet before you get the funding you need, which is the objective of this business plan.

Organization Structure

Even if you haven’t already hired anyone yet, you must provide a chart of the organizational structure defining the hierarchy of reporting.

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan for a private clinic.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your private clinic is an attractive investment.

There should be 2 sections to your financial plan section:

• The startup costs of your private clinic
• The 5-year financial projections

a) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a private clinic, startup costs are all the expenses you incur before you open your clinic.

These expenses typically are: the lease for the space, the renovation costs, the equipment and furniture.

Logically, the startup costs vary depending on the size of your clinic, the treatments you will offer (and therefore the equipment you need), the quality of the equipment and furniture, whether you buy the real estate or rent a commercial space, etc.

b) Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model for your private clinic. Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 15%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of patients you can receive in a day or week;
• The number of procedures you can perform ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing (prices of treatments and services) and your sales volume (number of customers). Indeed, a small change in these assumptions may have a significant impact on your revenues and profits.

7. Use of Funds

This is the last section of the business plan of your private clinic. Now that we have explained what your private clinic’s business model and services are, your marketing strategy, etc., this section must now answer the following questions:

• How much funding do you need?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

• What percentage of the total funding the loan represents?
• What is the corresponding Debt Service Coverage Ratio ?

If you raise equity

• What percentage ownership are you selling as part of this funding round?
• What is the corresponding valuation of your business?

Use of Funds

Any private clinic business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment in paying your employees’ salaries? Or will it cover mostly the cost for the lease deposit for the space, the renovation and equipment?

For the use of funds, we also recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

Privacy Overview

How to Write a Business Plan for Healthcare

• Small Business
• Business Planning & Strategy
• Write a Business Plan
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Example of a medical transportation business plan, how do i start a home business caring for elderly people.

• How to Create an Audit Template for a Client Account Review
• How to Get Federal Funding for a Clinic Start-Up

Writing a business plan for a healthcare involves preparing a document that outlines the services you plan to provide and how you intend to run your company. Health care businesses usually deal with reimbursement, fee schedules, billing systems, managed care contracts and operational issues. By describing how your company handles these challenges, you can prove to potential investors that your business strategy is sound and worthy of their investment.

Available Internet Resources

Use the resources provided by websites, such as the Business.gov and the Small Business Administration Small Business Planner websites, to get started writing your health care business plan. Use the self-assessment tool provided by the Small Business Administration website as well as other resources, such as free online courses, access to online mentoring and templates.

Description of Your Health Care Business

Write a description of your health care business. For example, list how your service offers elderly or disabled clients non-medical support at home. If you plan to purchase and run a franchise operation, the parent company typically provides information and training that describes the business.

For example, urgent care center businesses typically provide care by a certified physician, on-site lab services, prescription services and extended hours. Describe the skills and experience of your staff, such as technicians.

Marketing Strategy and Competitive Analysis

Use resources, such as the Plunkett Research website, to identify the industry outlook and trends in the health care industry. Identify your competitors. Analyze their strengths and weaknesses. Prepare your own promotional campaigns, which could mean describing your plans to develop a website to advertise your services or conduct an email marketing campaign to attract new customers.

Describe your community and how you intend to obtain referrals, such as making connections with doctors and hospital administrative personnel. These health care professionals frequently refer patients requiring home health care to local reputable agencies providing quality service to discharged patients.

Organization and Management 

Add a section describing how you intend to organize your health care business. List the software programs you intend to use for charting and billing. Establish a mechanism for receiving payment and obtaining reimbursement for services. List the licenses required to operate a health care business in your state, using the resources provided by the Business.gov website.

Ensure that you meet the guidelines for providing health care services and that your services can be reimbursed by Medicare, Medicaid and private insurance.

Financial and Strategic Goals

Describe how you plan to finance your company and specify a multi-year plan. For example, state the number of patients you hope to serve by the end of the first year. Classify these patients by type, such as home health care or personal injury cases. Set success criteria, such as 80 percent customer satisfaction as reported by follow-up surveys you conduct with clients.

Use the resources provided by the Business.gov website to pay your taxes and ensure you adhere to all the required regulations.

• Bplans.com: Free Medical and Health Care Business Plans
• Applied Health Strategies: Working Draft of the Safety Net ACO Business Plan for the “Next Coalition”
• Entrepreneur: Health and Personal Care
• SCORE: Templates for Your Business
• Small Business Administration: Assessment Tool

Tara Duggan is a Project Management Professional (PMP) specializing in knowledge management and instructional design. For over 25 years she has developed quality training materials for a variety of products and services supporting such companies as Digital Equipment Corporation, Compaq and HP. Her freelance work is published on various websites.

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Did you find what you are looking for.

Whether you plan to start a professional medical practice or a veterinary clinic, you need a clear roadmap to drive it to success.

Need help writing a business plan for your healthcare business?

This library of healthcare and medical business plan examples here can inspire and guide you as you begin to plan your business. So, don’t worry; we got you covered on that part.

Let’s learn more about these sample health and medicine business plans, starting with their benefits.

Benefits of using an industry-specific business plan example

Believe it or not, using an industry-specific business plan example is the best and probably the quickest way of writing a business plan.

Doubt it? Hold, this may change your perception; an extended list of the benefits of using an industry-specific business plan template.

• Inspiration : Reading a business-specific template can be incredibly helpful in getting content inspiration. Furthermore, it helps you gain insights into how to present your business idea, products, vision, and mission.
• Risk-free method : You are taking a reference from a real-life, let’s say, health coaching business plan—so you know this plan has worked in the past or uses a method subscribed by experts.
• Deep market understanding : Analyzing and reading such examples can provide clarity and develop a deeper market understanding of complex industry trends and issues you may not know but relate directly to the realities of your business landscape.
• Increased credibility : A business plan developed using an example follows a standard business plan format, wisely presents your business, and provides invaluable insights into your business. There’s no question it establishes you as a credible business owner, demonstrating your deep business and market understanding.
• Realistic financial projections : Financial forecasting being a critical aspect of your plan, this real-life example can help you better understand how they project their financials—ultimately helping you set realistic projections for your business.

These were the benefits; let’s briefly discuss choosing an medical business plan template that best suits your business niche.

Choosing a Medical and Health Care Business Plan

This category itself has 30+ business plan templates for various healthcare businesses. With many similar business types and templates, you may not find the most suitable one through manual scrolling.

Here are the steps to consider while choosing the most suitable business plan template.

Identify your business type

Are you going to be a rehabilitation providing nature therapy? Or a medical lab? Or planning on starting an urgent care center?

Asking yourself these questions will help you identify your business type, which will help in choosing a niche-specific business plan template.

Once you identify your business type, you can choose between templates for different business segments.

Search for the template

We have an in-built search feature, so you can easily search for a business-specific template using your business name as a key term. Once you have the search results, choose the most suitable one. Simple as that.

Review the example

Look closely at the content of the sample business plan you are considering. Analyze its sections and components to identify relevant as well as unnecessary areas.

Since all the Upmetrics templates are tailored to specific business needs, there won’t be many fundamental customizations. However, a hybrid business model targeting multiple customer segments may require adjustments.

For instance, if you plan to start a medical practice that also provides urgent care services—you may need to make necessary adjustments in some of your business plan sections based on your service offerings.

No big deal—you can view and copy sections from other business plan examples or write using AI while customizing a template.

That’s how you find and select the most suitable medical business plan template. Still haven’t found the perfect business plan example? Here’s the next step for you.

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7 steps to writing a business plan for your healthcare business

Creating a strong business plan is the key to a successful private healthcare business.

When it comes to building your private healthcare business, writing a strong business plan and implementing it properly is perhaps the most effective strategy to propel your business to success. Whether you are just starting out, or are already an established healthcare practice, it is never too late to write your business plan and put it in place.

We’ve put together seven steps to help you write a healthcare business plan and then implement it. You can also find a sample private practice business plan PDF here to get you started!

Download our free Business Plan template here!

1. Identify your end goal

Perhaps the most important step of writing a business plan is identifying what it is you are trying to achieve. Identifying clear business goals will enable you to build a step-by-step plan to ultimately achieve these aims. 

Dr Gero Baiarda, Clinical Director at GPDQ, states the importance of knowing your practice’s aims in our ‘Launching a Private Practice’ ebook. He states that identifying your purpose, vision, and mission, will help keep you consistent and accountable to your goals. Knowing exactly what you are seeking to achieve in your business will mean that your business plan is tailored to achieving that goal at every step.

2. Get to know your business in numbers

To write a business plan that will enable you to reach your goals, you need to understand how your business is currently performing . Obtaining a complete and in-depth overview of the health of your business will help you to make concrete and achievable goals based on accurate data. 

Tracking data is also essential as you progress further with your business. You can’t make a successful business plan without knowing your business inside and out, and you won’t be able to understand how you are performing against your business plan without measuring data as you go.

Make sure you have access to business management tools that allow you to track the key data, such as revenue, patient numbers, cash flow, and other financial and patient demographics which will be useful for your growth goals.

Find out more about Semble’s business management tools here.

3. Break it into smaller steps

With a business goal in mind, the best way to create a business plan is to break it down into smaller, achievable steps. By doing this you will be able to map out a clear trajectory for your business over the next months or years and it will be easier to track your progress against your aims and expectations. 

Work backwards from the end goal to create smaller steps, each with a clear, quantifiable goal, such as reaching a revenue goal in a certain month or number of patients reached. If you work well with visuals, experiment with creating a visual diagram or board that you can keep close at hand to check and measure up against as you grow your healthcare business.

4. Identify key successes and failures

A business plan is about improving and growing your business, and to do this it is important to understand your strengths and weaknesses. Consider what has worked well for your business and what has not. 

For example, how is your staff management? Does your team work well together, understand their individual roles, and achieve tasks efficiently ? 

By identifying main strengths, you can work them into your plan to help you improve business performance. Identifying any weaknesses will enable you to know areas that need some attention and a greater input of time and resources to help you build an all-around stronger business. 

5. Get to know your target market

An understanding of your patient’s needs is essential to performing well in the market. Your patient population will depend to an extent on the healthcare services you are offering, but conducting key market research into the specific needs of your patients will help you to create a unique and tailored service that will perform better in the market.

Oliver Capel, Managing Director at Medico Digital, explains that market research and patient demographics such as age, gender, religion, income level, and more, can help you to cultivate a more targeted and effective marketing strategy because it provides insight into what sort of marketing materials will be best received by patients. For example, a young mother will respond differently to marketing than a 60-year old male retiree.

Explore how to use patient market research to improve your business performance in Chapter 2 of the ‘Launching a Private Practice’ ebook . 

6. Schedule regular time for business management

You can’t expect to see results in business growth if you don’t invest the time and energy into nurturing it. Whether that be investing in your own development with business management learning time, or setting aside a weekly hour for growth strategy and progress reviewing, it is essential that you carve out time to work on your business.

There are many online courses, books, and guides for basic business management which could help you learn invaluable skills for managing and growing your healthcare business.  Start by identifying areas where you have less knowledge and schedule in an hour a week for learning, planning, and strategy. 

Even as little as one hour a week will have a profound effect on your business skills and management, and the results will soon be evident!

7. Get your team on board

There is little point in setting goals if your team is unaware of what they are. Sharing business goals with your team and employees means that everyone can do their part to reach certain milestones and improve the business. It also helps to create a stronger network that you can rely on to carry out delegated tasks and ease the burden of both business management and the day-to-day running of your private healthcare practice.

Whether it be improving customer service with better bedside manner, or making changes to workflows to improve efficiency, making your team aware of the end goal will help them understand why change is needed and thus more likely to get on board.

Get started writing your business plan with this free private healthcare practice business plan PDF!

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100+ Sample Healthcare Business Plans and Templates

Without healthcare, some people with medical conditions would be unable to survive, and we would not be able to access medical assistance when needed. Access to healthcare and treatment is something that is a right by law in many countries, and it should be treated as such.

There are a lot of reasons why you might be considering setting up a business, and there is no better time to start taking the first step. Entrepreneurs have already begun to use the healthcare system to their advantage, and it can be a great source of additional income for those who are wanting to set up their own business or even begin saving for retirement.

Creating your own business within the healthcare field can open a lot of doors for you. That is why this guide has been created to help you learn everything you need to know about starting a healthcare business. It has been aimed at people who want to get started on a new project that will eventually allow them to build a reputation as a local entrepreneur.

Sample Healthcare Business Plans

1. assisted living business plan.

Residential assisted living facilities are created for people who are independent but require day-to-day assistance to be able to carry out basic tasks such as taking their medications, bathing, feeding themselves amongst others. It is important to state that people in licensed residential care may require more assistance daily as they usually have complex health care needs.

2. Drug Rehab Business Plan

A drug rehab center is a specialized clinic that has medical staff who provide outpatient services that are related to the diagnosis as well as treatment of alcohol, drugs, and other substance abuse. The size of this business depends on the kind of firm it is, as for-profit firms tend to be larger and more highly concentrated in the industry than public and nonprofit firms.

3. Sober Living Home Business Plan

A sober living house (SLH), which is also known as a sober home is a facility that provides safe housing and supportive, structured living conditions for people moving out of drug rehabilitation programs. Sober living houses serve as a transitional environment between such programs and mainstream society.

Many sober living facilities also accept people who are in recovery from substance use disorders but have not recently completed a rehabilitation program.

4. Foster Care Group Home Business Plan

A group home is a community-based, long-term facility for specific types of residents (juveniles) who cannot live with their families due to behavioral issues. It is important to state that some group homes treat the mentally ill and the disabled.

5. Non Medical Home Care Business Plan

With more senior citizens preferring to age at home for as long as they can, there is a massive demand for non-medical home care providers in the United States. According to reports, non-medical home care has become one of the fastest-growing businesses – but it is not to be confused with medical home care.

Medical home care providers tend to offer licensed nursing and rehab services that are prescribed by a physician with stipulated guidelines.

6. Non Emergency Medical Transportation Business Plan

Non-medical transportation businesses help people get to pre-scheduled healthcare appointments, including doctor visits, rehab, clinical testing, follow-up exams, and more. In recent times, the demand for safe and reliable public transportation for people with medical issues and disabilities, particularly in rural communities, has witnessed massive growth.

According to industry reports, this demand is expected to continue growing and also remain strong in any economic climate.

7. Elderly Group Home Business Plan

An elderly group home is a facility or business that provides a comfortable living environment that is restricted in the kind of care they provide. This means that an elderly group home does not provide the high level of care provided at nursing homes, but they give elderly people the option to live among peers.

8. Maternity Group Home Business Plan

A maternity group home or preferably the Maternity Group Home Program (MGH) is a niche-group home facility that supports community-based, adult-supervised, transitional living arrangements for homeless pregnant or parenting young women who are between the ages of 16 and 22, as well as their dependent children.

The maternity group home business is designed to provide an environment where young mothers can function independently in the community.

9. Hospice Agency Business Plan

A hospice agency is a public agency or private organization or a subdivision of either that is engaged in providing care to terminally ill individuals, and has a valid Medicare provider agreement. The industry rakes in a whooping sum of $24 billion annually with an annual growth rate projected at -0.2 percent between 2016 and 2022.

10. Medical Spa Business Plan

A medical spa is a business that typically offers numerous health treatments. Unlike regular spas, medical spas pay detailed attention to more difficult issues such as widespread discoloration and wrinkles. The treatments include deeper chemical peels, injections (such as Botox), and laser treatments.

11. Medical Supply Business Plan

A medical supply company is a business that purchases medical and surgical equipment, instruments, and supplies, stores these items at distribution centers, and delivers these products to medical practitioners, clinics, hospitals, etc.

Recent data made available online shows that the global medical supplies market was worth USD 80 billion in the year 2019 and it is projected to reach USD 95.04 billion by 2026.

12. Teeth Whitening Business Plan

A teeth whitening clinic is a business that primarily provides elective dental services that improve the appearance of teeth and gums. Some teeth whitening clinics go as far as offering services that include cosmetic crown and bridgework, veneers, inlays and outlays, and direct bonding which is not generally covered by insurance, making them highly discretionary.

Available data from the United States shows that the value of the global teeth whitening market amounted to about 6.14 billion U.S. dollars in 2020, and is forecasted to grow to 8.21 billion U.S. dollars by 2026.

13. Medical Waste Disposal Business Plan

A medical waste disposal company is a business that disposes of medical waste. Medical waste essentially comprises wastes generated in the hospitals, laboratories, clinics, diagnostic centers et al. This waste can be harmful to humans if not properly disposed of.

14. IV Hydration Therapy Business Plan

An IV hydration therapy clinic is a business that offers hydration therapy to its patients. Hydration therapy is a simple treatment that delivers fluids directly into your bloodstream through a small IV inserted into your arm.

The fluids may also include vitamins, electrolytes, antioxidants, and even medications. Available data from the United States shows that the global intravenous solutions market size is expected to reach USD 18.9 billion by 2028 according to a new report by Grand View Research, Inc.

15. Adult Daycare Business Plan

An adult daycare center is a non-residential daycare facility that provides support in the area of health, nutrition, social, and daily living needs of adults in a professionally staffed, group setting. Adult daycare is designed to provide adults with transitional care and short-term rehabilitation especially when they are discharged from the hospital or when their family members are not around to take care of them.

How to Start a Healthcare Business in 2023

If you have taken the time to carefully research your business idea, and have decided which direction you’d like to go down, then it is time to start thinking about how you want to go about creating your healthcare business. These are some of the steps that you should take on your journey to setting up your business, and some key things to think about.

1. Conduct Your Own Market Research

Firstly, an essential first step when it comes to creating any kind of business is the market research. This step cannot be stressed enough, and you should carefully consider whether there is a gap in the market for your product or service.

Luckily, within the healthcare industry there is often a lot of room for improvement, so you could use this as an opportunity to provide something that you think your local healthcare system needs.

2. Create a Business Plan

Try to be as specific as possible in order to know what direction you plan on taking your business down. This can allow you to approach local funders who might be interested in helping you out, because they will know where their money will be going as well as the fact that you have worked hard to find a gap in the market.

It is better to be over prepared, because it allows you to adapt without worrying about the consequences as much. In addition to this, creating a more detailed business plan can help you follow an appropriate time frame, and encourage you to stay passionate about your agenda.

3. How Will You Fund Your Business?

If you are new to the world of entrepreneurship, you might not know that businesses can cost a lot of money. Creating brands and advertising alone can be very expensive, which is why you should allow the time to think about how you intend to fund your business.

This can be using your savings account, or even asking local investors or other entrepreneurs if they would like to invest in the set-up of your business for a certain percentage of revenue once you begin to see profit.

If this isn’t an option for you, then you should consider applying for a loan. Schedule a meeting with your bank supplier in order to see what your options are, and what kind of interest rates you would face during the repayment period.

4. Will You Have a Designated Business Location?

Some people find it easier to imagine their business in a physical location, whether that involves a small store or setting up a stall at the next community event. However, it largely depends on the service offered.

For example, if you are providing at-home care or online services then there is less need for a store, whereas you might want a business location if your business involves a personal touch. This can include selling medical supplies, or specially designed uniform for hospital workers.

5. Identify Your Business Structure

This is something that new business owners tend to overlook, but it is important to think about your business structure because it will determine how your business functions legally.

From taxes to workers’ wages, the business structure is an important part of any business when it is in its early stages. Ensuring that you have taken the time to carefully consider business structure can allow you to focus on generating clients and a customer base during the later stages.

6. Decide On Your Business’s Name

This can be more challenging than you might have anticipated, because a catchy name can be a little difficult to come up with. Try to find something unique to you and your business that isn’t too long. A good business name is easy to remember and say. It is also worth avoiding using a name that already exists because this can cause confusion as well as legal complications.

7. Register Your Business

Once you have a unique name and rough idea about your branding, you should register your business. This can help to legally protect your brand name, and make it feel more legitimate. Registering your business can allow you to claim ownership of your brand name and ensure that nobody else can use it for their business.

8. Apply For The Correct Taxes

You do not want to get into legal trouble within the first few weeks of business, so you should apply for the correct taxes that agree with your business structure as soon as possible.

When completing forms like these, it is worth doing your own research in order to figure out which taxes you need to pay and what to apply for. Another thing that you can do is speak with a lawyer about what steps you need to take in order to make your business legal.

9. Open A Business Bank Account

This can be done using an Employer Identification Number (EIN), which is also needed to deal with the taxes of your business. Opening a business account can allow you to apply for more benefits within your bank supplier, as well as using it to apply for business loans if you need one.

Once you get to the stage of growth that you can hire additional employees, you will want to use your business bank account in order to pay wages as well as your own income.

10. Apply For Your Business License And Permits

Make sure that your business is running legally in order to prevent additional challenges from arising. This can be a complex process, and it could be worth consulting a lawyer about what licenses and permits you will need. Because the requirements differ between state, industry, and location, it is definitely worth seeking appropriate advice before applying for the right permits and licenses.

Tips on How to Build a Sustainable Healthcare Business

In order to ensure that your business will stay as active as it can be over a long period of time, you should consider some of the following things. This can allow you to continue to make money, and keep investors as well as your clients happy.

Some businesses tend to hit the ground running for several months, and then begin to plummet. Try to do some of the following things in order to keep your business gaining momentum for as long as possible.

a. Keep Yourself Educated

Always understand what is happening in your business and industry as a whole. This can allow you to anticipate your business’ next moves as well as figure out how you can adapt to the changing market. Take the time to learn about how current affairs are affecting the healthcare industry as a whole, because it can help you to make predictions and figure out what you should do to stay on top of your business.

b. Know Your Competitors

They always say to keep your enemies close, and it’s mostly so that you can figure out what they might be planning next. Keep a close eye on your competitors and try to figure out how their marketing strategy differs from yours. You could also compare their branding and target audience, depending on the specific service provided.

c. Build a Strong Business Plan

This can be something that sets you apart from other businesses on the horizon, because a good quality, strong business plan allows you to stick to your guns and focus on the moment. Rather than worrying about what your next moves are or what you need to change, you can rest easy knowing that you have already created a comprehensive business plan.

d. Build a Strong Branding Strategy

Try to think about how you can make your brand stand out from the crowd. Create a dilemma that needs to be solved, and offer a solution through your business. Try to use this to generate local interest, because these will be your main clients unless you set up an online site.

e. Build a Strong Marketing Strategy

Again, try to present your business as a solution to a problem, whether that is a hole in the market or lack of resources. Try to do your own research in order to figure out how different businesses in the past have failed, and which were more successful.

Make your research more specific by comparing your competitors’ marketing strategies and think about how you can adapt that and make it stronger.

f. Know Your Target Audience

This depends largely on the type of service your business provides, but it is worth knowing your target audience so that you know how to reach them. In addition, it is worth changing your language, tone, and advertising platform depending on your audience.

For example, younger people might not want to receive a pamphlet in the mail, whereas older audiences might not appreciate digital marketing as much.

g. Always Stay Passionate

This is something that cannot be underestimated. Try to focus on your audience, competitors and do what you need to do to stay motivated.

Setting up a business can be challenging, which is why a lot of people need to be reminded to stay passionate about their brand. It can be easy to lose sight of what is important to you, so you should try to keep some level of perspective and stick to what works best for you.

How to create a business plan for a medical practice

Starting a medical practice is no small feat. You may consider it lucrative and the right step for your career but have you considered all that it takes to start and run a medical practice? This is what a business plan is for. 

A business plan is a strategic planning document that lays out in detail the objectives and goals of a company and also how the company plans to achieve its goals. A business plan can be considered a road map for any business that details a business’ profile, products and services, marketing, financials, operations and organizational structure.

Developing a business plan requires strategic planning to identify the mission and vision, target audience, operations and financials of your medical practice. This is a crucial step when starting your medical practice. In this article we will share about how to write a business plan for a new medical practice.

Why you need a business plan for a medical practice

Just like any other business, a business plan is very important before starting a medical practice. In a recent Sermo poll, 52% of respondents indicated it is important to get a business plan for your medical practice and we will share reasons why. 

• A business plan helps to define the core essence of your medical practice. With a medical practice business plan, you can properly define your practice’s vision, mission, goals and target audience.
• With a medical practice business plan, one can properly estimate the financial cost of starting up as well make financial projections for a time period. 
• A medical business plan can help define marketing for your practice and set SMART marketing goals.
• A medical business plan helps to strategically identify and define all the stakeholders relevant to your practice and their role in the success of your practice. 
• A SWOT analysis is a core part of any business plan. This will help the medical practice understand its strengths, its competitors, opportunities and the environment where it plans to operate in. 

Types of business plans for a medical practice

There are different types of business plans for different business types. For a medical practice, these two types of business plans are most common: traditional business plan and lean business plan. 

A traditional business plan is a more robust type of business plan that covers a wide range of topics regarding business planning. A traditional business plan usually covers areas such as products and services, financing, marketing and organizational structure. It is often used as a guide for business operations and an effective tool for communicating the medical office business plan to investors and business partners. 

A lean business plan on the other hand is a more succinct version of a traditional business plan. A lean plan is faster and easier to write. It focuses mainly on strategy, financials, important dates, milestones and activities. Think of a lean business plan as being more straight to the point. Some people use this business plan when trying to grow their business and achieve certain goals at specific timelines. 

How to create a medical practice business plan

There are different medical practice business plan templates but most cover four major key areas which are company profile, sales and marketing, operations and financials. 

Let’s take a look at what an ideal business plan template for medical practice should look like. 

1. Executive Summary 

The executive summary is usually the first section in a business plan. It should briefly describe the medical practice, products and service offerings, target audience, the organizational structure and financials. 

Executive summaries should be kept short and are usually no longer than a page. However, it should have as much important information as possible. The executive summary is usually the page of interest when your business plan is being reviewed by investors and business partners. 

2. Company description 

This section of the business plan allows you to define your medical practice in full detail. It should include the practice’s vision and mission statements, its goals and objectives and products and offerings. 

This section should detail the type of medical services your medical practice will be offering. If there are other medical experts who will be supporting your offerings, this is a good section to define that. This section should also describe your target patients. 

 By creating an ideal patient profile, medical practices can better describe their target patients. The ideal patient profile should describe patients best suited for the types of services you offer and who can afford to pay for your services. 

3. Market Analysis

Your medical practice is most likely not the only medical practice in your location and there may be alternative options where your patients may go for treatment or medical services. The market analysis section in a medical business plan should describe the current market for your services and present competitors. 

The market analysis section may require conducting a market research to understand the patient demographic and your competitors. 

4. Marketing and Sales

The importance of marketing in a business cannot be overemphasized. In a Sermo poll, 64% of physicians indicated attracting and retaining patients as the biggest factor in the success of a new practice. The marketing and sales section of a medical business plan should describe how the medical practice intends to attract and retain its target patients. It should describe the marketing plan, marketing activities and the marketing goals of the medical practice. 

When describing this section, keep in mind the 7Ps of marketing. This includes the product, people, price, promotion, place, packaging and positioning. Each of these must be considered when developing a successful marketing strategy. 

The marketing and sales section is also a good place to include a SWOT analysis. A SWOT analysis is a critical analysis of the Strength, Weakness, Opportunities and Threats of the medical practice. 

5. Operations

The Operations section is a very important part of the business plan. It describes how the medical practice will work. Things to cover include, working hours, staff strength, location, technology, outsourcing and logistics. 

The operations of a medical practice is very sensitive and it would help if a lot of things are defined before starting the business. For instance, the location and layout of your medical practice should be well captured and defined in the medical business plan. You should also consider outsourcing. Are you handling medical billing in-house or will it be outsourced? Will you be handling recruitment or it will be outsourced to a staffing agency? 

Also supplies and logistics of medical materials should be considered and defined. If your medical practice will have a pharmacy, how will the drugs be sourced? These are some of the important questions that should be answered in this section. 

6. Milestones and Timelines

This section involves setting and defining achievable milestones and corresponding deadlines. This way it is clear what needs to be done and by when it needs to be completed. 

For setting up a medical practice, milestones can include major events like renting a place, purchase of medical equipment, recruitment of staff and set up of medical devices. 

7. Organizational structure

A business plan is not complete without defining the organizational structure and/or team that will carry out business operations. In this section, define the management team and their required qualifications. It is also important to define roles of the management team and projected salaries. 

At this point, one can also add in the hiring plan for other members of the organization. Define the other roles, how they will be recruited, skill set of interest and how much they will earn.

8. Financial plan

A solid financial plan must be included in every business plan. For a start up medical practice, the financial plan should include start up costs. The financial plan should also include a cash flow forecast that shows projections of cash inflow and outflow over a time period. This is usually broken down on a monthly basis. 

A good financial plan should tell a story of how the business will grow income-wise. If your medical practice has already been established, other financial statements like income statements, balance sheets and cash flow statements will help give a better picture of the financial stability of your medical practice. 

9. Appendix

This is a section reserved for miscellaneous topics. Other supporting documents such as pictures, charts, reference letters that may be of interest can be added in this section.

Building a successful medical practice starts with writing a good medical business plan. Start by strategically thinking about your medical practice. Using the guide above of a private practice business plan template, you can think through all the important aspects of starting your medical practice and write an effective business plan that will help the process. 

Don’t do it alone, get help from other physicians

For more useful tips that will help you start up your medical practice, sign up on Sermo today. Engaging with more than 1 million physicians across 90 specialties and 150 countries, Sermo offers a unique physician-first online community that allows clinicians to communicate about issues that are important to them and their patients.

More physician resources

A complete guide to paid physician surveys

What is Continuing Medical Education (CME)?

Maximizing your survey earnings: Tips for physician survey participants

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Healthcare Business Plan Template [Updated 2024]

Healthcare Business Plan Template

If you want to start a healthcare business or expand your current healthcare business, you need a business plan.

The following healthcare business plan template can be used to craft a business plan for a medical practice and all types of healthcare practices. As such, you can use it to create a business plan for a healthcare startup, business plans for family medicine, chiropractic, occupational health, physical therapy and/or psychology practices among others.

You can download our Business Plan Template (including a full, customizable financial model) to your computer here.

Below are links to each of the key sections of a free Healthcare business plan example: Healthcare Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

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Healthcare Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

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18 Health Care Business Ideas for Passionate Entrepreneurs

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

The health care sector is an amazing place for aspiring entrepreneurs to open up shop. Exploring health care business ideas is smart for lots of reasons.

There’s an opportunity to do a world of good by serving an aging American population and helping those struggling with the national drug crisis. There are lots of new medical and technological advances, and widespread interest in health and wellness, too. And those are all great incentives for passionate entrepreneurs.

Plus, these factors combined mean there's a thriving market for health-related businesses. Aspiring new business owners can turn one of many health care business ideas into a viable way to make a living, including those entrepreneurs who want to work remotely.

This list of health care business ideas should get you started — and maybe inspire you to explore starting a business.

Why businesses in health care are worth exploring

Nationwide spending on health is projected to grow at an average rate of 5.5% annually through 2026. That’s one percentage point faster than the national GDP is projected to grow during that same time. And by 2026, health care is projected to account for nearly 20% of the GDP.

Employment in health care-related occupations is projected to grow 18% from 2016 to 2026, much faster than the average for all occupations, according to the U.S. Bureau of Labor Statistics. Nearly half of the 20 occupations projected to have the highest percentage increase in employment by 2026 are in the health care industry.

What that spells is a lot of opportunity.

One big reason for the surge in health care spending: By 2030, the Census Bureau projects, approximately one-fifth of the population will be 65 and older. This will be the first time in history that the number of Americans over age 65 will surpass the number of Americans under 18.

Keep those numbers in mind as you look through this list of health care business ideas.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

18 health care business ideas to consider

1. medical transcription services.

Medical transcriptionists transcribe doctors’, nurses’ and other health care practitioners’ voice recordings into written documents for patients’ records. Speech recognition technology has definitely improved the efficiency of medical transcription, sure. But it certainly hasn’t yet replaced the need for human transcriptionists to review and correct the transcriptions to make sure they’re accurate.

This is a great business to run from home because you can make your own hours, and all of the work can be done digitally. Plus, if you’re digitally savvy and can create an efficient (and secure) way to share files, you can really one-up the competition.

2. Medical records management

Start a service that manages medical records for hospitals, clinics and doctors’ offices. You can work with clients to identify the best records management systems, implement them and provide their staff with training on how to use the systems.

Another approach? You can offer full-service medical records management, and clients can outsource the work to you. This can be helpful for boutique practices and sole practitioners who need the organization but can’t afford the in-house staff.

3. Physical/occupational therapy center

Physical therapists help patients recover from injuries to regain their full range of motion and reduce pain. Occupational therapists provide more specific therapy to help patients perform tasks of daily living, such as dressing themselves or feeding themselves. You can specialize in one or the other, or put both under one roof. Note that this does require certification.

4. Develop a health care app

Both health care providers and individuals alike are increasingly turning to mobile apps to track, record and manage medical conditions. The world is your oyster if you’re skilled in app development, so you might want to consider developing your own health care app targeting these markets. Do some field research to find out where your skills can fit a need.

5. Diabetic care center

According to the CDC, 9.4% of all Americans either have diabetes or are prediabetic . Opening a diabetic care center can help diabetic patients improve their quality of life by providing nutrition counseling, dialysis and other medical services. You can also provide preventive help such as teaching healthy eating habits or providing support groups for diabetics.

6. Home health care service

A home health care business provides in-home medical care for recently discharged hospital patients, patients with chronic health conditions, seniors and others who need assistance managing their health.

In states with rapidly aging populations, like Florida and California, not only could this be a benefit to the community — but also a strong business prospect for you.

7. Medical foot care

A growing population of seniors and diabetics means more need for foot care services. Something as simple as trimming toenails can be impossible for seniors and overweight patients who can’t reach their feet. You can either open a foot care clinic or save patients a trip to the podiatrist by providing mobile foot care services in their homes or in a van. You’ll need to train as a podiatrist or hire one.

8. Drug treatment/rehabilitation center

As drug use has escalated to become a national crisis in the United States, legitimate places for people to seek treatment for their addictions and rebuild their lives are needed more than ever. Every day, more than 115 Americans die after overdosing on opioids, according to the National Institute on Drug Abuse .

Open a drug treatment and rehabilitation center to help clients with drug addiction. You can specialize in different types of patients, such as juveniles or more senior patients.

9. Childbirth services

Today's expectant parents want to control every aspect of childbirth, and that often includes having a midwife or doula present at the birth. The use of midwives is increasing , according to the American College of Nurse-Midwives.

Midwives are trained health care providers who assist women during childbirth, while a doula is more like a pregnancy coach who helps couples arrange all aspects of the birth and caring for the newborn. You can either become certified yourself or open a business that employs contractors under your umbrella.

10. Medical billing service

Medical billing requires performing complex coding when submitting insurance claims. Keep in mind, certification is required in this field to ensure that doctors and other health care practitioners get paid.

Although big hospitals and health care organizations often have in-house staff, small medical practices that don’t have time to manage billing and coding themselves are an ideal market for medical billing services. Acquire and learn medical billing software, get trained in proper coding and target these smaller medical practices to take medical billing hassles off their hands. And you can even earn your certification online.

11. Nutritionist/dietitian

If you want to help people improve their nutritional intake and habits, you can build a business as a nutritionist or dietitian. Only nutritionists who get a license with the Commission on Dietetic Registration, or CDR, can advertise themselves as dietitians. Some states regulate nutritionists and others don’t.

You can specialize in different types of clients, such as sports nutrition, nutrition for weight loss or holistic nutrition.

12. Alternative health care

Acupuncture and massage therapy are two alternative health care business ideas that are becoming more popular. Many are using these services to supplement their traditional medical treatment — or as a primary treatment unto itself.

Check with your state to see what the requirements are to practice; they vary across the country. Even when health insurance plans don’t provide coverage, Americans are more willing to pay out-of-pocket for these types of care than they used to be.

13. Health information website

If you have health care expertise — or access to people who do — consider starting a website to provide health care information and advice. You can create all kinds of content, such as podcasts, YouTube videos and even online classes, in addition to blog posts.

You might even be able to get health care experts to contribute content for free in exchange for the publicity your site offers. There are a lot of options; just make certain that you do some market research to figure out the white space to fill, and find viable revenue streams to make your business highly sustainable, too.

14. Medical supply sales

Seniors, people with disabilities and those with chronic illnesses have an ongoing need for medical supplies and equipment. This can include walkers, braces, bedpans and more.

Although you can open a physical store, keep in mind that your target customers will often have difficulty getting to your location, so an online store is likely a better bet. Again, research here will be key so you can make sure that you’re stocking the right products and marketing in the right places.

15. Stylish uniforms for medical professionals

Medical professionals who wear scrubs to work are always looking for affordable and durable uniforms. They’re also looking for stylish options — and those aren’t as easy to find. Start a store selling scrubs, comfortable shoes, lab coats and other gear for health care professionals. You can design the goods yourself or source them from multiple places, and encourage your customers with word-of-mouth incentives to drive sales.

16. Hearing aid dispensary

Because hearing aids generally aren’t covered by health insurance, this can be a lucrative health care business idea if you find the right customer base. You might want to open a location to provide hearing tests, recommendations and hearing aid fittings and care. You could even outfit a mobile van to come to customers' homes to clean and repair their hearing aids as an extra service.

17. Respite care service for caregivers

Whether they’re parents caring for severely disabled children or adult children caring for aging parents, caregivers have a stressful job. Provide a much-needed break for caregivers by starting a respite care business. Your caregivers can come in for a few hours or a few days, giving family caregivers a chance to rest.

18. Medical marijuana dispensary

As a growing number of states legalize medical marijuana, this $8 billion industry is projected to continue its growth, according to IBISWorld . Opening a medical marijuana dispensary can be a profitable business in the right location; however, changing state and federal regulations could affect your startup. (Marijuana is still illegal under federal law.)

Frequently asked questions

How do i start a health care business.

When you start a health care business, it can be helpful to begin by writing a business plan, registering your business and hiring employees. While all businesses need to obtain any necessary licenses, permits and forms of insurance, health care businesses may require earning professional designations or taking out extra forms of insurance. Research what you need to run your business safely and legally before you launch.

How do I start a home health care business?

Starting a home health care business requires a high level of professionalism, even if you’re running a business where the bulk of the work will occur in your clients’ homes. For example, you may still need office space to train your employees. Like starting any business, it is important to write a business plan, register your business and create proper business procedures. You should also obtain any necessary licenses, permits and insurance for running a business in your area, as well as for working within the health care industry.

How do I write a business plan in health care?

In general, a business plan is an organizational tool that business owners can follow when they need guidance. This document can also tell outside parties, such as investors, about your business and its value. A good business plan should include thorough research about your industry, market and competitors, as well as dive into your financials, products and services and your marketing plan. When writing a business plan in health care, it will be important to do heavy research on the industry, as well as outline clearly what medical services or products you will be offering and why you or your staff are qualified to run a health care business safely.

Start Your Dream Business

The bottom line

There are a lot of potential great health care business ideas for entrepreneurs interested in the health care sector — and many opportunities for health care business ideas to become real, sustainable businesses.

Be sure to check regulations, licensing, professional training or degrees needed for these businesses before you get started, and do lots of market research. Don’t forget that “care” part, of course.

On a similar note...

How to craft a successful home care business plan

Claim your free Nextdoor business page

Claim your business page to get discovered by customers and manage your recommendations

As a home care provider, you run your business with compassion and knowledge of the job and the local community you work with. After you’ve learned more about how to become a caregiver and how to start a home care business , you’re ready to formalize your ideas with a business plan.

How to create a home care business plan

Your business plan is an essential part of the portfolio you’ll present to banks, investors, and partners before launching your company. Every entrepreneur can benefit from a business plan that helps you turn your vision into action and strategize for success. For home care professionals, there are unique additions and considerations for your business plan. From determining your core local clients to developing the marketing plan to reach them, this guide will walk you through nine sections for your home care business plan.

1. The executive summary

The executive summary kicks off your business plan and hooks whoever’s reading it to learn more about your company and your proposal. Think of it a little like a sales pitch for your business and a preview of everything you lay out in your business plan.

A home care business summary should include:

• Your mission and the populations your business will serve 
• A list of your primary services 
• The demand for these services in your community
• What sets your home care business apart from competitors
• Your vision 
• A summary of funding needs

2. The company description

As a home care business working with clients in need, your professional background should be front and center. Your company description offers a snapshot of you and your business, and should include:

• The registered (or intended registered) name of your business
• The location of your company headquarters, and the neighborhoods, area, or city your business will reach
• Management, primary personnel, and their professional backgrounds
• Any licenses or certifications your staff has

Different types of home care services will need different certifications, like medical home care companies compared with senior transportation providers, for example. Make sure to research and include the requirements in your county, city, and state. 

If you’re in the preliminary stages of creating your home care business and haven’t secured the required licenses yet, mention any certifications you’re pursuing in this description.

3. Your business mission and goals

The mission and goals section of a business plan outlines the primary objectives of your company and how you plan to achieve them.

As more Americans advance into the senior age bracket, demand for credible home care businesses is rising. This need can help position your business for success and give you more opportunities to refine your mission and select specific populations to focus on. 

The need for home care help for senior relatives in particular has grown. As home care professional Christine Friedberg reflects, “I used to get on the phone and talk with clients about home care being an option for them or for their loved one, but it was like a new concept…For a long time, we were trying to educate the community about what home care was. Demand is greater than ever now.”

Medicare’s Triple Aim program may provide general inspiration for your own company goals. Their three pillars are :

• Centering and improving patients’ experience of care
• Improving health outcomes of patients served
• Mitigating the cost of care for individuals

From a business perspective, working with specific demographics may give you a leg up on funding. Based in Alexandria, VA, Griswold Home Care works with the area’s large population of aging veterans. To reach more of them, Griswold joined the cross-regional VA Community Care Network to provide in-home services to veterans needing extra support at home.

Not only was Griswold able to reach a specific community in need, but the program also helped this local home care business secure funding directly from the Department of Veterans Affairs . “We’ll see anywhere from 5 to 20 hours a week that the VA is covering, in terms of actually contracting with us directly. They pay us directly…so it’s very easy for the veteran to get in, take advantage of this program and take advantage of this care.”

In the home care industry, other demographics include:

• LGBTQ senior citizens
• People with Alzheimer’s
• People living with disabilities
• Non-seniors living with disabilities
• Adults whose first language isn’t English

Keep your demographic in mind as you refine your company’s identity and plan for growth. It will determine the steps you’ll take to fund your business and reach the neighbors who need you most.

4. Your services

The services section of your home care business plan sets the vision for what your business will specifically do. There are two main types of home care companies and services:

• Non-medical home care services – This type of home care business is not licensed to administer medical services or healthcare to its clients. Instead, they provide support, companionship, and home assistance. Services may include driving clients to doctor’s appointments, taking them to the park, or preparing meals.
• Medical home care services – Medical home care providers are staffed by nurses or other medical professionals licensed to administer medical care to their clients.

With the growing need for at-home healthcare businesses, some of the most common home care services include:

• Assistance with dressing, bathing, and using the toilet
• Companionship and diversion
• House cleaning and support with daily chores
• Transportation
• Hospice care
• Continued education for older adults
• Physical therapy and rehabilitation
• Prescription fulfillment services
• Administering medication
• Tracking vital physical or psychological health 
• Senior citizen relocation assistance
• Specialty nursing for a long-term illness or disability
• 24-hour emergency services

Get specific about what caregiver duties you’ll provide your clients, narrowing down your list with the most needed services in your local community. With 1 in 3 U.S. households on Nextdoor , you’ll be able to connect with neighbors, and your most important clients, with a free business page.

5. Your management structure

This section of your business plan establishes the legal status of your company, which affects other details, from the extent of your liability as the owner to how you’ll file taxes.

The most common business structures for home care providers are:

• Limited liability company (LLC)
• Sole proprietorship
• Partnership
• Corporation

To choose the right business structure for you, consider:

• Liability – Every business is financially and legally liable to compensate for injuries committed on their watch. Consult with an accountant to take stock of your personal assets to choose a framework that gives you adequate protection.
• Taxes – Your home healthcare business structure will determine how the profits you earn are taxed, whether through your business, on your individual tax returns, or a hybrid of both. As a general rule, the larger your company is, or the more shareholders it has, the more complex the tax process will be.
• Growth expectations – Whether your home care company will focus on your neighborhood or expand nationwide, your business structure should reflect your desired administrative capacity and set the stage for investors who want to scale alongside you. 

While S corporations and C corporations are often better suited for larger-scale companies, it’s possible to change the legal structure of your organization as it grows. Consider hiring experts, like a lawyer and an accountant, to help you with this stage of the process, especially if they have advised other local businesses in your area.

6. Your marketing plan

Show potential funding partners you know the modern home care market and set your local business up for success with marketing goals that cover the following bases:

• Digital marketing - In a job as intimate as home care, any new caregiver business begins on the local level. Sign up for a free business page with Nextdoor to instantly unlock a network of verified neighbors near you. Keep your business page updated with your story, photos, and contact information so local clients can find you and easily get in touch. Introduce yourself, share job listings, and keep neighbors updated on your business with free posts or hyperlocal advertising tools to reach more clients in specific ZIP codes you want to grow your business in.
• Partnerships – Qualified home care providers may be eligible to partner with care networks already plugged into local consumer demand. If properly licensed, apply to enroll as a Medicaid or Medicare partner. 
• Word-of-mouth marketing – Since home care professionals are a part of their clients’ and families’ lives, your local reputation will be important. Build trust in you and your services with testimonials on your website and recommendations on Nextdoor. 72% of neighbors there have been influenced by a business recommendation and 71% have shared one. Consider sharing your website and Nextdoor page with former clients to ask them for a recommendation.

Anything that makes your home care business unique, include in this section of your business plan. With a growing population of aging Americans, entrepreneurs are getting creative about the types of care they offer to suit different lifestyles.

Take Dr. Bill Thomas . He thought there should be a senior care option in place of the traditional nursing home so he created Minka, a company that builds small dwellings tailormade for seniors who want extra assistance, community, and autonomy in their advanced years. Says Thomas, “I think there will continue to be congregate housing, but the more choices people find in front of them, the more they’ll find something that suits them best.”

7. Your core financials

The next two sections cover your financial history with projections for your home care business’s future. This will be important for your business strategy, as well as for potential lenders, investors, or partners. 

The finance section of your home care business plan should include:

• Income statement
• Balance sheet
• Expected revenue
• A list of your assets and debts
• A summary of company expenses
• Desired loans

If you plan to enroll as a provider through a network like Medicare, mention in this section of your business plan.

8. Financial projections

This section of your home care business plan is important if you’re asking for an investment of any kind as it covers the funding you’re requesting, what you’ll use it for, and your plan to pay it back.

Financial projections should cover at least three years. Fortunately, the home care industry is slated for financial growth in the coming years. In the U.S. alone, the compound annual growth rate for home health care is projected to be 14.2% between 2021 and 2027.

However you plan to grow your company, speak with your local bank to discuss the full spectrum of financial options before finalizing your business plan. 

You can also connect with fellow home care professionals through Nextdoor for more information on the local home care industry in and around your neighborhood. This will help you get a realistic sense of your financial plan and the next few years operating your business.

9. Appendix

Your business plan’s appendix is where you’ll include any supporting or miscellaneous information for your business goals that didn’t have a place in the earlier sections.

Consider including:

• The resumes or educational and professional backgrounds of you, the owner, and your core staff
• Medical or non-medical licensing, or the licenses you plan to secure
• Any legal permits your business needs or the ones you plan to secure
• Bank statements, loans, and personal or professional credit history
• Real estate information about your business’ headquarters, if applicable

Make local connections through Nextdoor

As more Americans age, local caregivers are increasingly integral to the health of their communities. An effective home care business plan should tell this compelling narrative, sharing why there’s a need for your services and what you’ll do to fulfill them in your area. 

If you’re just building your local home care business, start close to home with a Nextdoor Business Page. Signing up is free, takes just a few minutes, and will help you spread the word, turning your neighbors into your first clients. 

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Creating a business plan for community health center capital projects.

This resource provides healthcare professionals with a hands-on approach to writing a business plan. While it focuses on health centers engaged in capital improvement projects, the suggested outline can be tailored to a variety of purposes.

Prepared with support from the Health Resources and Services Administration.

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The future of Medicare Advantage

Table of contents, payer considerations in 2024 as medicare advantage changes, sweeping changes to medicare advantage: how payers could respond, this year us health insurers have to navigate strong crosscurrents from demographic shifts, regulatory changes, and member preferences. how they react now can have an impact for years to come., by gabe isaacson, dan jamieson , sonja pedersen-green, and cara repasky.

The undeniable story of early 2024 for US health insurers has been the sustained economic pressures that Medicare Advantage (MA) payers are experiencing. This was borne out in 2023 year-end financial results, with several MA payers pointing to inpatient and outpatient care utilization being higher than expected, consequently increasing the medical-loss ratio.

Looking ahead, the financial pressure on payers could worsen. In its 2025 advance notice for new payment rates, the US Centers for Medicare & Medicaid Services (CMS) notes that there will be an aggregate revenue growth (3.7 percent) 1 “2025 Medicare Advantage and Part D advance notice fact sheet,” CMS, January 31, 2024. when the increase (3.86 percent) driven by the risk score trend is included. Payers’ estimates of this number, however, vary widely.

Taken together, these headwinds only exacerbate the imperative for MA payers to contain costs. Savings will need to come from both medical costs and value-based care, as well as administrative expenses and product design changes. Yet none of this lessens the need to invest sufficiently to achieve growth expectations and Star-rating aspirations.

Cost-containment imperatives don’t lessen the need for MA payers to invest sufficiently to achieve growth expectations and Star-rating aspirations.

Higher utilization in 2023 was likely spurred by delayed care caused by the COVID-19 pandemic and other acute triggers in excess of historical trends. As the extent and longevity of these acute triggers are uncertain, payers can continue to monitor the research. But in the longer term, they can also continue to focus on how the aging of the Medicare population is likely to continue driving utilization, indicating that this could be a new normal. Similarly, some other seemingly gradual changes could nonetheless be disruptive this year.

Besides planning for demographic shifts, payers will need to navigate changes to Star ratings and rethink product designs and distribution channels. All of these factors are expected to complicate growth and revenue. As we consider the decisions that payers will need to contemplate, five key trends are coming into clear focus for the year ahead: the need for a product reset, an aging population, Star-rating pressures, opportunities in special needs plans (SNPs), and broker channel constraints.

Product reset

The cost-containment imperative for MA payers means that a focus on ROI in product design is already emerging as an undercurrent in 2024 and is expected to be a priority in the 2025 bid cycle. Regulatory changes are putting pressure on top-line revenue and may seemingly warrant retrenchment, but instead we suggest that payers make calculated trade-offs and reevaluate their portfolios. In recent years, with more cash on hand, the focus has been on increasing product richness—for example, through new and more generous benefits, increasingly in cash and cash-equivalent forms—to drive growth.

However, as CMS starts to ask more questions on benefit utilization to assess efficiencies, 2 David Kopans and Sua Yoon, “CMS upends Medicare Advantage supplemental benefits data reporting for payers,” DLA Piper, February 27, 2024. we expect to see a more triangulated focus on designing benefits for not just growth but also retention (for example, ease of use and vendor stability) and member outcomes (for example, proactive engagement in seeking care and flex card allowance focused on medical coverage rather than broader retail access). Even with possible new reporting requirements and nascent recommendations regarding standardization, supplemental benefits are expected to go from being nice to have to an offering that provides meaningful strategic upside. With the number of plan options increasing every year, the market may have reached a saturation point, leading to benefit designs that evolve from a buffet to a curated menu.

Payers were clearly grappling with these choices in the 2024 pricing cycle. Some pulled back in select markets and aligned investment to risk-bearing providers, whereas others employed a broader stance to deliver richness across markets in pursuit of a nationwide approach to membership. 3 McKinsey analysis of CMS landscape files. In 2024 and beyond, payers may see more value in having a concise narrative for distribution partners and beneficiaries rather than the “all things to all people” approach of recent years.

In 2024 and beyond, payers may see more value in having a concise narrative for distribution partners and beneficiaries rather than the ‘all things to all people’ approach of recent years.

A critical question for this year is whether the market has reached a tipping point in benefit generosity focused on growth and will shift to an environment in which payers are more intentional about ROI through member retention and improved health.

Aging population

Nearly half of the MA-eligible population will be aged 75 or older by 2030, up from roughly 40 percent at the present time. 4 McKinsey analysis of US Census Bureau data. This increase, along with labor-shortage concerns, has triggered rising qualms about a potential crisis in eldercare. Healthcare worker vacancies reached 710,000 in May 2023, and the educational pipeline indicates that the gap is likely to expand in the next decade . This makes 2024 a pivotal year to put in place solutions to rebuild the depleted workforce of doctors, nurses, certified nursing assistants, home health aides, nursing home workers, and other integral supporters of eldercare.

Besides the foundational solutions needed to address workforce challenges, we expect to see a shift toward next-generation care models to better help the higher-need aging population access the right care at the right time at the right cost. These models often use technology and data to personalize care through, for example, wearables, remote monitoring, telehealth, and sophisticated data platforms. This responsibility falls heavily on payers—not only those that already own many of these services, but also those that shoulder the responsibility of engaging members to navigate this complex web.

Of crucial concern are whether the emerging crisis will prompt those payers that aren’t already vertically integrated to begin down this path, whether it will encourage those that are vertically integrated to continue with M&A and investments in healthcare delivery, and if the next decade of investment will vary from the primary care–centric investments to date.

Star-rating pressures

Another year brings another set of changes to Star ratings for payers to adapt to. For one, implementation of Tukey method guardrails for rating year 2024 will raise the bar on the Star program . The new provision nixes performance outliers from calculations, which in turn contributes to more challenging cut points. Also in the current rating cycle, plans will face the deweighting of member experience measures, which will place relatively more emphasis on clinical and pharmacy metrics. 5 “The impact of Stars 2024: An interview with industry leader Mick Twomey,” blog entry, AdhereHealth, October 20, 2023. Payers will need to focus on member and provider engagement through both omnichannel outreach and an on-the-ground presence, an area that has traditionally seen lower investment. And it could well be that clinical and pharmacy metrics, even when properly collected, won’t affect Star ratings as positively as member experience measures have.

Looking ahead, another important change to the Star program is that a health equity index will replace the reward factor, which benefited plans with high and consistent performance across various measures. The index, though, will do more for plans with high performance on a subset of measures for their low-income-subsidy, dual-eligible, and disabled populations. For payers with fewer of these members or less experience in serving these populations, building out these capabilities will be a multiyear effort. We expect to see payers invest in these populations through both traditional care and addressing social determinants of health.

A vital matter is whether payers can adjust to the new guidelines and reverse the downward trend in Star ratings over the past couple of years.

Opportunities in SNPs

The market for SNPs, driven by both demographic and regulatory trends, will continue to be an area of increased focus. As top-line MA population growth begins to slow, payers are continuing to seek out pockets of growth, and chronic-condition SNPs may be an emerging opportunity. They grew faster in last year’s enrollment period than dual-eligible SNPs (D-SNPs) did for the top three payers.

D-SNPs, however, remain the largest of the SNPs. Recent years have seen substantial growth in their population, with payer entry and investment to match. This isn’t lost on state governments. While not a nationwide phenomenon, more states continue to move into highly integrated and fully integrated models for the D-SNPs. New models are expected in 2026 for Illinois, Michigan, and Rhode Island, and many more states are likely to be close behind. Recent surveys point to 17 additional states that are considering pursuing new D-SNP contracting strategies. 6 Alice Burns, Maiss Mohamed, and Maria T. Peña, “Medicaid arrangements to coordinate Medicare and Medicaid for dual-eligible individuals,” KFF, April 27, 2023.

McKinsey analysis indicates that while MA should remain a high-growth profit pool overall , the dual-eligible cohort is expected to see EBITDA increase by more than 10 percent by 2027. 7 Neha Patel and Shubham Singhal, “ What to expect in US healthcare in 2024 and beyond ,” McKinsey, January 25, 2024. This means that payers are now grappling with the increasing imperative to invest further in Medicaid capabilities and partnerships, including through connecting with community partners and social organizations, to remain viable in this market.

A central issue is whether payers will make the needed proactive moves to prepare—whether the state they work within forces it or not—to build the capabilities necessary to remain viable for the D-SNP population.

Broker channel constraints

Payers and brokers have been abuzz since CMS’s November 2023 announcement “proposing to redefine ‘compensation’ to set a clear, fixed amount that agents and brokers can be paid regardless of the plan the beneficiary enrolls in.” 8 “Contract year 2025 policy and technical changes to the Medicare Advantage Plan Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly, and Health Information Technology Standards,” CMS, November 6, 2023. With customer acquisition costs widely pushing north of $2,000 across the country, these compensation caps could—if implemented as proposed—have a meaningful impact on the financial solvency of the largest field-marketing organizations and brokerages. 9 Based on McKinsey analysis of earning filings for publicly traded brokerages.

Although the compensation cap won’t affect those naturally aging into Medicare from commercial plans, it will affect other groups, as brokers have developed superior marketing and sales capabilities for them. To date, payers have used broker channels for their efficiency and high-volume capabilities, but the expected pressure on the broker business raises questions of sustainability and competitiveness.

To date, payers have used broker channels for their efficiency and high-volume capabilities, but the expected pressure on the broker business raises questions of sustainability and competitiveness.

A fundamental query is whether the new compensation caps will be a forcing mechanism for payers to bring more distribution into internal systems by enhancing and scaling their own marketing and sales capabilities.

Although 2024 has just begun, we already see some MA payers adjusting their outlook for the rest of the year. The sustained increase in utilization is only adding upward pressure on cost structures, while the CMS 2025 advance notice is putting downward pressure on revenue. We expect that the trends discussed in this article will deepen disruptions for MA payers. The next few months and the next round of financial results will be telling about which payers have anticipated these changes successfully, setting them up for success for years to come.

ABOUT THE AUTHOR(S)

Gabe Isaacson is an associate partner in McKinsey’s Pittsburgh office, where Cara Repasky is a partner; Dan Jamieson is a partner in the Chicago office; and Sonja Pedersen-Green is an associate partner in the Minneapolis office.

The authors wish to thank Emily Pender for her contributions to this article.

This article was edited by Querida Anderson, a senior editor in the New York office.

The Medicare Advantage program will look meaningfully different in the years ahead. Payers will need to consider transformational moves in the near term to improve their ability to compete in the long term.

About the authors.

The Medicare ecosystem is facing a series of simultaneous challenges, disruptions, and opportunities that add up to one certainty: this market will look meaningfully different in the years ahead. Medicare Advantage (MA) is projected to be the line of business that drives the most profit for payers in 2026, 10 Neha Patel and Shubham Singhal, “ What to expect in US healthcare in 2023 and beyond ,” McKinsey, January 9, 2023. even while headwinds are emerging in the Medicare program. The Centers for Medicare & Medicaid Services (CMS) is projecting the Medicare trust fund will run out of money in 2031, 11 2023 annual report of the Boards of Trustees of the federal Hospital Insurance and federal Supplementary Medical Insurance trust funds , CMS, March 31, 2023. although investors continue to pour billions into acquisitions of payers, care delivery partners, and related healthcare services and technology providers across the Medicare value chain. Additionally, market penetration of Medicare Advantage (MA) remains hugely variable nationwide, with only about 12 percent of beneficiaries in MA plans in some states but about 60 percent in others. 12 For example, MA penetration in Michigan is about 59 percent and in Wyoming is about 13 percent. For more, see MA State/County Penetration 2023 06, CMS, June 2023. Meaningful disruptions—in demographics, regulations, and member preferences—compound the uncertainty, making it difficult for payers and other Medicare participants to chart a path forward. By making transformational moves in the near term, payers can improve their ability to compete in the years to come.

The strategic decisions private Medicare payers make now will determine their ability to have competitive capabilities and position themselves to succeed as the market changes. Some large payers and investors have already begun placing strategic bets to capture future growth (for example, buying up primary-care centers whose patients are enrolled in MA plans), despite the climate of uncertainty. By closely monitoring the ongoing shifts in Medicare, continually adjusting their priorities, and building new capabilities, payers can position themselves to succeed.

Disruptive trends are shaking up the Medicare landscape

Payers are considering strategies to better address the aging population, a succession of pending regulatory changes, and shifts in member preferences for benefits and engagement.

Demographic shifts

The demographic profile of Medicare beneficiaries and eligible individuals is skewing older. From 2020 to 2030, seniors aged 75 to 79, 80 to 84, and 85 and older are projected to grow as a proportion of all seniors. This is a shift from the 2015–20 period, when growth was more heavily in the cohort aged 65 to 74. 13 McKinsey analysis of US Census data.

For many of these aging and higher-need members, today’s popular plans (for example, those with zero or negative premiums, rich supplemental benefits, or leaner core medical coverage) may no longer be the best fit. To retain members, payers may need to counsel them to switch to products that better match their evolving health needs, although some members are likely to resist, at least initially.

Medicare beneficiaries aged 85 and older average more than twice the monthly medical costs of those aged 65 to 69 and are more than three times as likely to have at least one hierarchical condition category. 14 McKinsey analysis of 2021 Medicare Fee-for-Service data. This creates a substantial increase in clinical burden that will require payers to develop new capabilities in care management, social determinants of health (SDoH), and health equity—in line with CMS’s priorities. In the meantime, payers will continue to advance their capabilities as risk-bearing entities operating under capitated models. Specifically, where diagnosed conditions are most acute, payers could pursue specialist-centric risk arrangements. As needs intensify and mobility declines, payers could also develop intensive, home-based care models.

Along with the aging Medicare population, MA membership growth is slowing. We estimate that annual growth in MA membership will slow from more than 8 percent in 2022 to about 3 percent in 2031. As growth slows in historically strong and currently penetrated (primarily urban) markets, payers will seek to build the networks and capabilities to grow in historically less penetrated markets, such as those with large rural populations (Exhibit 1).

Regulatory environment

The most sweeping set of regulatory changes to the Medicare Advantage program since the Medicare Modernization Act of 2003 will go into effect in the next three years, affecting rates, risk adjustment, Star ratings, and Part D. To adjust, these changes necessitate a nimble response from payers.

MA rates. The 1.12 percent effective MA rate decrease—the change in the amount paid per enrollee per year to payers by CMS—marks the first decline since 2015 (Exhibit 2). 15 This rate excludes the CMS-estimated 4.4 percent rate increase from MA risk score trend. This translates to a loss to payers of an average of $150 per member per year. 16 The 1.12 percent effective rate decrease equates to a roughly $4.7 billion loss in payment to MA plans, or about $150 per member considering 2023 MA membership. For more, see “Fact sheet: 2021 Medicare Advantage and Part D rate announcement,” CMS, March 31, 2023.

Risk adjustment. CMS announced changes to MA risk adjustment following careful analysis, including observed higher-than-expected risk scores compared with fee-for-service (FFS). 17 Report to the Congress: Medicare payment policy , Medicare Payment Advisory Commission, March 2022. CMS has refreshed the risk adjustment model to bring it more in line with FFS, driving MA rates down by 2.16 percent, on average. 18 “Fact sheet: 2021 Medicare Advantage and Part D rate announcement,” March 31, 2023. Risk adjustment remains a high-priority topic for payers as they respond to CMS’s Risk Adjustment Data Validation (RADV) Final Rule, which is expected to enable CMS to recoup $4.7 billion over the next ten years. 19 “Medicare Advantage Risk Adjustment Data Validation final rule (CMS-4185-F2),” CMS, January 30, 2023; McKinsey analysis of historical audit results.

Star ratings. For calendar year 2024, CMS reduced payment rates by 1.24 percent in response to a decline in average MA Star ratings, which resulted largely from expiring COVID-19 provisions and scheduled measure adjustments. 20 “Fact sheet: 2021 Medicare Advantage and Part D rate announcement,” March 31, 2023. Star ratings reached a record high in rating year 2022, with 90 percent of members in plans rated with four or more Stars; that number has fallen to 72 percent in 2023. 21 “2023 Medicare Advantage and Part D Star ratings,” CMS, October 6, 2022; “Fact sheet – 2022 Part C and D Star ratings,” CMS, October 8, 2021. Payers will likely face further headwinds from Stars technical changes—for example, removal of contract performance outliers using the Tukey method and revisions to disaster provisions—and the introduction of the health equity index (HEI). Starting with 2027 Star ratings, the new HEI will reward contracts for high measure-level scores with low-income subsidy, dual eligible, and disabled enrollees. 22 “2024 Medicare Advantage and Part D final rule (CMS-4201-F),” CMS, April 5, 2023.

According to a simulation of the removal of the current reward factor and addition of the proposed new HEI reward, 1.7 percent (seven) of MA prescription-drug contracts gained a half star on the overall rating, while 13.4 percent (54) of contracts lost a half star on the overall rating. 23 Medicare program; contract year 2024 policy and technical changes to the Medicare Advantage program, Medicare Prescription Drug Benefit program, Medicare cost plan program, Medicare Parts A, B, C, and D overpayment provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; health information technology standards and implement specifications , Federal Register, December 27, 2022. Historically, payers have been able to respond to technical adjustments, the addition or expiration of certain metrics, and other changes to the Stars program, but the magnitude of these changes will be their biggest test yet.

Part D. As a result of CMS changes to Part D plans, payers will be prohibited from collecting back-end payments from pharmacies via direct and indirect remuneration (DIR) fees and will be required to assume greater responsibility for catastrophic drug coverage. Payers will lose more than $11 billion in plan revenue from lost DIR fees, equivalent to 74 percent of revenue from member premiums in 2021 (Exhibit 3). 24 Adam J. Fein, The 2023 economic report on U.S. pharmacies and pharmacy benefit managers , Drug Channels Institute, March 2023; 2022 annual report of the Boards of Trustees of the federal Hospital Insurance and federal Supplementary Medical Insurance trust funds , CMS, June 2, 2022. Additionally, reinsurance payments are currently the largest and fastest-growing source of payer revenues. In 2025, however, government coverage for reinsurance will drop by three-quarters, from 80 percent of catastrophic costs to 20 percent, leading to dramatic decreases in reinsurance payments to payers. 25 Inflation Reduction Act of 2022, Pub. L. No. 117-169, 136 Stat. 1818, 2022.

Shifting member preferences

Members’ preferences for engagement with MA plans are fundamentally changing—in line with the seamless, omnichannel, and customer-centric experiences they now routinely enjoy with B2C companies such as retailers and technology providers. Most prominently, this change manifests in their rising preferences for digital engagement. 26 Gabe Isaacson, Marina Ivanenko, and Cara Repasky, “ Digital engagement now typifies the Medicare Advantage experience ,” McKinsey, March 9, 2023. This appears first in the extent to which beneficiaries increasingly rely on e-brokers when shopping for MA plans. Of the more than seven million beneficiaries who enrolled in a new MA plan in 2022, more than one-third (about two million) used an e-broker, highlighting a meaningful shift to digital channels compared with even five years ago. 27 McKinsey analysis of earnings reports for SelectQuote (about 617,000 beneficiaries in 2022), eHealth (about 322,000 in 2022), and GoHealth (about 830,000 in 2022). Triangulated with expert interviews for private and broader market (more than 400,000 beneficiaries in 2022).

Beyond shopping, our recent survey data indicates that more than two-thirds of members reported using technology in the onboarding journey to understand benefit coverage, manage prescription drugs, and navigate physician networks. 28 “ Digital engagement ,” March 9, 2023. More broadly, delivering a distinctive omnichannel experience will be critical in retention of members and performing well on Stars ratings. The quality of members’ experiences will be a core component of competitive differentiation in the future.

How payers can respond to the changing Medicare landscape

Payers can address changes in Medicare with near-term, targeted interventions and simultaneously carry out transformative initiatives. In the near term, they could consider the following:

• Pursuing sizable growth opportunities in underpenetrated populations (such as high- and low-income rural areas) with renewed focus and creativity to build products and networks—potentially augmented by virtual care—that will appeal to members traditionally less inclined to enroll in MA and historically presented with fewer plan options.
• Actively engaging in the evolving marketing and sales ecosystem—by diversifying their portfolio of partners to include more field brokers and e-brokers—to enable payers to reach more eligible individuals in their preferred (increasingly digital) channels. By supplementing their captive internal-distribution channels, which rely heavily on standard mailers and other traditional methods, they could also broaden their reach into, for example, communities with a higher proportion of minority residents or residents of relatively low socioeconomic status.
• Prioritizing investment in the Stars program to meet evolving beneficiary needs and address Stars performance and, therefore, revenue headwinds. Investment in Stars could be targeted to address SDoH needs, close clinical care gaps, and improve clinical outcomes for an increasingly aging population with more acute care needs, allowing payers to deliver a best-in-class member experience.
• Expanding digital engagement (such as through applications, text, and chatbots) to meet changing member preferences, and develop wraparound support services to increase member uptake and proficiency.

Additionally, a series of transformative initiatives could best position payers to navigate the future Medicare ecosystem.

Serve members with efficiency. For payers facing substantial margin pressure, administrative costs, which commonly exceed $100 per member per month (PMPM), 29 Phil Ellenberg et al., “Medicare Advantage organizations financial results for 2021,” Milliman, December 1, 2022. are increasingly unsustainable. Plans can consider entirely new ways of managing administrative costs and running their budgets without sacrificing service quality. Although attaining economies of scale can create cost efficiencies, the distributed nature of MA membership creates challenges. Many single-state payers can boast a strong market presence yet have only tens of thousands of members. For most payers, reducing administrative costs will require investment in nonscale performance levers.

Typically, increasing cost efficiencies would require a meaningful investment in automation, data-backed decision making, and continuous reallocation of resources. Specific actions to consider include the following:

• embarking on true zero-based budgeting, 30 Zero-based budgeting means building a budget from scratch with no carry-over spending allocated. targeting an administrative cost of less than $80 to $100 PMPM so that it could better withstand any changes in top-line revenue
• expanding reliance on shared technology platforms and services to manage costs while also investing strategically in products and capabilities
• investing now in innovative technologies that will soon become standard, including, for example, chatbots to assist members with support and requests (such as generative AI) and self-serve portals with tools to help members find the best plan for them

Deliver seamless shopping, enrollment, and onboarding experiences. Demographic changes will result in fewer seniors enrolling in MA, expanding opportunities to reach new and existing members. Payers could create and deliver an integrated experience from shopping to enrolling and onboarding to attract and retain members. In a 2022 survey of MA members, nearly half indicated they had shopped around to assess product options in the year prior, 31 “ Digital engagement ,” March 9, 2023. highlighting the imperative for easily navigable websites and distinctive benefits positioning.

To achieve their growth targets, payers will also likely expand their reliance on brokers and other third-party partners. Success will hinge on having clearly defined member journeys and integrated internal and external channels (for example, call centers and onboarding). Multidirectional, real-time data sharing paired with efforts by payers to educate and enable brokers would allow the integrated distribution unit to optimally attract and retain members in a lower-growth environment.

Know each member and personalize engagement. Knowing members as individuals is becoming crucial to meeting their shopping preferences, implementing best-fit engagement channels, managing disease states, ensuring access to quality care, and supporting evolving care needs.

Although payers have vast repositories of data, their databases (for example, for customer-relationship-management and care-management tracking) have traditionally been siloed. Payers have also typically defaulted to standard reporting and struggled to perform ad hoc analytical queries to understand the full scope of member engagement. And they have relied extensively on third-party Stars vendors who engage in sporadic calling campaigns to engage members in their healthcare journeys.

Instead, payers could consider differentiating themselves in their engagement with members by meeting the standards set by leading retail and e-commerce players. This might entail establishing a singular view of each member over the span of their Medicare journey and using unique member identifiers to track data points and touchpoints across channels such as brokers, care managers, and physicians. With a holistic view of each member at their fingertips, customer service representatives could provide better support. Payers could develop AI-enabled predictive capabilities to provide personalized engagement plans and smart interventions. Ultimately, this improved transparency could unleash a ripple effect of better care, improved health outcomes, and an elevated experience for each member.

Convene and enable a redefined care-delivery landscape. The payer’s role in the care domain has expanded over time from utilization management to care management and, increasingly, care delivery. Some payers are carving out a leadership role as a convener of a care delivery ecosystem (encompassing the set of care models, physicians, capabilities, and services that surround a patient) while leaving care provisioning to clinicians. They are investing in enablement partnerships and acquisitions while working hand in hand with physicians to improve outcomes for Medicare members in meaningful risk-sharing arrangements.

Payers could accelerate this trend by assessing the clinical needs of their membership and mapping them to the care delivery landscape in their geography. For example, payers that have members with substantial clinical needs (for example, large populations with chronic kidney disease or special-needs plans for chronic conditions) might invest in or partner with specialists or advanced in-home care delivery partners. Payers with a large rural population could consider supplementing their care delivery footprint to address care gaps (for example, through virtual-care models).

Many payers would benefit from simultaneously pursuing multiple strategies, particularly as acuity in the Medicare population accelerates. Important considerations include aligning their incentives with those of physicians and patients and protecting physician independence in clinical decision making.

Payers could also use member data and conduct advanced analytics to match members with effective care models and enable physicians to deliver the highest quality of care.

A mature care delivery ecosystem would meet every member where they are through a combination of value-based care models (with physicians who can deliver against them), next-generation models (for example, rural-focused care), in-home primary and specialty care, and advanced care models.

Reimagine the product portfolio in line with MA membership needs. Payers often grapple with variable economics across the product portfolio. Newer members are typically enrolled in the most generous products with, for example, expansive dental and vision benefits, flex cards that cover not only over-the-counter medications but also food and wellness, and Part B givebacks (in which payers cover a set monthly amount toward a member’s premium).

These newer products are also the most economically challenging for payers. But although they would struggle to sustainably offer, for example, a $100 Part B giveback benefit, legacy members paying higher premiums (at least for now) effectively subsidize these offerings, resulting in an overall profitable membership mix. This trend, encouraged by many distribution partners, is unsustainable for payers, as evidenced by a number of previously high-growth MA plans that are now retrenching, rolling back benefits, and potentially causing meaningful disruptions in healthcare for tens of thousands of members.

The trend also doesn’t bode well for members as they age and their needs evolve. While members are relatively young and healthy, preferred provider organization (PPO) plans with $0 premiums and rich supplemental benefits but lighter core medical benefits can be a fit. These members, unconcerned with a higher maximum out-of-pocket cost, see supplemental benefits flowing directly to their personal bottom line—an especially appealing proposition at a time of high inflation and broader economic uncertainty. However, as the MA membership skews older, likely correlating with increasing medical needs, plans with richer medical benefits and lower maximum out-of-pocket costs may make more sense.

Payers can start now to evolve their product offerings and messaging to serve these members, including by rationalizing the supplemental benefit portfolio and reinvesting in core medical benefits that matter most to members’ health. In parallel, they can devise ways to counsel members to ensure they are continually enrolled in the right plan for their needs, perhaps over decades.

Given members’ increasing proclivity to shop, a proactive stance by payers will be rewarded. Payers could consider strategically engaging brokers, for example, to enable intrapayer plan movements. Although some payers and distributors have already begun to do this on an ad hoc basis (by, for example, proactively moving members to plans within their portfolios that have better Star ratings), taking a more strategic approach could help retain members within the payer’s ecosystem.

The MA market has been on an upward trajectory for years, with a continual stream of investor dollars chasing double-digit growth rates annually, enabling a thriving ecosystem of payers, care delivery partners, and services and technology companies. The variety of disruptions emerging, however, means that the winning strategies of the past five years are unlikely to be sufficient to meet members’ evolving needs and preferences. Success in the future will be determined by bold moves made now.

Gabe Isaacson is an associate partner in McKinsey’s Pittsburgh office, where Cara Repasky is a partner; Dan Jamieson is a partner in the Chicago office, where Emily Pender is a consultant; and Sonja Pedersen-Green is an associate partner in the Minneapolis office.

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HHS Statement Regarding the Cyberattack on Change Healthcare

The U.S. Department of Health and Human Services (HHS) is aware that Change Healthcare – a unit of UnitedHealth Group (UHG) – was impacted by a cybersecurity incident in late February. HHS recognizes the impact this attack has had on health care operations across the country. HHS’ first priority is to help coordinate efforts to avoid disruptions to care throughout the health care system.

HHS is in regular contact with UHG leadership, state partners, and with numerous external stakeholders to better understand the nature of the impacts and to ensure the effectiveness of UHG’s response. HHS has made clear its expectation that UHG does everything in its power to ensure continuity of operations for all health care providers impacted and HHS appreciates UHG’s continuous efforts to do so. HHS is also leading interagency coordination of the Federal government’s related activities, including working closely with the Federal Bureau of Investigations (FBI), the Cybersecurity and Infrastructure Security Agency (CISA), the White House, and other agencies to provide credible, actionable threat intelligence to industry wherever possible.

HHS refers directly to UHG for updates on their incident response progress and recovery planning. However, numerous hospitals, doctors, pharmacies and other stakeholders have highlighted potential cash flow concerns to HHS stemming from an inability to submit claims and receive payments. HHS has heard these concerns and is taking direct action and working to support the important needs of the health care community.

Today, HHS is announcing immediate steps that the Centers for Medicare & Medicaid Services (CMS) is taking to assist providers to continue to serve patients. CMS will continue to communicate with the health care community and assist, as appropriate. Providers should continue to work with all their payers for the latest updates on how to receive timely payments.

Affected parties should be aware of the following flexibilities in place:

• Medicare providers needing to change clearinghouses that they use for claims processing during these outages should contact their Medicare Administrative Contractor (MAC) to request a new electronic data interchange (EDI) enrollment for the switch. The MAC will provide instructions based on the specific request to expedite the new EDI enrollment. CMS has instructed the MACs to expedite this process and move all provider and facility requests into production and ready to bill claims quickly. CMS is strongly encouraging other payers, including state Medicaid and Children’s Health Insurance Program (CHIP) agencies and Medicaid and CHIP managed care plans, to waive or expedite solutions for this requirement.
• CMS will issue guidance to Medicare Advantage (MA) organizations and Part D sponsors encouraging them to remove or relax prior authorization, other utilization management, and timely filing requirements during these system outages. CMS is also encouraging MA plans to offer advance funding to providers most affected by this cyberattack.
• CMS strongly encourages Medicaid and CHIP managed care plans to adopt the same strategies of removing or relaxing prior authorization and utilization management requirements, and consider offering advance funding to providers, on behalf of Medicaid and CHIP managed care enrollees to the extent permitted by the State. 
• If Medicare providers are having trouble filing claims or other necessary notices or other submissions, they should contact their MAC for details on exceptions, waivers, or extensions, or contact CMS regarding quality reporting programs.
• CMS has contacted all of the MACs to make sure they are prepared to accept paper claims from providers who need to file them. While we recognize that electronic billing is preferable for everyone, the MACs must accept paper submissions if a provider needs to file claims in that method.

CMS has also heard from providers about the availability of accelerated payments, like those issued during the COVID-19 pandemic. We understand that many payers are making funds available while billing systems are offline, and providers should take advantage of those opportunities. However, CMS recognizes that hospitals may face significant cash flow problems from the unusual circumstances impacting hospitals’ operations, and – during outages arising from this event – facilities may submit accelerated payment requests to their respective servicing MACs for individual consideration. We are working to provide additional information to the MACs about the specific items and information a provider’s request should contain. Specific information will be available from the MACs later this week.

This incident is a reminder of the interconnectedness of the domestic health care ecosystem and of the urgency of strengthening cybersecurity resiliency across the ecosystem. That’s why, in December 2023, HHS released a concept paper that outlines the Department’s cybersecurity strategy for the sector. The concept paper builds on the National Cybersecurity Strategy that President Biden released last year, focusing specifically on strengthening resilience for hospitals, patients, and communities threatened by cyber-attacks. The paper details four pillars for action, including publishing new voluntary health care-specific cybersecurity performance goals, working with Congress to develop supports and incentives for domestic hospitals to improve cybersecurity, increasing accountability within the health care sector, and enhancing coordination through a one-stop shop.

HHS will continue to communicate with the health care sector and encourage continued dialogue among affected parties. We will continue to communicate with UHG, closely monitor their ongoing response to this cyberattack, and promote transparent, robust response while working with the industry to close any gaps that remain.

HHS also takes this opportunity to encourage all providers, technology vendors, and members of the health care ecosystem to double down on cybersecurity, with urgency. The system and the American people can ill afford further disruptions in care. Please visit the  HPH Cyber Performance Goals website for more details on steps to stay protected.

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