Business 101: Goal Setting and Strategic Planning

This article is the second installment in a four-part series on applying basic business concepts to radiology. To read the first installment, click here.

Goal setting and strategic planning are important processes for any business, and though radiology practices are no exception, many of the challenges they face are unique to the imaging industry, according to Greg Thomson and Dan Simile Jr of Medical Management Professionals, Inc. (MMP), Atlanta, Georgia. “The whole business model of radiology starts with volume, and you begin looking at volume by asking, ‘Who is my customer?’” Simile says. “That is the most critical aspect a radiology group should consider: you are either in the business to make a living or because you love medicine, but either way, it has to support you economically, and for that, you need volume.”

During the past few years, Thomson observes, radiology’s customer base has evolved: Though patients, referring physicians, and hospitals have always composed the customer mix, “It used to be that referring physicians were at (or near) the top of the customer list, and now hospitals have taken that position,” he says. “Hospitals are replacing radiology groups, so the importance of keeping that customer happy has grown dramatically. Defining your customer upfront (and realizing where hospitals, in particular, are on that list) is important.”

According to a philosophy from FranklinCovey® (a global business-consulting and training leader based in West Valley City, Utah), strategic planning for radiology groups can be broken down into three main components: setting goals to establish where the group would like to be according to the existing business model, balancing the achievement of those goals against any threats that the group is facing, and determining the business processes that it needs to normalize to further a bold strategic vision. “It has to weigh its business model, which is based on who its customer is, with whether there are any needs out there for it to address or issues it needs to normalize—and with whether it wants to take some kind of vision of its future,” Simile says. “Practices should ask themselves, ‘Is this the right time to move forward with this vision?’”

Defining Objectives

Radiology practices should set goals based on the principles that they have committed to in their mission statements and accompanying business plans. Thomson explains the relationship between the two: “A mission statement is an aspiration, and the business plan defines more directly how to get there,” he says. He offers the example of a practice with a mission statement of offering the highest-quality radiology services to its market. “In creating the business plan from that, we challenge the practice,” Thomson says. “We ask what that means: Will it buy the latest and greatest equipment as soon as it hits the market? Is it making that commitment?”

Practices should aim to identify three key goals for the year. “To quote Jim Collins, ‘Good is the enemy of great,’” Thomson notes. “In any radiology practice, you have a lot of bright people with a lot of bright ideas, and it is always harder to discard an idea than it is to put it on the list. A disciplined practice, though, can narrow 20 goals down to three or four.”

Simile recommends narrowing the list of goals by challenging each with a simple question: “What does this goal mean?” Another philosophy from FranklinCovey suggests that goals should fit the format of “x to y by when,” Simile says. “You want to put a goal in terms of moving from one place to another by a certain time, and you need to know how to be able to measure it.”

Thomson adds, “Often, when you ask a group about its goals, it will respond, ‘We want to be the best group in town.’ Well, at the end of the year, how do you know if you have accomplished that? That is what you really have to ask. That ‘x to y by when’ drives the discussion on narrowing the goals.”

A Balanced Approach

Simile notes that practices should equilibrate what they would like to achieve in the coming year against any problems that they are currently facing in the marketplace. Once a practice’s customer base has been defined, he explains, practices should assess whether those customers have any needs that are not currently being met, or whether there is a specific challenge to the business that needs addressing. “When you are doing strategic planning, you have to worry about the customer, but if your practice is threatened, you may skew your goals toward that threat,” he says. “For instance, if the hospital is saying that your turnaround time is not good enough, that your coverage is not what you said it would be, or that it expects you to communicate more with its referring physicians, those are threats to your volume.” Threats, however, are just one factor that influences goals.

To aid in identifying other factors that affect practice goals, Thomson and Simile recommend a method emphasizing strengths, weaknesses, opportunities, and threats (SWOT). “SWOT is a logical process of positioning the practice so everyone understands where it is in the market, and it helps define the goals, going forward,” Thomson says. “It helps clarify the conversation.”

A practice using the SWOT method should identify those four characteristics as part of the process of establishing annual goals. Thomson explains, “The S and W in SWOT represent internal aspects: the strengths and weaknesses of the organization. The O and T are external: they are government, macroeconomics, or the market. An opportunity might be that a certain market is currently lacking radiology coverage, while a threat might be a new competitor in the market.”

Practices should seek to normalize their business processes, Simile says, by addressing smaller problems proactively before they have a chance to grow into threats. “Maybe your physicians are not reading enough RVUs per month, and when you look into it, you discover that some of them are coming in 20% lower than benchmarks,” he says. “That is an issue you need to normalize—it is not a threat, but it is an opportunity to bring your practice more in line with good, solid business principles.”

Cat Vasko is editor of ImagingBiz.com and associate editor of Radiology Business Journal.