This article is the fourth in our Physical Therapy Clinic Business Plan blog series. Here we cover the Industry Trends and Market Opportunity Analysis section of the business plan. For this section, you should review your competition, and the state of the rehabilitation market. Note that the lending institution(s) you are approaching for funds may know nothing about the rehab market nationally, regionally, or locally. In addition to educating them on the rehab market’s potential, this is also your chance to explain how your clinic will be superior to the competition.
Your Market Opportunity Analysis should include most of the items listed below, depending on your area’s demographics. As you author your Market Opportunity Analysis, be sure to include information on your core target market, profiles of your ideal patient “customers”, and other market research. If you have been operational at some level and have testimonials, include them, as well.
Describe as much as you can about the demographics of your target market and targeted patients. Study your local market, i.e., within 5-mile radius at most in an urban setting. Let lenders know the patient profile income levels, activity levels, age groups (pediatric? Middle aged? Senior citizen?), and more.
Market Opportunity and Industry Analysis Format
To get at the ideal market and industry analysis format, spend some time describing each of the topics listed below.
Size and Growth Rate – Call out the size of the national rehab market and how fragmented it is still. At a local level, there may be some regional players that you will have to contend with. If so, remind the lender here of your method to distinguish yourself from your competition.
Patient Protection and Affordable Care Act – This Act has less consequence now than it did a few short years ago. But, if it still impacts your revenue stream, explain how and to what extent.
Maturity of Industry – Answering this point provides the lender with context. Is the rehab industry expanding, stable, or declining in size and scope? Explain your assessment.
Sensitivity to Economic Cycles – There may be some patient volume fall-off during a recession. If so, explain how much and for how long. If not, explain why patient volume is not impacted by economic cycles. Also, it might bear mentioning that there is some volume fluctuation during each calendar year.
Seasonal Factors – Your referring physicians may take vacations during spring break and summer months, thus providing fewer patient referrals. Also, in January and February you might see some drop off in volume as deductibles are felt. Will you see more patients when in the warmer months due to outside activities resulting in treatable injuries?
Technological factors (Advances) – Describe your choice of EMR and Practice Management software, and what computer hardware you are using or plan to use. If you will utilize an outside billing company, go into some detail about why and what the cost will be. Other technology, such as text or email reminders for appointments? Other?
Regulatory Issues – The medical profession certainly has its share of regulations and restrictions. Describe them and how they may impact your business. For example, does HIPAA impact how you handle records or fax information or notes? Explain what education levels and certifications may be required of your staff. Do you have any local or state ordinances that impact your clinic’s operations, location, or size?
Financial Considerations – Explain reimbursement rates for different insurance provider types and their impact on your revenues/profits. For example, primary financial considerations involve reimbursement by insurance types such as Blue Cross/Blue Shield, Medicare, United Healthcare, Worker’s Compensation. Include information about the conventional reimbursement levels that each allows for the numerous physical therapy procedure codes that are billed by physical therapy providers. Most payers will pay for billed services within a 30-day window. Federal and state regulatory bodies can, from time to time, influence both Medicare and Worker’s Compensation reimbursement levels, but typically they pay these claims within 30 days of claim submission.
Anticipated Changes and Trends in the Rehab Industry – Discuss any changes to Workers Compensation reimbursement levels. Discuss Medicare changes if any, and other trends occurring in the rehab space.
Format Driven by the Lender
The more knowledge you exhibit of the dynamics of the rehabilitation industry/market and how you will adjust to those dynamics helps the lender feel more comfortable that your business and your management is a “safe” bet. Plus, as we have stated before, even if the lender glosses over some of this information, it is still good that you have demonstrated a grasp of this information to yourself.
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