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Business Case Funding

July 19, 2013


In this era of Accountable Care, Hospital providers will be facing significant revenue shrinkage from all payers.  As revenue dries up, so does internal funding for new capital initiatives.  Internal competition for scarce capital dollars will be fierce.


As payments become bundled, laboratory management needs to be able to express their “value” from a business case standpoint in order to get capital funding. This blog is designed to teach you how to develop compelling business cases and present them to senior leadership to obtain required funding.


Let’s start this discussion by examining what is motivating your senior leaders.  According to HealthLeaders, (January – February 2013, Page 54) the top three items that will determine executive incentive payments are:


1) Improving operating margin (64%),

2) Achieving clinical quality targets (54%), and

3) Meeting patient satisfaction targets (53%).


A well-conceived business case that you want to get funded, should help your organization achieve one or more of the three goals listed above. 


In my mind, a business case is a well-conceived story with three potentially different plots.  

  1. Story number one is the Net Revenue Story—an example would be a laboratory inreach / outreach pro forma.  

  2. The second plot is the Expense Savings Saga.  Laboratory management understands this story line—examples could include service line insourcing justification, laboratory system consolidation, islands of automation or total lab automation, switching reference laboratories, and/or a Lean transformation. 

  3. The third story plot is what I like to call the Cost Avoidance within the Care Continuum—sometimes this is a tough sell because the investment or expense is in the lab but the savings occur elsewhere in the care continuum; a few examples discussed at industry meetings and in trade journals include 1) High-risk patient screening for MRSA and C-Diff, and 2) Transfusion Management Programs.


Determine the contribution margin or cost savings and your timeline to capture it.  This is a lot of hard work!  To learn more about how to develop the actual business case, email me at for a download of my recent presentation titled "Develop a Business Case That Will Get Your Initiative Funded."


Keep your boss fully informed and answer all his/her questions and concerns—show your passion and belief in the viability of this initiative.  In addition, gain the trust and respect of finance by working with and through them throughout the planning process—get your hands dirty by doing the research on the market, the resources, and the costs.  Your project will be ready for the C-suite presentation when finance says it’s ready—usually when the numbers are sound and it passes the internal hurtle rate


Summarized the opportunity on a one page document and include the relevant topics from the list below:

  • Initiative name and business purpose

  • Value proposition, or opportunity, or solved problem—remember the C-suite is focused on improving margins, hitting clinical targets, and improving patient satisfaction scores.

  • The market, the customer, and targeted market share.

  • The savings initiative, the big buckets, your vetted estimates, your passion along with risks and rewards

  • If a contribution margin initiative then:  Income statement:  net revenues, expenses, and profits for Years 0 through 5, or

  • If a cost savings initiative then: projected annual savings year after year

  • The required investments Years 0 through 5 & in total

  • The return on the investment (ROI)

  • The close—Ask for the resources and summarize your timeline to launch. 

  • Anticipate Senior Leader questions and have ready answers prepared.

Tips on preparing your presentation: 

  1. Practice your delivery and do not ramble

  2. Stay within your timeframe—it is usually very limited

  3. Anticipate Senior Leader questions, i.e. have ready answers

  4. Be confident—you have earned the right because of your hard work

  5. Be passionate—it builds trust and will get you funded











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