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Oakview Medical Group: A Business Plan
Sonja Fontana
12/3/2010
Oakview Medical Group: A business Plan 1
Executive summary
As the patient population and mandatory insurance requirements increases so does the
demand for primary care providers unfortunately, primary care and medical school students
have an overall decrease in primary care residencies (Steinbrook, 2009). The patient protection
and affordable care act offered primary care residency slots and compensation but, two-thirds
of these slots have remained vacant for the last three years (Lowes, 2010). Medical school
residents are choosing specialties over primary care careers. A gap that exists between primary
care physicians and non-primary care providers is income disparities. (Freed & stockman, 2009).
The Medical Group Management Association conducted surveys to address the primary care
shortage and found in the year 2004 that primary care physicians earned $100,000 or less and
25% of non-primary care providers earned $600,000 or more. Lowes, (2010) found that
currently the United States needs an additional 17,000 primary care providers and in 2025 an
additional 124,000. Low income and challenging primary care work conditions have been
associated with physician burn out, poor patient outcomes due to long hours, pressure, limited
time, and organization (Linzer, Manwell, Williamsm, Bobula, Brown, & Varkey et al., 2009).
After collecting data it is evident that the United States has a decreasing work force of primary
care providers.
Description of the present situation
The Congressional Budget Office projects that nineteen million Americans will gain medical
insurance as required by the new health reform in 2014 (Lowes, 2010). Because of the primary
care shortage many patients will not receive proper medical care. Patients will have difficulty
Oakview Medical Group: A business Plan 2
accessing care, receiving timely visits, and having optimal outcomes. The primary care shortage
should encourage nurse practitioners to reduce the gap but financial barriers, physician’s
attitudes, and limited ability to deliver full service primary care have impeded NP role
development. Credentialing nurse practitioners will reduce primary care demands allowing
better work conditions. Fifty percent of nurse practitioners are denied credentialing by
managed care organizations.
Proposed solution
The primary care shortage supports nurse practitioners to format business plans to own and
operate a primary care clinical practice. A business guide is constructed to outline steps for
nurse practitioners setting up a clinical practice.
Goal
To deliver primary health care services individualized, holistic, and preventive resulting in
optimal health care outcomes to patients eight years and older.
Objectives
To apply preventive care to reduce diabetes and cardiovascular disease by fifty percent
annually.
To establish a primary care practice projecting a mission statement, SDSA model, sample
timeline, basic budget formula, projected expenses, receivables, monthly evaluation form, and
annual expense report in one year.
Oakview Medical Group: A business Plan 3
Receivables will be larger than expenditures in one year. The fifth year annual revenue will
exceed $600,000.
Presentation of options
Option #1
Ignore the primary care shortage and nurse practitioner opportunity for role advancement. If
we wait for nurse practitioner barriers to be lifted, laws to support us, and managed care
organizations to stop discrimination we risk losing our autonomy. Therefore, until we develop a
business plan we can choose to work for medical corporations as employees and not partners
to reduce the primary care shortage.
Option #2
Nurse practitioners can develop a six month business plan to start their medical corporation.
The nurse practitioner can own and operate a primary care practice using preventive and
holistic care to achieve optimal patient care outcomes. We can choose to be partners with our
physicians and reduce the primary care shortage.
Option #3
The primary care shortage could be reduced by proposing a fast track opportunity for doctrine
nurse practitioners to enter medical school and residency training programs. Since funding has
not been utilized in vacant primary care physician slots the nurse practitioners could fill those
slots. After residency the nurses could develop the business plan with sole medical corporation
ownership or physician partnership to reduce the primary care shortage.
Oakview Medical Group: A business Plan 4
Cost/benefit analysis
California law requires a supervising physician to be a 51% stakeholder in a medical
corporation. The physician signs a minimum of three charts a week. The physician is paid
$2,500.00 per month or $30,000 per year. Office Manager $1,525 per month or $18,300 yearly.
The nurse practitioner will not take salary for the first year until the company is profitable then
reimbursement will be made. Two medical assistants Monday-Friday positions. 2.0 (FTE) x 2,080
(hours per year) x $11.60= $48,256. Benefits at 30% total $62,732. The starting costs were
estimated at $48,000. Attorney costs to set up physician and nurse practitioner contracts,
Medical Corporation, articles and bylaws of the corporation, and filling costs was $5,000.
Construction costs were $31,000. Billing is contracted at 3% of the net income. A projected
expense report is included in appendices.
Market analysis
Many primary care health providers are not accepting new patients. Ten primary care and
internal medicine physicians have moved out of town in the last year. The primary care
physician accepts 35-50 patients per day. The estimated total Visalia patients discontinued from
ten practices ranged from 8,400 to 12,000. Visalia population is 120,000. A literature review
and demographic survey resulted in the best ways to set up a primary care clinical practice. I
attended California Association Nurse Practitioner (CANP) organization business classes
comparing how colleagues set up their businesses. Many practices included Botox, dermal
fillers, and visiting assisted care living facilities to boost revenue.
Explanation of the program
Oakview Medical Group: A business Plan 5
The NP hired an attorney she met at the CANP meetings for the corporation and employee
documents. Two billing medical managers were screened and one hired by the NP. The
manager was assigned tasks to help with written job descriptions retrieved from other medical
corporations and set up billing. Many physicians were interviewed and one selected. The first
medical corporation meeting will proceed with all legal documents signed. A real-estate agent
was contacted by the NP and a lease was signed after a lengthy search for a medical office. The
NP reviewed OSHA requirements found on the internet and a contractor was hired to improve
the office. A credentialing agent selected by the manager is contracted to manage insurance
companies. Employees are screened by the manager and qualified employees screened a
second time by the manager and NP. A meeting with the health Insurance agent occurred and
the NP selected the medical insurance and renters insurance. The accountant was given
corporate documents. Weekly meetings occurred between the office manager and NP. Medical
supply companies were contracted and items were purchased. The NP hired an informatics
technician and equipment was selected and purchased. A business account was established
between the physician and NP as required by state law. The NP researched and purchased
office furniture organizing a moving company to deliver an old desk and filling cabinet.
Evaluation of program
The business plan will be evaluated monthly. The following reports reviewed: Expense account,
receivables, vender receipts, employee surveys, budget reports, MCO reports. Revenue
$265,000, expenses $165,000 Profit /net income $100,000.
Oakview Medical Group: A business Plan 6
References
American Academy of Nurse Practitioners. (2007). Nurse Practitioners promoting access to
coordinated primary care. http://www.napnap.org.
Hansen-Turton, T., Ritter, A., & Torgan, R. (2008). Insurers’ contracting policies on nurse
practitioners as primary care providers. Policy, Politics, and Nursing Practice, 9(4), 241-248.
Linzer, M., Manwell, B.L., Williams, S. E., Bobula, A. J., Brown, L.R., & Varkey, B. A, et al (2009).
Working conditions in primary care: physician reactions and care quality. Annuals of Internal
Medicine, 151(1), 28-40.
Lowes, R. (2010). Solving primary care shortage requires more than new health care reform
law. Retrieved http:// medscape.com/viewarticle/720793
Nelson, C.E., Batalden, B. P., & Godfrey, M.M. (2007). The model for improvement. Quality by
design (271-283). San Francisco, Ca: Jossey-Bass.
Steinbrook, R. (2009). Easing the shortage in adult primary care: Is it about money? Retrieved
http://healthcareform.nejm.org.
Waxman, K.T. (2008). A practical guide to finance and budgeting skills for nurse managers.
Marblehead, MA: HCPro, INC.
Oakview Medical Group: A business Plan 7
Figure 3.0: Mission statement
Oakview Medical Group envisions quality integrated family health care services resulting in
personalized holistic treatment and preventive care implementing optimal health care outcomes to
serve the community. The purpose of Oakview Medical Group is to deliver personalized, holistic, and
compassionate evidence based practice health care to patients eight years and older utilizing current
technology. The objectives are to reduce health care costs, diabetes, and cardiovascular disease by fifty
percent in one year. Patients are educated to change their lifestyles through diet, exercise, and
behaviors. We strive to promote human respect and dignity for our patient’s wellness, adaptation and
rehabilitation or comfort. It is our goal that patients and families work with our health care team to
construct an individualized plan to meet their needs. We are proud of our staff for identifying the
patient’s needs, communicating any help to reduce the patients stress and promote wellness and trust
as a priority of business.
Oakview Medical Group: A business Plan 8
Figure 3.1: Idealized Design for Clinical Office Practice
• Access
• Open access
• Continuous flow
• reliability
• knowledge
• management
• Interaction
• communication
• Informatic
Technology
A
S
S
D
• vitality
• Research and
development
• staff
development
This model supports the mission statement. Patients have access to medical care by scheduling
appointments and medical assistants allow slots in the everyday schedule for patients that need
more immediate care. Interactions are supported by good communication between the health
care team and patients to construct an individualized plan of care. Reliability supports the
provider’s knowledge level and management skills. Vitality allows management to research and
practice evidence based practice. Leadership allows effective evaluations, education, and
training for staff development.
From “Quality by Design: The Model for Improvement,” by E.C. Nelson, P.B. Batalden, and M.M.
Godfrey, 2007, p. 271-283. Copyright by Jossey-Bass.
Oakview Medical Group: A business Plan 9
Figure 3.2: Sample Timeline
January 1
Develop a business proposal
January 2
Hire an attorney
January 3
Hire medical billing manager
January 4
Set up banking
January 10
Interview physicians and hire one.
January 13
Apply for Medical Corporation and business license
January 16
Meeting with real estate agent to find property to lease
January 24
NP reviewed OSHA requirements and hired a contractor for improvements
February 1
Hire credentialing agent
February 10
Hire employees
February 28
Meeting with health insurance agent
March 10
Turn on utilities and select AT&T business package.
March 18
Hire accountant
March 24
Medical supply accounts application
April 4
Install alarm system
April 18
Buy furniture and paper supplies
April 27
Hire informatics technician and buy computers and software
May 10
Hired movers to bring old desk and file cabinet to new facility
May 14
Set up policy and procedure manual
May 24
Board meeting with physician, NP, and manager.
June 1
Opening day
Oakview Medical Group: A business Plan 1
Figure 3.3: Basic Budget Formula
FTE= Number of hours worked in a year divided by number of hours in a year.
Two full time medical assistants Monday thru Friday 8:00AM-5.00PM.
2 x 2,080 hours per year x $11.60/hr = $ 48,256.00
Benefits at an estimated 30% total $62,732.00
Figure 3.4: Projected Expenses 2008
Expenses
Medical Assistants
$28,272.00
Supervising Physician
$30,000
Manager
$18,300
NP
$84,000
Orientation Training
$185.60
Overtime
0
Employee Benefits
$12,000.
Total Salaries
$160,757.60
Medical Supplies
$5,585.47
Nonmedical Supplies
$3,945.56
Equipment Rental
0
Maintenance
500.00
Advertisement
688.48
Other
749.20
Total other expenses
$11,468.71
Oakview Medical Group: A business Plan 2
Figure 3.5: Estimated Receivables
Month:__________
Medicare 42
Actual: 32,000
Number of patients: 540
Secondary 27
Estimated: 27,000 (50xpt’s)
Primary Insurance Claims: 360
-180 claims
Denied claims: 16
Figure 3.6: NP
Monthly
Evaluation
Form
Sonja Fontana
Date_________________
Over
Under
FTE Projected Expenses
*****
Medical supplies
*******
Paper supplies
*******
Utilities
*****
IT
Education
*****
*****
Meetings / Food
Equipment Maintenance
Total
Figure 3.7: Annual Expense Report
Estimated
*****
*****
Rent
2,700
phone
Educatio
n
$36.6
8
utilities
Comput
er
Meeting
s
1,405.
Licenses
office furniture
postage
1,350
334.51
104.3
1,266.
1,350
279.1
2
495.
106.9
147.1
47.50
47.50
3,741.
28.54
473.41
50.50
171.6
7
8.49
1,350
205.9
351.33
1,350
313.6
0
176.8
0
42.74
1,350
325.79
1,350
360.2
9
220.90
125.0
0
1,350
$16,200
289.9
2,977.
1,786.8
145.5
146.50
77.30
5.95
114.1
28.80
33.45
336.4
448.88
495.00
1,301
480.5
8
6.45
22.78
183.5
6
62.11
833.67
$1,519.
760.4
6,269
.
753.52
9,279.3
81.00
72.18
118.72
11.87
11.4
165.52
523.3
Allergan
Lowes
Professional organ
533.0
3
525.0
0
456.8
6
2.36
475.0
0
13.17
Medical supplies
6,025.
6,025
.
cell
1,354.
240.0
2,483
.
1,050
.
345.4
6
229.6
$331.5
$63.0
5
1,384
207.32
141.8
4
184.8
2
152.7
9
244.92
98.45
24.03
236.7
28.24
6,025
.
18.00
6,025.
$26.7
104
6,025
.
$104.
5,232
.
2,625.0
909.30
1,507.
15.00
1,664
726
49.95
150.0
0
2,948
.
6,025
6,025.
6,025
6,025
6,025
6,025
6,025
72,300.
104.
104.
104.
104.
104.
104.
104.
962.70
5585.47
5232.34
60.00
982.
982.
982.
982.
982.
982.
advertisement
bus
cards
signs
credenti
al
60
2,115.
$1,81
9.
$982.
$982.
576
26.21
16.2
CPA
3,000
$72.0
0
pay roll
2,000.0
0
$982.
112.4
8
$982.
13,754.
688.48
16.15
5,000
.
5,000
.
Attorney
3,860.8
7,237.7
1,050
.
40.00
Obagi
moving
Insuranc
e
9.99
2,456
.
IT
Costco
2,222.7
6,048.2
9.99
44.71
Total
December
November
October
September
August
1,350
276.2
0
216.6
2
106.7
9
70.07
Paper supplies
EDD
July
June
1,350
$31,000
dry cleaning
Fed tax
ID
Salary
May
April
1,350
240.7
0
349.1
106.4
1
168.2
9
31,00
0
218.0
0
349.0
0
Construction
March
February
January
Oakview Medical Group: A business Plan 3
42.36
$27.0
0
$43.20
5,000.
3,000
8,000.
3,000.00
$72.0
0
$72.00
2,000.0
0
$72.0
0
$72.0
0
$72.00
2,000.0
0
$72.0
0
$72.0
0
$72.00
2,000.0
0
$72.0
0
$72.0
0
$792.00
203,367.2
5
Oakview Medical Group: A business Plan 4