Needs Assessment
Writing A Business Plan
Delivery Models
Inter-Disciplinary Team
Program Operations
Quality Assessment

How to Establish Credibility and Confirm Leadership Competency

How to Establish Credibility: Prepare a Business Plan

A business plan helps everyone involved recognize benefits and understand risks.

Given the current fiscal environment, preparation of a business plan reflects a responsible approach to and understanding of the benefits and the potential risks of establishing a palliative care program. As such, a business plan can contribute substantially to the credibility and competency of the palliative care program's leadership and proponents.

Hospital finance and planning staff may be helpful in drafting a plan, which should delineate the following:

  • Justification for a palliative care program;
  • Program goals;
  • Delivery model;
  • Marketing, financial, operating plans and budget;
  • A method for evaluating both clinical and financial program performance;
  • A quality improvement process to enhance or alter stated goals; and
  • Implementation process.

Justification for Palliative Care

The introductory section of the business plan explains why palliative care of the seriously ill and dying is the standard of excellent compassionate care. This section will establish the social and medical context for proposal and should present data and information gathered from the hospital and community needs assessment process. This discussion might also include information on the number of adult deaths that occur in hospitals (both nationally and locally), data on symptoms, suffering and poor communication near the end of life and the fiscal impact of using hospitals for

terminal care. 2, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35-38

Develop Program Goals

Documentation of program goals should include both short-term (the next twelve months) and longer-term (three to five years) plans. Program success will be measured in part by the ability to meet these goals, so they should be as specific, feasible and as measurable as possible. Include time frames for accomplishment and identify the individuals responsible. Develop goals that address these areas:

  • Patient/caregiver outcomes (satisfaction with care, symptom burden, advance planning prevalence); 39, 40-42
  • Physician satisfaction/other staff satisfaction;
  • Decreased revenues/lowered expenses;
  • Utilization statistics (e.g., percent of hospitalized patients who died who received palliative care; consultation; percent of adult admissions who died in the hospital or ICU; length of stay trends among patients who die in the hospital and within specific diagnostic and acuity index levels);
  • Hospice referral rate;
  • Nursing home transfer rate;
  • Discharge locations for patients in specific diagnostic categories at high acuity levels;
  • Innovation/research; and
  • Awards/recognition of the interdisciplinary team's service.

Select a Palliative Care Service Model

A business plan typically defines the range of palliative care services to be offered in light of stated program goals. Part of this process requires selecting the most appropriate service delivery model for a hospital-based palliative care program in each particular setting. This critical decision is based on several factors:

  • What target populations does the program intend to serve? A complex, tertiary care referral population with a high proportion of critically ill, technology-dependent patients? Or a small community-hospital population of mostly elderly and chronically ill patients?
  • Where do most patients die within your hospital and service area (ICU, medical/surgical ward, home, nursing home, in-patient community hospice facility)?
  • Will inpatient bed constraints dictate the type of service model that best fits your hospital?

While many different palliative care program models exist, no evaluative data are available to assess their relative strengths and weaknesses. It is evident, however, that one model does not fit the needs and resources of every institution. Selecting the "right" model may be a function of patient load, physician practice patterns and culture, availability of trained palliative care staff and other circumstances. Common organizational models for palliative care programs include the following:

Consultation service
A consultation service team is typically composed of doctors, nurses and social workers, who see patients with palliative care needs anywhere in the hospital. The consultation format is a good mechanism for introducing the palliative care service throughout the hospital because it reaches the largest possible number of nurses and physicians through bedside and nursing station teaching and role modeling. Its primary disadvantage is that a consultant is only an advisor to the patient's primary physician and his or her recommendations may or may not be followed. In addition, depending upon training and experience, some hospital staff may or may not be comfortable with a role in palliative care (e.g., administering opiates for dyspnea or titrating analgesics for pain relief).

Dedicated inpatient unit
In this model, palliative care beds are clustered on one unit, allowing concentration of patients with like needs in one place. Nursing staff quickly become skilled and comfortable with both pharmacologic and psychosocial approaches to patient and family, and the palliative care approach is less likely to be resisted or feared by the primary physician. The disadvantage of this model is that the geographic patient concentration deprives staff in other parts of the hospital from exposure to the service and learning opportunities about palliative care skills that every doctor and nurse needs.

Inpatient hospice and palliative care units typically contain at least 15 beds, largely based on staffing ratio considerations. Some programs situate their unit where the complex, seriously ill patient population already resides and where the staff is likely to be trained in competent and compassionate care of the seriously ill. Where possible, select a unit with patient rooms that have space for a family member to stay overnight as well as a conference room or lounge large enough to hold regular family and staff meetings.

Combined consultative and geographic unit model
A number of the pioneering programs for hospital-based palliative care have established combined programs with a consultation service and a dedicated inpatient unit. 43, 44, 45-47, 48, 49-53 These programs have attempted to achieve the benefits of both models. The major limitations of such an approach may be the availability of professional staff and beds.

Combined hospice palliative care unit (with or without a contract with a community hospice)
Several hospitals have established geographic inpatient units that serve both hospice patients as well as hospital patients who have palliative care needs. The payment sources on such units may include Medicare hospice inpatient per diem, Medicare Part A, inpatient DRG, and other insurers (e.g., Medicaid and commercial). Because the needs of the patient populations are similar, regardless of payer, this model allows concentration of staff expertise and, theoretically, could enhance continuity of care from inpatient to home care to home hospice. Some programs have combined an inpatient unit with a contract for inpatient hospice care with a community hospice program (see sidebar "How Partnership Works").54, 55-57 The financial and contractual implications of such a hospice-hospital relationship will vary between programs.

Hospital outpatient palliative care clinic:

If resources permit, establishment of an outpatient palliative care clinic, in combination with one or more of the above services, will provide greater continuity of care after patients are discharged from the hospital.

Develop a Marketing and Publicity Plan

Colleagues, satisfied families, caregivers and referring professionals will be invaluable as marketers for a new palliative care program. A publicity plan with specific activities to promote the new program to internal and external target audiences may be a useful component of the overall business plan. Certain standard tools are inexpensive and should be considered in terms of their effectiveness and value for stimulating growth and utilization of the new program. They include:

  • Program brochure and direct mail campaign;
  • Introductory letters to physicians, nurses, administrators, trustees and hospital staff, preferably co-signed by the hospital CEO;
  • Educational programs for referring professionals, families and patients;
  • Local news and media stories and press briefings; and
  • Special public relations and fund-raising events.

Develop an Operations Plan

The next step in drafting a business plan is to identify and list the resources required to put the new program into operation. It may be helpful to obtain assistance from a hospital financial planner. The plan may include descriptions of various program components such as:

  • Administrative and management staff;
  • Interdisciplinary core clinical team (with staffing mix and core competencies);
  • Space and environment;
  • Patient capacity (number of beds and patients to be served per unit of staffing);
  • Medical and office equipment and supplies;
  • Formulary for medications;
  • Health records and secure storage space;
  • Safety and security;
  • Policies and procedures, care protocols or pathways (JCAHO pain and end-of-life care standards, transfer policies, sedation policies, etc.);58 and
  • Quality assurance (measurement/evaluation, outcomes database, satisfaction surveys, etc.).

Develop a Financial Plan

Drafting a financial plan based on cost estimates for marketing and operations of the palliative care program is the final and, to many, the most critical component of a convincing business plan. It may be helpful to seek the assistance of a budget or financial analyst at the hospital to ensure that your projections are reasonable and credible.

In the healthcare industry, payment rates for health services are established by third-party payers. Since 73% of deaths in the U.S. occur in persons over age 65, Medicare and Medicaid are the dominant payers for hospice and palliative care professional services. Medicaid, workers compensation and other local government sponsored-program payments may vary state by state.59, 60 Other funding sources include federal/state/private foundation grants and self-pay. Many programs rely heavily on philanthropy and grants. It may be reasonable to consider a special fund-raising campaign dedicated solely to this activity.

After identification of program-related costs (marketing and operations) and estimated anticipated program revenues from third-party payers and other funding sources, it becomes possible to judge whether or not revenue and funding are adequate.

The business plan should include a three-year program budget of revenues and expenses based on patient utilization and program growth assumptions. The budget should identify funding sources and projected revenues (for both hospital and physician fee income).

If possible, it should also quantify and document any value-added revenues that will result from the program. These might include:

  • Increased patient and family satisfaction
  • Reduction in length of stay through more timely discharges to home or to a long-term-care setting with hospice or other services (and associated increases in new hospital admissions)
  • Reduction in medically unnecessary, costly and burdensome high-tech interventions and procedures as a patient nears the end of life
  • Referrals to affiliate or owned programs such as hospice, home care or nursing home services

The financial plan can conclude with contingency plans and related financial scenarios should its assumptions and projections not hold.61, 62 If major funding sources include unreliable sources such hospital and medical school funding, grants or philanthropy, a long-term plan for financial sustainability (such as an endowment campaign) is likely to be necessary.

Related Reference

1.  Davis M, Walsh D, Nelson K, Konrad D, Legrand S.  The business of palliative medicine:  Management metrics for an acute-care inpatient unit. American Journal of Hospice & Palliative Care 2001;18(1).

PubMed, a service of the National Library of Medicine, provides access to over 11 million citations from MEDLINE and additional life science journals. PubMed includes links to many sites providing full text articles and other related resources.  Visit:  http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?db=PubMed


Additional Resources

Module 2: Creating Compelling Business and Financial Plans
New Orleans: Lynn Hill Spragens, MBA Consultant, The Bard Group, LLC

Module 5: Structurinng Hospital-Hospice Partnerships
Legal Issues in Hospital-Hospice (and Other) Partnerships. Brooke Bumpers, Esq. Hogan & Hartson, LLP

Session C: Financing a Palliative Care Program

Session D: Developing a Financial Plan

CAPC Marketing Tool: How to Promote Palliative Care at Your Hospital

Financial Spreadsheet Tool Model: Potential Impact
A CAPC Management Training Seminar
April 2001, New York City
The Bard Group, LLC
Excel Spreadsheet

Putting it All Together -- Making it Work
How to Fund Your Palliative Care Program
Module 5 / Closing
June 2002, Seattle, WA
Diane Meier, MD
PowerPoint Presentation

Seattle Conference Summary
A brief overview of information about the conference.

Developing a Compelling Business Case for your Palliative Care Program
A CAPC Management Training Seminar
February, 2002 Tampa, FL
PowerPoint Presentation

Data Collection Tool for Hospital Utilization and Cost Patterns

Health Care Financing in the United States
An overview of facts, issues and trends in healthcare financing methods and delivery system organization.

Preparing a Grant Application
How-to apply for grants, examples of grant proposals and funding resources

Live Fall Forum 2001 Webcast Available on CAPC Website
Developing a Compelling Business Case, Medicare Primer: Payments to Hospitals and Physicians and Alternative Models of Palliative Care Delivery sessions are available to view.

Business Case Development: Topics Focused on the Financial Plan (advanced)
A CAPC Fall Forum 2001 Workshop
October 2001, Chicago, IL
PowerPoint Presentation

Financial Planning -Grand Rounds
Lynn Hill Spragens, MBA, of The Bard Group, LLC, offers sound advice on developing the financial plan for your palliative care program in an hour audio presentation.

Creating a Compelling Business Case for Palliative Care: Financial Models
A CAPC Management Training Seminar
July 2001, Oakland, CA
PowerPoint Presentation

The Business of Palliative Medicine: Management Metrics for an Acute-Care Inpatient Unit
American Journal of Hospice & Palliative Care
Volume 18, Number 1
January/February 2001

Managing a Palliative Oncology Program: The Role of a Business Plan
Journal of Pain & Symptom Management
Volume 9, Number 2
February 1994

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