My practice partner and I had been working together for about a year in our small family practice. A medical equipment salesperson approached us promoting a new device that would surely bring in additional practice revenue.

After considering the purchase, we decided to proceed. We signed a loan agreement and purchased the device. It would take 5 years to pay back the loan. We were convinced the device would generate procedures that would easily cover the loan payments.

medical device annual management plan

Eighteen months later, we had only used the device about a dozen times, and we were stuck making that monthly payment with little revenue to offset the cost.

We had been overly optimistic in our assessment of the need for the device. And we had not considered what we would do if it failed to match the salesperson's inflated return on investment.

As a former small business owner, I have been guilty of the sin of failing to perform a basic financial analysis prior to purchasing new equipment. Furthermore, my partner and I never took the time to budget appropriately or formally plan for each coming year.

Later in my career, as I studied hospital finances and participated in regular strategic and management planning meetings, I came to appreciate their importance. In hospital management, it is expected that annual goals and budgets will be developed. And executives and their direct reports will be held accountable to them.

The earlier in its development that a healthcare organization adopts a formal budgeting and management planning process, the more likely it is to meet and exceed its goals. The old adage is true: you cannot manage what you don't measure.

The Annual Management Plan

Many hospital systems, including ours, went though a major strategic planning process every 3 to 5 years. But we found that such a plan became outdated very quickly. So we began to focus our efforts on creating an annual management plan that was strategic in nature.

This process dovetailed with the annual budget process. We could therefore push the organization to identify and pursue big goals on a regular basis.

For this post, I would like to outline a fairly straightforward, though somewhat time-consuming, process that any business can follow. This process can be adopted to medical groups, hospice organizations, nursing homes and hospitals.

When applied appropriately, it will help such organizations to optimize their performance, and drive growth and improvements in satisfaction, quality and financial performance.

I'll start by providing an outline of the process that you can follow. The goal of this planning process is to review what has happened in the recent past, analyze the current situation, and then plan for the coming year.

It’s been demonstrated many times that those with a plan are much more likely to make progress toward important goals.

annual management plan not to fail

So, here are the general steps to follow when creating a new management plan for the upcoming year.


In creating this plan, I'm starting with two assumptions. You may need to pause the management planning process and address these foundational steps first, if these assumptions are not true.

Assumption #1 – Mission, Values and Vision

Your organization has a mission, values and vision that have been articulated clearly and are understood by everyone. The goals that will be chosen for the coming year must be aligned with these fundamental concepts.

annual management plan vision

Keep the vision in mind.

The one item that could be rolled into the planning process could be updating the vision. The vision is not as fixed as the mission, so it can change from time to time. It is therefore possible to start the management planning process by updating the vision.

Then the new management goals can be selected to start to achieve the new vision. It is rare that a one year is enough to completely achieve the vision.

Here's why.

The definition of vision is as follows (from “An aspirational description of what an organization would like to achieve or accomplish in the mid-term or long-term future.”

So, a statement such as “improve sales by 10%,” or “increase revenues and earnings by 5% next year,” are not what I consider meaningful vision statements.

A vision statement is more profound and long-term: “Our organization will become the premier provider of in-home care in our county,” or “We will be the number one orthopedic group in the state, as measured by surgical volume.”

These are big audacious goals that qualify to be part of a vision statement.

Our annual management goals are going to help us move toward the fulfilment of the vision.

Assumption #2 – Pillars

At my hospital, we identified major domains or pillars that serve as the foundation for the success of the organization. These were fairly stable, but occasionally changed. For us, they generally included the following domains:

  1. Financial
  2. Growth
  3. People
  4. Customer satisfaction
  5. Quality
  6. Physicians
annual management plan pillars

Pillars serve as the foundation.

Some organizations include employees and physicians under the People pillar. Academic organizations might have a pillar for Research or Technology.

A Word About the Budget

Sometimes the question comes up: should we complete the budget first or the management plan first?

To some extent the processes are done in tandem. However, it is impossible to complete the budget without knowing what new initiatives, service lines or technologies are going to be developed. If a new unit is to be opened or a management firm consulted, there will be new expenses generated.

And new revenues must be added to the budget if these new services are designed to generate additional income.

The final budget can, therefore, only be completed after the management goals have been approved for the new year.

Creating the Annual Management Plan

I divide the process into six phases, each of which will be described in more detail:

  1. Preparation
  2. Review of previous budget, previous management plan, prior results and market analysis.
  3. Analyze and discuss, including a SWOT Analysis
  4. Brainstorm preliminary goals
  5. Draft the list of general goals
  6. Finalize plan by creating SMART goals with assigned accountability and milestones to achieve
annual management plan process

The Annual Management Planning Process

1. Preparation

The team will need to have a basis from which to make recommendations and select meaningful goals. That will require information to set the stage for analysis and brainstorming.

A set of documents will need to be prepared prior to the first meeting. The reports that will need to be reviewed prior to, and discussed during, first planning meeting will include the following:

  • Financial Statements. The Profit and Loss Statement (also called an Income and Expense Statement). You probably want to look at 3 to 5 years of annual reports, if possible, and 12 months of monthly data. These will also include a comparison of the budget created last year to the actual financial performance.
  • Volumes. Is the number of clients, patients, residents, etc. increasing or decreasing? What are the trends? Depending on the business, it could be the number of widgets sold, tests completed, or treatments delivered.
  • Market Analysis. To the extent possible, bring in an analysis of what has happened over the past year or so with respect to the market. How many competitors are there? What is the market share of each? Is your share going up or down (you may be growing but still losing market share if others are growing faster).

Other Considerations

The Preparation Phase also includes determining the following:

  • Who will be attending? Just the executive team (CEO, COO, etc.), or directors or managers? Who will be presenting the reports and leading the sessions? Who will take notes?
  • Where will the review, brainstorming and selection of goals take place? Will some sessions be held at an offsite location (at a so-called retreat)? This tends to help avoid interruptions and distractions more than holding all of the meetings at the main office location.
  • Will an outside speaker be needed to help set the stage with a broad market overview, or a review of the regulatory environment for your business? Perhaps a speaker with a legal or risk management perspective is needed. Or you might ask someone from one of your professional associations to provide a summary of recent trends in the field (like the American Hospital Association, the American Medical Group Association or the Ambulatory Surgery Center Association, or similar national or state associations).

Someone will need to be assigned to make the arrangements (reserve meeting space, hotel, meals, etc.).

annual management plan meeting

Conference room for discussing and debating new goals.

2. Review and Market Update

This phase will take from one-half to one full day to complete.

At the beginning of this review, there should be an effort made to do some team building. This is something that should be done all year long, but at this meeting it will be helpful if the participants feel comfortable openly discussing issues with one another.

Team Building

You might simply have each person describe their background and their families. Or you can go further by sharing little known facts, and getting into hobbies and interests outside of work.

You can use specific techniques to break the ice and generate rapport among the participants, such as:

  • Two Truths and a Lie. This is one of my favorites. In groups of 4 to 10, each member identifies three “facts” about themselves, two of which are true and one of which is completely made up. The others attempt to guess which item is false. Then the speaker explains which is false and expounds on the others. Each takes a turn doing the same.
  • The Observation Game. Everyone is paired up with a partner. Then you both stand facing each other for about a minute, observing the appearance of their partner. The moderator has everyone turn away from their partners. One partner changes something about their appearance, such as removing eyeglasses or a bracelet, placing a pen in their shirt pocket, etc. Then the partners are asked to turn towards each other and the observer is given 30 seconds to determine what is different. Then the partners switch roles.

These games tend to help participants loosen up and feel comfortable with the group. When appropriate, more sophisticated team building methods can be employed.

Review of Reports with Discussion

Once the team building is done, a review of the prior year updates on financial, HR and satisfaction data are completed. This should be sufficient to prime a smaller organization and might take 2 to 4 hours to complete.

For a large organization, this might be an all day retreat with the hospital board, CEO, CFO, CMO and other senior executives, that includes a review of all of the above issues. It might include other presentations, such as:

  • an overview of national trends in your business by a professional society representative as noted above,
  • a lecture by a futurist about innovations in healthcare that might impact your organization,
  • new healthcare delivery models, and
  • changes coming to Medicare and Medicaid reimbursement.

This time is spent learning, digesting and internalizing new information in preparation for the next stage of the process. Discussion should be encouraged, but it is a bit early to start talking about specific goals or new initiatives.

Be sure that these reports are distributed PRIOR to the meeting so participants can come prepared to discuss them.

3. Analysis and Discussion

annual management plan SWOT analysis

Components of the SWOT Analysis

At this point, the information reviewed needs to be put into context and analyzed. Probably the best way to accomplish this is to do a SWOT analysis. I have described this process in some detail at From SWOT Analysis to Inspired Goal Setting.

Briefly, a moderator is going to lead a discussion encouraging participants to identify the Strengths, Weaknesses, Opportunities and Threats that exist for the organization. These observations need to be captured in written form during an unbridled brainstorming session without regard to the relative importance or magnitude of the strength, weakness, opportunity or threat.

During a break, someone will then combine and categorize the results of the SWOT Analysis. The break for this can be as brief as a lunch or overnight break, or over a period of days back at the office.

4. Brainstorming Preliminary Goals

Following the collation and categorization of the items identified during the SWOT analysis, a separate meeting will be held to write out goals based on the analysis.

annual management plan new goals

This SWOT analysis can drive the process by creating goals that:

  • Capitalize on the Strengths of the organization,
  • Address the Weaknesses of the organization,
  • Take advantage of Opportunities open to the organization,
  • Minimize Threats to the organization, and,
  • Address combinations of the above factors.

When the team is together again, everyone takes turns articulating goals that follow the above outline. At this point, the goals do not need to be written in final form – just a form that is easy to understand and categorize under a given pillar.

Each goal is assigned to one of the Pillars. To facilitate the prioritization process, each goal can be listed on a document under the appropriate pillar. Then each team member assigns a number to the goal indicating the relative importance of each, and the name of a team member that should have accountability for the goal if it is adopted.

annual management plan goal ranking

Ranking the proposed goals.

It is probably best to use three levels of importance:

  1. Most critical and important – to be addressed quickly
  2. Secondary importance – address if resources allow after goals rated #1 have been addressed
  3. Least important – possibly to be considered at next year’s planning process, if ever

Someone must then calculate the average ranking of each goal. The list of goals and rankings must be distributed and discussed at a subsequent planning meeting.

5. Goal Selection

The CEO or other leader presents the list of draft goals and rankings at a subsequent meeting.

The team will look at the importance and balance of each of the goals. It will also consider the budgetary implications of the proposed goals. If not presented previously, estimated expenses and/or potential income associated with each goal will be listed parenthetically.

The team will select goals with the highest rankings, and confirm that the “owner” of each goal is appropriate and that it is assigned to the correct Pillar.

By the end of the meeting, each team member will have a list of goals which he/she will be responsible for during the coming year.

6. Write Finalized Goals and Management Plan

Each leader is asked to rework his or her goals offline such that the statement of the goal includes ALL of the following components (as discussed in How I'm Using Smart Goals). Each goal will be:

  • Specific. It states a change that is clear to anyone reading the goal. It is not general in nature like “improve safety” or “reduce employee issues.”
  • Measurable. The goal itself states or implies the change in the measure, such as “increase revenues by 10%,” or “reduce nursing turnover in the ICU from 10% to 6%.” Or it will describe a clear endpoint, such as “opening of the new unit.”
  • Attainable. The goal should be a stretch to accomplish, but still possible.
  • Relevant. It addresses an important issue that will support the previously described vision and make a significant contribution to the organization's finances, quality, community standing or similar aspect.
  • Time-specific with a deadline. You should at least define the quarter when it will be completed. In addition, separate from the deadline, a series of milestones should be included as a footnote, or separately in another document, in order to support the next step of the process.

Following some “wordsmithing,” the team and/or the board or CEO finalizes and approves the plan.

Using the information within the document, a dashboard is created for each of the accountable parties that lists each goal, the milestones for the goal, and a place to write final grade for the goal.

annual management plan dashboard

Dashboard for the new goals.

The management team will review this document quarterly in order to maintain accountability AND to identify when assistance or resources are needed.


I've tried to provide a brief overview of a management planning process that any organization can follow. It can be adapted based on the resources available to organize the planning process.

Once the goals have been selected, budget aspects applied and accountable parties assigned, the hard work of implementation follows. However, following this process on an annual basis will greatly improve an organization's chances of continuing to grow and succeed.

Next Steps

If you're part of an executive team, pull out your annual management plan and see if it follows the guidelines presented here. Is there a dashboard that can be used to track implementation of the goals for each VP or Director?

If you are just getting into management, ask the CEO or Executive Director if a Management Plan exists, and look it over.

Check to see if SMART Goals are being used and if there is a single accountable owner of each goal.

If you're the leader of a small to medium-sized medical group or similar organization and you don't have an annual management plan process, start to develop one using these suggestions.

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