Surgical Compensation & Consulting

Transcription

1 Surgical Compensation & Consulting Business Plan Submission Jessica A. Minesinger, BA, CMOM, FACMPE August 14, 2018 This paper is being submitted in partial fulfillment of the requirements of Fellowship in the American College of Medical Practice Executives.

2 Table of Contents Project Summary... 2 Executive Summary... 3 Organizational Plan... 5 Mission & Model... 5 SWOT Analysis... 7 Strategy... 8 Services Administrative Plan Operational Plan Marketing Strategy Overview Market Analysis Strategy & Implementation Financial Documents Healthcare Impact & Outcomes

3 Project Summary The healthcare industry impacts everyone. Improving the way in which this industry operates requires proper oversight of operations. The primary goal within the industry is to maximize patient-centered care. The Body of Knowledge identifies six primary ways of meeting this goal. Maintaining efficient and effective operations of financial, human resource, operations, risk and compliance management, patient-centered care, and organizational governance are components of the Body of Knowledge. Surgical Compensation & Consulting will positively impact each of these areas. Currently physicians may make suboptimal compensation and contract agreements with hospitals, private practices, and in academic settings due to time constraints and lack of access to information. SCC will serve to assist physicians in navigating the evolving landscape of compensation models, intricacies of employment contracting, and the evolution from volume to value-based care systems. Overall job satisfaction increases when surgeons are offered fair compensation and contractual terms. The benefits of this service stretch far beyond the individual surgeons however. Other stakeholders include patients, medical practices, hospitals, and the healthcare industry. All of which will prosper as an effect of implementation. This is due to: Transparent and data driven physician compensation and contracting resulting in more efficient and effective physician recruiting and retention Physician satisfaction promoting better patient outcomes, shorter LOS, enhancing physician recruitment, and increasing physician retention Stakeholders benefits leading to positive outcomes within the industry SCC will contract with a team of corporate, physician, legal, accounting and HR professionals. These teams will provide expert review, analysis, and recommendations, customized for individual surgeons. The eventual goal is to extend this service to medical practices and hospital recruiters. This approach provides a team of individuals with the scope of experience and expertise to advocate for physicians in a cost effective and timely manner. The team would provide a menu of consulting options including: Market analytics utilizing MGMA Data Drive, Sullivan Cotter, and AHA Compensation review Contract analysis, recommendations, and negotiation Review, analysis, and recommendation of multiple offers Assisting practices contracting with individual surgeons Independent practice contracting with hospitals and networks The remainder of this plan evaluates the feasibility and benefits of implementing this service through strategic planning, market analysis, and financial predictions. 2

4 Executive Summary Surgical Compensation & Consulting is a surgical consulting firm committed to educating and advocating for surgeons. The existing office is in Troy, Ohio. However, this firm will operate across the nation. This company is unique in that the consulting services offered are specific to surgeons, data driven, and professionally navigated. Market Opportunity 69% of residents identified a good financial package as very important when considering practice opportunities, while only 10% said they were very prepared to handle the business side of medicine (Merritt Hawkins). This data indicates a clear consulting need for surgeons exiting fellowship and residency. SCC sees an opportunity to ensure female surgeons are compensated commensurate with their male colleagues. Compensation agreements offered to women are not equal to those offered to men. As of 2016 the number of surgical residents amounted to 14, % of which were female (AMA). When compared against the total number of practicing surgeons, this amounts to nearly a 16% increase in the market ratio for female surgeons. This company has the tools necessary to navigate compensation plans and contracts for surgeons. Strong web-based and information systems will assist the firm in achieving high accessibility to surgeons. Capital Requirements & Start Up Funds SCC is owned solely by a CEO with 23 years of experience building and developing successful small businesses. Careful consideration has been given to the startup expenses, financial cash flow projections, and breakeven analysis for SCC. SCC will operate under a parent company that provides overhead for several related companies owned by the CEO and owner of SCC. Overhead expenses for the parent company are well documented for more than 20 years. It is anticipated that SCC will be responsible for 25% of the overall overhead expense. This expense will be charged via a monthly overhead fee payable from SCC to the parent company and is reflected in the financial projections. SCC will utilize internal cash reserves, opposed to loans or outside investors, to absorb start-up expenses. This simplifies the financial structure of the company. Investor benefits and interest expenses will not be a factor in operational costs. Mission Statement The mission is to empower surgeons with the specific industry knowledge and data analytics to successfully navigate compensation opportunities and employment contracts. Experienced based and data-driven recommendations are the result of SCC s streamlined analytics and expert guidance. 3

5 Management SCC will operate on a client by client basis. The CEO will oversee the initial client contact, collection of pertinent information, and case review. A member of the legal team will review contracts. SCC will also contract with physicians experienced in academic, private practice, and hospital settings. The professional team is the final tier within SCC s model. This team will consist of a CPA and benefits analyst. The CPA will review, identify, and make recommendations regarding the structure of compensation and taxable income. The benefits analyst will compare benefits offered to the client against local, regional, and national health system standards. SCC will provide all consulting teams with competitive compensation. The firm will also create streamlined procedures for client review and recommendations. SCC will enter into a three-year consulting agreement with the individual consultants to ensure stability for the organization and consistency in the quality of the consulting services. Competitors & Competitive Advantages ECG Management Consultants is an indirect competitor as the target market differs from SCC. ECG focuses on consulting healthcare organizations in a multitude of capacities, not just physicians or compensation agreements; SCC focuses specifically on surgeon s compensation and contractual agreements. ECG has a wide span of resources including relationships with large healthcare organizations. The company can provide SCC services, but this is unlikely due to ECG s company model. SCC found only three direct competitors: Physician s First Contract, Resolve, and Physician s Contract Review. All companies operate under a middle-man model, connecting physicians to attorneys who review contracts. SCC differs from these companies in its focus specific to surgeons, abundant and relevant data from internationally recognized sources, and the range of consultancy offered beyond an attorney s perspective. 4

6 Financial Projections A detailed financial analysis including cash flow projections, income statement analysis, breakeven analysis, identification of start-up expenses, and overhead projections have been prepared. These statements can be found within the financial statement section. Below is a threeyear pro forma income statement provided to easily breakdown SCC financials. Revenue Year 1 Year 2 (10% Increase) Year 3 (10% Increase) Total Yrs. 1-3 Projected Number of Clients w/ 10% annual growth rate Billable Hours (Est. 10 Hours per Client) ,650 Flat Rate - Hourly Consulting Fee $ $ 125,000 $ 137,500 $ 150,000 $ 412,500 Projected Gross Income $ 125,000 $ 137,500 $ 150,000 $ 412,500 Expenses Marketing Web Design & Maintenance $ (10,000) $ (2,500) $ (2,500) $ (15,000) Marketing & Advertising (Avg. $1,000 per monthly) $ (12,000) $ (12,000) $ (12,000) $ (36,000) Operational Costs Data Analytics Program Construction- Initial Expense & Updates $ (5,000) $ (1,000) $ (1,000) $ (7,000) Data Subscription Annual Fees- MGMA & Sullivan Cotter $ (6,500) $ (6,500) $ (6,500) $ (19,500) Professional Development Professional Memberships Fees (MGMA & ACS) $ (1,500) $ (1,500) $ (1,500) $ (4,500) Travel Expense & CEU's (MGMA & ACS Clinical Congress) $ (5,000) $ (5,000) $ (5,000) $ (15,000) Professional Team Consulting Physician Professional Consulting Fee #1 (20 hrs per year) $ (10,000) $ (10,000) $ (10,000) $ (30,000) Physician Professional Consulting Fee #2 (20 hrs per year) $ (10,000) $ (10,000) $ (10,000) $ (30,000) Legal Team Contract ($150 per hour Avg. 1.5 per client) $ (11,250) $ (12,450) $ (13,500) $ (37,200) Professional Consulting Fees (100 hrs. $75 per hour) $ (7,500) $ (7,500) $ (7,500) $ (22,500) Overhead Fee to Parent Company *Monthly Overhead Fee to "Parent Company" $3,646 per mo. $ (43,750) $ (43,750) $ (43,750) $ (131,250) Total Expenses $ (122,500) $ (112,200) $ (113,250) $ (347,950) Projected Net Income Yrs. 1-3 $ 2,500 $ 25,300 $ 36,750 $ 64,550 Organizational Plan Mission & Model Knowledge is Power. Know your value. Empowering surgeons to navigate compensation opportunities with knowledge, expertise, and data analytics. SCC s mission is to empower surgeons with the specific industry knowledge and data analytics to successfully navigate compensation opportunities and employment contracts. We provide clear, concise, and actionable recommendations on an individual basis. Our streamlined analytics combined with expert guidance, result in experience based and data-driven recommendations, delivered quickly and cost effectively. 5

7 Our vision is simple yet robust: ensure every surgeon has the tools to navigate the business of medicine. This is done by employing the latest market and expert analysis from a pool of professionals in multiple settings. Our tag line says it all: Knowledge is power, know your value. Key Distinguishing Factors Surgeon Focus Centered Around Individual SCC Data Driven Team of Experts Various Practice Settings SCC is centered around a team of experts contracted exclusively with SCC. No agency offers this unparalleled level of combined expertise. The streamlined organizational structure results in timely recommendations and cost-effective pricing. SCC serves a niche market, as aspects of surgical compensation are unique and complex. Such aspects include academic research, base salary, call pay, medical director pay, etc. The business model is catered to the individual. This entails a personal assessment for each client. SCC will guarantee that a surgeon s desires align with the contract they pursue. Whereas competitors disregard the qualities, values, and needs of clients by simply reviewing contracts. This firm is molded by data. SCC intends to utilize data from MGMA as well as Sullivan Cotter. These are the highest regarded data sources in the medical field. SCC services are justified by data. Clients are offered assurance of fair pay and contractual terms through transparency of this data. 6

8 SWOT Analysis STRENGTHS Benefits to stakeholders BOK strengths improving patient centered care Access to pool of knowledge (professionals & resources contracted exclusively with SCC) Accessibility Proactively avoid potential legal issues Differentiating factors WEAKNESSES Advertising challenges Ensuring transparency Unique concept no template Client assurance of preeminent data Reliance on outside professional resources Challenges associated with demonstrating need of service to physicians OPPORTUNITIES Lack of competition Large need make supply of service known high demand Transform the outlook of the healthcare industry Contract with a wide-range of professionals to provide a wealth of data & experience for SCC clients Growing number of female physicians showing greater demand for service THREATS Potential backlash from hospitals Threat of new entrant (low) Existing Competition Self Education Resident and fellows facing high debt In performing a SWOT analysis external threats were determined weak. Opportunities, as well as internal strengths and weaknesses, were defined as strong. SCC intends to pursue strengths while monitoring the market. Monitoring weaknesses and threats will motivate SCC to consistently improve services. Strengths The strengths identified above will act as competitive advantages for SCC. We have identified several key performance indicators for this line of consultation. Access to imminent medical data and experienced professionals are two KPIs that align with SCC strengths. 7

9 Weaknesses To combat the weaknesses identified, SCC will track the effectiveness of marketing initiatives, database analyses, and client satisfaction. Identifying precisely how each of these points will be pivoted is difficult to state before the exact issues are determined. Basic strategies to combat these weaknesses include: Utilization of different advertisement platforms Offer a website that makes the services offered abundantly clear Establishment of strong tracking systems to monitor the market SCC is creating Provide strong marketing to emphasis the weight SCC data holds Analyzing the market need then expanding or reducing the size of the team Entering into 3-year exclusive consulting contracts with the legal and professional team to ensure stability for the organization and consistent quality of consulting services rendered. Opportunities Due to the uniqueness and newness of this idea opportunities are abundant. Lack of competition and high demand are the largest advantages. The female target market is discussed in further detail within the market analysis. This niche will serve as a target market for SCC. However, male surgeons freshly out of residency are included in the target market as well. Threats As stated previously, threats were determined weak. Backlash from hospitals could prove a more imminent issue if SCC intended for services to impact a mass number of surgeons immediately. The impact on hospitals is low as the intention is to start out serving less than 60 surgeons for the first three years. In addition, the demand for surgeons is large. This deters hospitals from combating SCC services. If SCC were partner to with hospitals in the long run, this service would act as an advantage for the hospital as more surgeons would desire a transparent work environment. The market analysis details precisely why existing competition is weak. Lastly, research indicates that many surgeons do not have the time or know-how necessary to navigate compensation and contract agreements. Strategy The sole purpose of this firm is to educate and advocate for surgeons. When surgeons are satisfied, referral occurs. SCC will facilitate annual surveys to measure surgeon satisfaction with a goal of 100% referral. Short term goals include capturing a client list of 50 in the first year. This amounts to less than 0.5% of the overall market, which was deemed highly attainable. SCC will aim to grow by 10% in the following two years, consulting 55 surgeons in year two and 60 in year three. SCC intends to expand the team as the number of clients increase and the company grows. Ideally within ten years, SCC will expand consulting services to include hospitals, independent physician practices, and hospital recruiters. 8

10 As an established independent third-party consultant, SCC would be an ideal candidate for hospitals, academic practices, and individual practices conducting compensation audits. This proactive measure is becoming common in larger corporations to ensure employees are compensated fairly, regardless of gender or race. Employers who actively seek to identify and rectify pay disparities engender the trust of their employees thus promoting job satisfaction and retention and reducing the risk of employment litigation. Marketing initiatives include web based social media presence, memberships with various healthcare organizations, direct mail, and print ads in journals. Investment in IT systems will ensure high accessibly and awareness, imperatives for a successful marketing model. Implementation and presentation of high level data, combined with the expertise of a team of professionals, sum up the primary pieces of SCC s strategy. SCC has a network of legal consultants, physicians, and organizations to call upon. These existing strategic relationships allow SCC to focus on surgeons needs from a multitude of perspectives. Strategic relationships with surgical colleagues are an especially beneficial tool in navigating the best way to assist surgeons. Integral parts of SCC s strategy can be summarized into three tiers: Team of Professionals Strong Marketing Initiatives Data Implementation Key Stakeholders Surgeons will be served by SCC in a myriad of ways. SCC will promote overall job satisfaction, job retention, and quality of life by arming surgeons with compensation data and negotiation of equitable contractual terms. Medical practices benefit when their physicians understand the terms and expectations of their employment contract. Physicians report higher job satisfaction and longer job retention when confident of compensation and contract terms. 9

11 Hospitals & academic centers also report less cumbersome physician recruitment, longer retention, better overall job satisfaction, and higher rates of productivity from physicians who believe their compensation and employment terms are competitive and fair. Most importantly, there is a strong correlation between physician job satisfaction and patient satisfaction. Patients experience better outcomes and shorter length of hospital stay when physician satisfaction is higher. When physicians understand the business of medicine their focus remains on the delivery of care. Key Decision Makers CEO/FACMPE SCC Owner: All aspects of physician communication and consultation are handled by the CEO. Utilizing a strong administrative team, and preeminent data analytics, the CEO can provide continuity of communication and timely, accurate, and sage recommendations to the physician. Legal Team: Experienced attorneys with extensive emphasis on physician, hospital, and medical practice representation. Expertise in contracting and negotiating. Physician Consultants: Board Certified Surgeons who have spent their careers in private practice, academic, and/or hospital settings. Providing expert consultation with personal experience, employment setting dynamics, on-call schedule and expectations, job satisfaction, and overall quality of life. Professional Team: A CPA is utilized to review the tax advantages and liabilities and make recommendations specific to each individual compensation package. The benefits analyst provides insight and recommendations as to the specific types of medical, malpractice, life, and disability coverage on a case by case basis. The administrative plan highlights ways in which these key decision makers operate within SCC. Services SCC will offer four packages. Each package will provide a detailed, data-driven analysis with recommendations. The packages are described below: Compensation Analysis Contract Review Review & Comparison Negotiation A comparison against what other surgeons are compensated utilizing multiple databases This will include an analysis of fair compensation as well as reviewal of the specifics within a surgeon s contract The services offered in the first two tiers applied to multiple job offers in order to compare job options SCC will negotiote the contract and compensation with the chosen employer 10

12 Administrative Plan CEO: The CEO will act as the primary facilitator. This is the first phase that a surgeon s inquiries will come through. After reviewal of a surgeon s plans and desires, consultancy will be determined as necessary. Data Analytics: Data is the main driver in providing this service. As such, a preeminent tool for the assessment is required. This system will serve as an essential tool for consulting. SCC will employ the latest marketing data from MGMA Data Drive as well as Sullivan Cotter. Attorney Team: Legal rhetoric can be difficult to comprehend. Consultancy regarding contract analysis will require oversight of an attorney. SCC will begin with two attorneys to provide this portion of consultancy. Contracts drafted by hospitals or practices are crafted to benefit the employer. SCC will ensure contracts are equitable and any benefits surgeons desire as met. Physician Team: Clients require assurance when seeking a service. The best way to provide this assurance is through physician advocation. In addition to providing assurance, the physician team consisting of two people, will offer advice and consultancy. SCC will use this knowledge as a marker for industry standards. Professional Team: Like the need for legal consultancy, reviewal of tax-advantageous decisions is necessary for the highest level of recommendations. This requires a CPA with knowledge specific to tax obligations. SCC will serve surgeons located in multiple states, meaning this CPA will have a well-rounded understanding of tax requirements in all states. A visual breakdown of the SCC Team can be found below. Operational Plan SCC has identified major milestones and roadblocks when determining the operational timeline. 11

13 Major milestones 1. Establishing strong information systems to increase accessibility and awareness 2. Ensuring strategic relationship relationships with partners and team of professionals 3. Executing 3-year exclusive consulting contracts with SCC team members including attorneys and physicians 4. Monitoring the effectiveness of systems & measuring outreach capabilities 5. Tracking surgeon satisfaction 6. Adapting after performing a detailed review of company outcomes Potential roadblocks 1. Lower interest than anticipated 2. Difficulty demonstrating the need for consultancy 3. Ineffective marketing 4. Inability to form desired partnerships and long-term contracts 5. Demand surpasses supply The first three potential roadblocks would be combatted with a revision of SCC s marketing strategy. If desired partnerships are not formed, the level of marketing needed for outreach would increase substantially. If demand for SCC s services surpasses the company s start up capabilities, controlled expansion will prove necessary. These conclude the pivoted strategies SCC will pursue if these roadblocks occur. Review the following timeline for SCC operations and goals. 12

14 Marketing Strategy Overview Accessibility and awareness are the key factors in strong brand recognition. In the first year of operation SCC aims to serve 50 surgeons. This was determined based on need and start-up potential. In terms of marketing strategy, SCC s objective is to first educate surgeons and organizations on the issue, then make the service known. Brand recognition initiatives will be achieved through coordination with larger organizations such as MGMA, American College of Surgeons, and others. These organizations are recognized across the nation and hold high prestige. Knowledge is what we sell. The goal is to educate surgeons on their value. This is done by providing relevant data and expert analysis. The service will be offered in four packages: compensation analysis, contract review, review & comparison, and negotiation. Descriptions can be found in the operational plan under the services section. Market Analysis Target Market Surgeons exiting residency and fellowship define SCC s target market. These surgeons are between the ages of on average. While the target market is surgeons within this age segment of all genders, females show a greater need for this service. Substantial pay differentials exist between male and female surgeons even after adjusting for factors such as age, years of experience, specialty, work hours, and productivity (Association of Women Surgeons). This is unjust. Surgeons do not typically have the knowledge or time to ensure equal pay and contractual terms. The American College of Surgeons revealed that approximately 40% of student membership came from females. Male surgeons make up a significantly larger portion of surgical students, so this number reveals a greater need for consultancy amongst women. 60,000 50,000 40,000 30,000 20,000 10, AMA Physician Master File 0 Practicing Surgeons Residents Male Female 13

15 As of 2016 the number of surgical residents amounted to 14,878; 27% of which were female (AMA). When compared against the total number of practicing surgeons, this amounts to nearly a 16% increase in the market ratio for female surgeons. The graph above visualizes the decrease in gender disparity amongst surgeons. The number of female surgeons is growing. Unfortunately, unequal and fair compensation are not offered to many women within this occupation. SCC feels an obligation to provide the knowledge necessary for these surgeons to promote themselves in the most efficient way possible. All surgeons should know their value. Competition As stated previously, true competition is virtually non-existent as we are the only company to currently offer a service in this capacity. Recognition of similar companies is important when conducting a market analysis. This type of competition includes companies that connect physicians with attorneys as well as a healthcare consulting company. ECG: ECG shares a similar implementation model: use of data-driven analytics as the foundation for recommendations, utilization of expertise across multiple disciplines, and client-by-client analysis. ECG serves healthcare organizations, such as hospitals, healthcare centers, and payors. Essentially, they act as problem solvers. Whereas SCC will focus on compensation and contract consultancy with surgeons specifically. As the targeted client is different, ECG is best categorized as an indirect competitor. It is possible that in the future ECG could expand their services to cater to surgeons or other physicians. However, this seems unlikely due to the nature of ECG operations. They stress a desire to improve the healthcare industry organization by organization. SCC seeks to improve surgeon satisfaction which in turn improves patient outcomes. SCC does state long term goals of expansion beyond individual surgeons. Due to this, ECG could serve as a future competitor. Physician s First Contract: Physician s First Contract is SCC s biggest competitor, yet still not a strong one. Advantages of this company include low prices and fast turnaround time. Physician s First Contract claims reviewal of over 1,000 contracts for new or established physicians. SCC holds a competitive advantage with a team of experts, relevant and recognized data, and focus specific to surgeons. Resolve: Resolve is similar to Physician s First Contract in several ways. In addition to contract review, Resolve offers a job search service for physicians. SCC will distinguish itself by providing an entire team of experts across disciplines, not only attorneys. Resolve offers significantly lower prices for its services and an even faster turnaround time compared to Physician s First contract, offering an expedited option of 24 hours. To combat this SCC will emphasize the services that are offered, which stretch beyond contract review. Physicians Contract Review: Of the firms identified as competition, this company is the least threatening. This firm connects physicians with attorneys. Presentation of the service was poor, a competitive advantage that SCC will employ. SCC will provide accessible and transparent services. 14

16 These firms are the closest representation of competition that exists in the market currently. None offer the specific SCC offers. Key differentiators were discussed in depth within the organizational plan. To review, the specificity of this service, strength within the team of SCC experts, and the streamlined process place SCC in a field of competition that is unmatched. SCC is a proactive company that works to meet surgeons needs. These competitors share an ideology of getting the best negotiation based on what is offered in the contract. This is where SCC deviates. Market Trends The market is experiencing a shortage of surgeons. Over the next 10 years this shortage will stretch even further. When supply cannot meet demand, costs increase. For surgeons this amounts to higher potential compensation. Surgeons are empowered to negotiate competitive compensation and contracting terms. The lack of business education offered to these surgeons, coupled with a lack of personal time, may prevent surgeons from identifying this opportunity. SCC can offer this service. Market Research The following resources were used to quantify and predict trends within this niche market: MGMA, Merritt Hawkins, AMA, and Association of Women Surgeons. Surveys were utilized to determine market demand as well. SCC marketing strategy was determined after analyzing this data. An in depth competitive analysis was done through researching dozens of companies. Companies listed under the market analysis were the only found that resembled competition. This further establishes the need for SCC s service. In addition, the lack of awareness and accessibility offered by competitors emphasized the opportunity for effective marketing practices which make SCC services abundantly transparent and available. SCC marketing funds will be allocated amongst ads in relevant journals, direct mail, and a strong web based social media presence. Employment of search engine tools that increase awareness and accessibility and partnership opportunities are allocated in SCC s marketing plan as well. The return on these marketing investments can be quantified as the cost each client pays for the services. SCC will measure the effectiveness of each marketing initiative (i.e. google analytics, website purchases, referrals from organizations, etc.) and precisely identify the ROI of each 15

17 marketing tool. This is difficult to do without any base for reference. However, SCC is aware of said tools and will heavily utilize them once the company is underway. Estimated marketing costs will account for an average of 14% of overall expenses in the current budgeting model. In the first year marketing expenses will account for nearly 18%. Expected return can be quantified by client purchase of service. To ensure SCC is employing the best marketing practices, tracking of all marketing tools will be recorded. After this data is obtained SCC will restructure the marketing plan as necessary to ensure the greatest return on marketing investments at the lowest costs. Strategy & Implementation Several opportunities surfaced when researching the market. Like the demand for surgeons, the demand for this service is abundant. All surgeons, not just those freshly out of fellowship or residency, would benefit from this service. Hospitals could use this as a recruitment tool as well. This widens the potential market. However, SCC s consulting start-up capabilities limit the company to young, new surgeons. Our goal is to provide service for 50 surgeons in the first year. This amounts to less than half of a percent of total surgeons exiting residency. Eventually we hope to expand this service to all surgeons in need. Marketing to these individuals is a factor imperative to success, doubling as a strength if implemented properly and a weakness due to the potential difficulty of effective marketing. This entails making the SCC brand known. Coordination with larger organizations is one advertising motive SCC intends to employ. These organizations facilitate for surgeons in many ways. Methods of increasing outreach include advocating at conferences to establish advertisements, articles, and journals. SCC will utilize site advertisements as part of the marketing strategy implementation as well. An overall robust online presence will play a large role in increasing accessibility and awareness. Search engine tools will be used to increase SCC awareness as well. High level organizations for potential partnerships include: American College of Surgeons MGMA American Association for the Surgery of Trauma Eastern Association for the Surgery of Trauma Association of Women Surgeons After initial startup, a detailed analysis of the market need will be conducted. If determination of a greater need is recognized internal expansion will occur followed by an increase in marketing initiatives. These initiatives include coordination with hospitals. Surgeons would show greater interest in working at a hospital that offered SCC services. This higher demand from surgeons will be the incentive for hospitals. Similar tracking methods will occur once SCC moves past the startup phase. SCC will evaluate marketing methods based on criteria such as awareness and accessibility. Awareness is defined as the outreach of each marketing initiative, or how many clients are aware that this service exists, 16

18 and accessibility measuring how easily accessible a product was to a customer. A dashboard will be created to accurately track marketing tactics. This dashboard will review reach, engagement, and purchases through the various tools used. The dashboard will track daily, weekly, monthly, quarterly, and annually, to achieve detailed analyses of marketing tactics. As identified previously, the demand for surgical compensation and consulting far surpasses the initial abilities of SCC. This means the demand after the initial start-up phase will remain large. Financial Documents SCC is owned by a CEO with 23 years of extensive experience building and developing multiple successful small businesses. This includes 10 years developing a medical management company. SCC will operate under a parent company that provides overhead for several related companies also owned by the CEO/owner of SCC. Overhead expense for the parent company is documented over 20 years. It is estimated that SCC would be responsible for 25% of the overall overhead expense. This expense will be charged via a monthly overhead fee payable from SCC to the parent company and is reflected in the financial projections. The parent company oversees several companies in diversified sectors of the economy. SCC will benefit from a fully operating office, equipment and IT systems, and a highly trained staff. SCC would not require additional office space, technology, or equipment updates at this time. 17

19 SCC will utilize internal cash reserves, opposed to loans or outside investors, to absorb start-up expenses. This simplifies the financial structure of the company. Investor benefits and interest expense will not be a factor on operational costs. Pro Forma Cash Flow Statement (Budget) Pro Forma Cash Flow Statement Surgical Compensation & Consulting, Inc. July 17, REVENUE JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD Estimated Billable $ $250 Per Hour $0 $0 $4,750 $10,000 $12,500 $10,000 $12,000 $15,000 $12,000 $18,750 $15,000 $15,000 $125,000 Cost of Goods Sold $12,500 $5,250 $12,000 $9,111 $7,861 $12,861 $7,861 $7,861 $15,361 $11,111 $7,861 $12,861 $122,500 Gross Profit ($12,500) ($5,250) ($7,250) $889 $4,639 ($2,861) $4,139 $7,139 ($3,361) $7,639 $7,139 $2,139 $2, EXPENSES JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD Web Design & Maintenance $2,500 $2,500 $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,000 Data Analytics Program Construction- Initial Expense & Updates $1,250 $1,250 $1,250 $1,250 $0 $0 $0 $0 $0 $0 $0 $0 $5,000 Legal Team Contract ($150 per hour Avg. 1.5 per client) $0 $0 $0 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $11,250 Professional Memberships Fees (MGMA & ACS) $750 $0 $0 $0 $0 $0 $0 $0 $0 $750 $0 $0 $1,500 Data Subscription Annual Fees- MGMA & Sullivan Cotter $6,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $6,500 Travel Expense & CEU's (MGMA & ACS Clinical Congress) $0 $0 $0 $0 $0 $0 $0 $0 $2,500 $2,500 $0 $0 $5,000 Physician Professional Consulting Fee #1 (20 hrs per year) $0 $0 $2,500 $0 $0 $2,500 $0 $0 $2,500 $0 $0 $2,500 $10,000 Physician Professional Consulting Fee #2 (20 hrs per year) $0 $0 $2,500 $0 $0 $2,500 $0 $0 $2,500 $0 $0 $2,500 $10,000 Professional Consulting Fees (100 hrs. $75 per hour) $0 $0 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $7,500 Marketing & Advertising (Avg. $1,000 per monthly) $1,500 $1,500 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000 *Monthly Overhead Fee to "Parent Company" $3,646 per mo. $0 $0 $0 $4,861 $4,861 $4,861 $4,861 $4,861 $4,861 $4,861 $4,861 $4,861 $43,750 Total Expenses $12,500 $5,250 $12,000 $9,111 $7,861 $12,861 $7,861 $7,861 $15,361 $11,111 $7,861 $12,861 $122, NET INCOME ($12,500) ($5,250) ($7,250) $889 $4,639 ($2,861) $4,139 $7,139 ($3,361) $7,639 $7,139 $2,139 $2,500 18

20 Three-Year Income Projection Revenue Year 1 Year 2 (10% Increase) Year 3 (10% Increase) Total Yrs. 1-3 Projected Number of Clients w/ 10% annual growth rate Billable Hours (Est. 10 Hours per Client) ,650 Flat Rate - Hourly Consulting Fee $ $ 125,000 $ 137,500 $ 150,000 $ 412,500 Projected Gross Income $ 125,000 $ 137,500 $ 150,000 $ 412,500 Expenses Marketing Web Design & Maintenance $ (10,000) $ (2,500) $ (2,500) $ (15,000) Marketing & Advertising (Avg. $1,000 per monthly) $ (12,000) $ (12,000) $ (12,000) $ (36,000) Operational Costs Data Analytics Program Construction- Initial Expense & Updates $ (5,000) $ (1,000) $ (1,000) $ (7,000) Data Subscription Annual Fees- MGMA & Sullivan Cotter $ (6,500) $ (6,500) $ (6,500) $ (19,500) Professional Development Professional Memberships Fees (MGMA & ACS) $ (1,500) $ (1,500) $ (1,500) $ (4,500) Travel Expense & CEU's (MGMA & ACS Clinical Congress) $ (5,000) $ (5,000) $ (5,000) $ (15,000) Professional Team Consulting Physician Professional Consulting Fee #1 (20 hrs per year) $ (10,000) $ (10,000) $ (10,000) $ (30,000) Physician Professional Consulting Fee #2 (20 hrs per year) $ (10,000) $ (10,000) $ (10,000) $ (30,000) Legal Team Contract ($150 per hour Avg. 1.5 per client) $ (11,250) $ (12,450) $ (13,500) $ (37,200) Professional Consulting Fees (100 hrs. $75 per hour) $ (7,500) $ (7,500) $ (7,500) $ (22,500) Overhead Fee to Parent Company *Monthly Overhead Fee to "Parent Company" $3,646 per mo. $ (43,750) $ (43,750) $ (43,750) $ (131,250) Total Expenses $ (122,500) $ (112,200) $ (113,250) $ (347,950) Projected Net Income Yrs. 1-3 $ 2,500 $ 25,300 $ 36,750 $ 64,550 19

21 Break-even Analysis Under a break-even scenario, SCC would defer the overhead contribution to the related parent company for year one and reduce the contribution in years two and three. In addition, a reduction in actual vs. projected SCC clients would reduce the attorney and professional fees respectively. Fixed costs include web design, marketing, physician professional fees, travel expense, memberships and subscription fees. The conclusion of this analysis being a minimum of 30 clients to break even. Revenue Year 1 Projected Number of Clients w/ 10% annual growth rate 30 Billable Hours (Est. 10 Hours per Client) 300 Flat Rate - Hourly Consulting Fee $ $ 75,000 Projected Gross Income $ 75,000 Expenses Marketing Web Design & Maintenance $ (10,000) Marketing & Advertising (Avg. $1,000 per monthly) $ (12,000) Operational Costs Data Analytics Program Construction- Initial Expense & Updates $ (5,000) Data Subscription Annual Fees- MGMA & Sullivan Cotter $ (6,500) Professional Development Professional Memberships Fees (MGMA & ACS) $ (1,500) Travel Expense & CEU's (MGMA & ACS Clinical Congress) $ (5,000) Professional Team Consulting Physician Professional Consulting Fee #1 (20 hrs per year) $ (10,000) Physician Professional Consulting Fee #2 (20 hrs per year) $ (10,000) Legal Team Contract ($150 per hour Avg. 1.5 per client) $ (6,750) Professional Consulting Fees (100 hrs. $75 per hour) $ (4,875) Overhead Fee to Parent Company *Monthly Overhead Fee to "Parent Company" $3,646 per mo. $ (3,375) Total Expenses $ (75,000) Net Income - Breakeven Scenario $ - 20

22 Healthcare Impact & Outcomes CEO and President of MGMA, Halee Fischer-Wright, MD, phrased the dilemma perfectly: Compensation plans [should be] tied to achieving certain patient outcomes that are unique to each organization s and individual s need Once those outcomes are determined, doctors should work within their systems to discern what measurable metrics truly indicate how they are delivering on those outcomes compared with other physicians. Our compensation models need to reinforce this. Better care with better satisfied patients at lower costs can be achieved if we put patients first and incentivize our doctors and frankly the rest of the system to make those outcomes paramount. This is exactly what SCC intends to do. Challenges Encountered While the compilation of this business plan raised challenges including the filtration of voluminous data to drill down the salient issues, identifying and comparing competitors, and accurately identifying threats and weaknesses in our SWOT analysis, this process has further confirmed our assertion of the need for SCC services in the marketplace. Next Steps SCC is excited to enter the unique niche market identified in this business plan. Next steps include initiating a marketing strategy, outreach to potential partners and finalizing the SCC team. A detailed outline of SCC s timeline can be found within the operational plan. Ultimately, SCC will work diligently to bring our vision to fruition, ensuring every surgeon has the tools to navigate the business of medicine. Patients experience better outcomes and shorter length of hospital stay when physician satisfaction is higher. By employing the latest market data and expert analysis from a pool of professionals in multiple settings, SCC will deliver on our tagline knowledge is power, know your value for every physician we serve. 21