Wednesday, September 18, 2013

Your Medical Practice’s SWOT Analysis

SWOT in Medical PracticeNow part of basic business vocabulary, the term “SWOT analysis” has its origins in research conducted and published by the Stanford Research Institute back in the 1960s. Fortune 500 companies funded the research in an effort to understand why corporate planning often resulted in failure. Its success as a “forensic” tool led to its adoption as a strategic tool, and eventually it became the standard process for Western business planning.

SWOT is the abbreviation for Strengths, Weaknesses, Opportunities, Threats, and the analyses can be extensive and complex or short and sweet. The bigger your proposed plans, the more detailed research you need—and the more likely you’ll need outside help. But for your annual strategic planning and for analyzing opportunities that crop up from time to time, you can adopt a SWOT mindset that will help you make more objective choices.

For Example . . .

A sales rep sitting across your desk opens up a slick brochure describing a new office-based procedure that will supposedly boost your revenues by an amount that makes the equipment’s $100,000 price tag pale by comparison. He or she may provide complicated spreadsheets and return-on-investment analyses, as well as testimonials and references from other physicians who give glowing reports of financially successful programs. During difficult economic times, you may easily dismiss the salesperson without giving a fair hearing to what may actually be a great opportunity. On the other hand, you might rush into a questionable deal when things are going relatively well. Use the SWOT model to bring more objectivity to the decision-making process and help you rely less on your gut feelings. Determine how well the service under consideration meshes with your practice’s strengths, weaknesses, opportunities, and threats. Even more important, ask SWOT questions about the program itself. The sales rep will enthusiastically provide you with the strengths and opportunities, but you’ll have to do some digging to ferret out the weaknesses and threats.  Negative findings don’t necessarily indicate that you should reject the idea. The negative simply offsets the positive and helps you develop a balanced view of the risks and potential rewards. In the end, you’ll have to accept a certain amount of risk. Objective data and analysis will greatly increase your ability to tolerate reasonable risk.

When considering a new business strategy, medical groups will make better decisions and draw conclusions with greater confidence if they take the time to conduct a SWOT analysis first. In fact, practices can avoid the chaos and panic of habitual “crisis management” by conducting regular analyses—at least once a year. Fundamentally, a SWOT analysis requires practice leaders to take a step back from day-to-day difficulties and look objectively at the practice’s:
  • Strengths: What’s good about your practice? Where do you excel or lead your market? Where’s your competitive advantage?
  • Weaknesses: Where do you need improvement? In what areas do you lag behind average performance for similar medical groups?
  • Opportunities: What needs exist in your market that your practice can fill? What weaknesses in your competition can you exploit?
  • Threats: What stands between you and the success you envision? Do your greatest threats come from competitors? From payors? From your local health system? From government regulations?
Your goal is to gather and analyze objective data—test your impressions and feelings against the hard facts. Then figure out the strategic response that makes the most sense and has the best chance for success.

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