While many medical students dream of fast-paced hospital work, others dream–and rightly so–of one day opening a private practice. A private practice is a doctor’s office owned entirely by one or more physicians, instead of a hospital or health system.
Whereas working for a hospital can give some physicians the freedom to travel or transfer to other cities, opening a private practice allows a physician the opportunity to be her own boss and work with like-minded professionals, to settle into the community, and to become a part of the lives of her patients.
Private practices are often more relaxed than other medical settings, and there are certainly fewer corporate restrictions. With a private practice, a doctor has the opportunity to set the tone and company culture of the office. And a private practice can be decorated to the physician’s aesthetic taste, which may not seem that important until you spend a lot of time in a hospital.
If you have a loyal following of patients and are contemplating opening a private practice of your own, there are a few things to consider. Before leaving your current employment, it’s important to factor in all the costs.
Facility
Gaining a lease for a facility can run into the tens of thousands, and that’s prior to making necessary amendments to the existing floor plan. As a sole practitioner, you absorb the costs. Having a business plan is necessary to present to a lender in order to secure funds and acquire the loan structure that benefits you. Keep in mind, while an older existing structure may be easier to enter, a new facility from the ground up is energy efficient and designed to suit your specific needs.
That being said, one of the reasons some physicians gravitate towards a private practice is to have the opportunity to set the tone and visual style of the office. A doctor’s office can be warm and inviting or, conversely, ultra-modern and aesthetically stunning. The doctor can create an environment she is happy to see every day.
Other physicians simply don’t care about the decor of their practice. Ready-made doctor’s offices are available for lease across the country; they often aren’t much to look at, but they’re completely functional and, in many cases, turnkey.
Malpractice and Workers’ Compensation Insurance
In order to prevent the loss of not only your medical practice but also your home and savings, you must have medical malpractice and workers’ compensation insurance in place. Since you are new to operating your own business, hiring a consultant with expertise in the medical field will ensure that you have adequate insurance from the start. Medical indemnity and public liability insurance are also a requirement.
Equipment and Supplies
Besides the facility, you’ll need medical equipment and supplies. Depending on the practice, each piece of equipment can cost tens of thousands. Thankfully, you have multiple options. You can lease or finance it or search online for used equipment through universities and other medical facilities. These auctions provide yet another viable resource. Click here for a guide on lab equipment auctions from Excedr.com, a company whose specialty is providing flexible leasing and equipment service plans. Their auction page lists laboratory equipment-specific auction websites, options outside of the industry where you might find needed equipment, and spot-on tips for purchasing equipment at auctions.
Stellar Marketing Campaign
You already have a small following. However, now as a sole practitioner, you must increase your patient base. Thanks to advancements in technology, you can use social media as a less expensive way to draw traffic to your website. For example, if you’re a dentist, you can do away with expensive ads on the radio until you establish real growth. But don’t discount more traditional marketing methods. These include radio and television commercials, local newspaper and magazine ads, community sponsorships, and direct mailings of flyers, postcards, and collateral marketing materials. A physician with a private practice could benefit from being actively involved in the community, both for brand exposure and for giving back to the community that supports her. A private practice can sponsor a wide range of groups and activities, from youth sports teams to charitable food and medicine drives.
Use Existing Customers
Another way to increase business is to utilize your existing customers. Word of mouth is very effective. If your loyal base is happy, they will spread the word freely to their family, friends, and co-workers. This gives you additional customers at a zero net cost to you. One of the best ways to gain word-of-mouth advertising is to provide the best care possible.
Full Staff
In the beginning, you must factor in the costs of having a full staff. Check with other practitioners in private practice to get an on-average range to work with. This information needs to be part of your business plan prior to presenting it to a bank for a loan. Included in the cost of an IT technician and bookkeeper are also salaries to consider.
Outsourcing
You have a business to run and patients to tend to. Eliminate positions such as payroll, IT, and medical billing because they are considerably less expensive when they are outsourced. By having the services provided by an outside company, you free up valuable time in training and monitoring and money for full-time salaries on staff. You’ll also need an accountant to handle quarterly taxes and remain updated on the changing tax laws that apply to medical facilities.
Additional Expenses
As a regulated professional, you will need to have software programs set up to accept Medicare, accept payments, and provide safe and secure access to the patient database. Unfortunately, there’s no way of getting around the use of software in medical practices. Computers, tables, desks, chairs, and basic office supplies are also essential.
Going out on your own and opening a private practice is possible. However, there are many costs involved. Just make sure it’s the right time for you financially. Otherwise, you’ll invest an abundance of time and money without a return on your investment.
