Strategic operations plan for a fertility clinic startup

Healthcare management (Strategic operations plan)

The financial section of this strategic operations plan will take into consideration both projected revenues and expenses and will try to anticipate these based on the existing business model. For that, it will look at pricing strategies, essential in the impact these can have on business demand and projected revenue. It will also look at best practices required to maintain profitability and the general financial health of the fertility clinic.

Basic Budget

In its very basic form, the basic budget will include the revenue and the expenses. The revenue will be primarily formed from the fees that customers pay for the clinic's services. Other forms of revenue could result from cooperating with different scientists in order to try new procedures at the clinic. With all the components of an infertility treatment, the average cost for such a treatment is likely to be around $7,500. To this, the fertility clinic will add a 10% premium, based on the pricing strategy described below. The average revenue per customer will thus reach $8,250.

One can evaluate that the clinic will be able to have around 600 customers in the first years, considering an average of 50 patients in a month (one can also consider that the numbers in the first couple of months will be smaller, as the clinic builds a presence in the market). The total expected revenue in the first year of operation will be $4,950,000.

In terms of expenses, the most important component will be the wages that the employees receive. There are several issues to be considered here. First of all, some of the employees are highly specialized, with many years of practice and, most often, with PhDs in medical science. Their wages are likely upwards of $200,000, although, as previously showed in the report, they can also share some of the profit, meaning that they can be offered lower wages for a share of the profits.

Another important category of expenses are marketing expenses, particularly in the first months to a year of operation. The clinic will be relatively unknown in the beginning, so a targeted marketing strategy, focusing on the segment of consumers and in specific locations (hospitals, other clinics, magazines such as "Parents" etc.), will be preferred. Travel expenses and other administrative expenses (rent, utilities) will have to be added.

It is important to note that the initial investment is also likely to be quite consistent. If one considers that the clinic will simply start with an empty building, everything, from high-tech instruments to furniture needs to be purchased. Such an investment, particularly in all the high-tech tools previously mentioned, will probably cost as much as $1,000,000.

In order to maintain profitability, the focus should be on the revenue side, namely on ways to maximize revenues. There are at least two different areas to be explored here: customer retention and new customers. Customer retention refers to those clients who have already used the clinic's services, but unsuccessfully, namely pregnancy has not occurred. It is more difficult to have them return, but the solution in this case is the quality of services. The idea is to have them believe that everything possible was done in order to improve their fertility and the quality of service is essential in this case. The main competitive advantage that the company can have on the market is the quality of services and the entire focus of the business should be directed towards maximizing this.

Preventing internal and external frauds

According to Colby (N.a.), there are three steps involved in a fraud process: committing the fraud, concealing the fraud and converting non-cash items into cash. He also emphasizes the importance of monitoring "red flags," namely looking for signs that the fraud is likely to occur or that it has already occurred. At the same time, control is an essential instrument in the entire prevention or identification process.

An important note about preventing internal and external frauds should be made when it comes to the staff being part of a comprehensive profit sharing mechanism. It is acceptable to believe that the risk of internal fraud will decrease if employees feel that it is more to their benefit for the clinic to operate well and for fraud to be avoided.

External and internal fraud can also be prevented with an annual external audit. This can be done at the end of each fiscal year and has numerous advantages, such as (1) increasing credibility for the clinic in front of potential future investors; (2) reducing the risk of external and internal fraud in the future and (3) identifying potential such actions occurred over the past year.

In its relationship with external vendor, the clinic should monitor and prevent both internal and external fraud. The likeliest risk in these situations is for the vendor and the representative of the clinic to agree to declare on the invoice a different sum than the one that actually reflects the transaction and to record as such in the clinic's books. This can be prevented either by having one of the managers present when the deal is concluded or implementing a monitoring and control function within the accounting office that would be included in meetings that involve concluding a deal.

It is important to make a note about vendors. There are two different categories of vendors, both from the medical side. These are equipment vendors and pharmaceutical vendors. The activity of a fertility clinic is closely related to these two categories of vendors, since the success of the process depends on the quality of equipment and the quality of the pharmaceutics, along with the quality of the medical staff, which is something that will be covered in the human resource strategy.

In order to maintain a high level of interaction with these vendors and ensure that the latest technologies are received for use in the clinic, the clinic representative (both medical and administrative) should continuously have meetings with the principal vendors, but also attend seminars and fairs, where the trends in the industry can be discovered.