Opening a medical practice is a detailed, lengthy process that requires the utmost care and attention, every step of the way. The sense of ownership and agency that comes with running your own practice is unmatched in a larger hospital system. Also, the ability to “be your own boss” is a large draw for entrepreneurial providers who choose to enter private practice. The good news is that as difficult as it can be to get your practice started, it’s a goal that’s well within reach if you have the right information at your disposal. Our guide aims to get you started with everything you need to know to start your own practice.
It’s important to note upfront that there is no “one size fits all” formula for starting a medical practice. It might be worth your while to hire a seasoned, professional consultant who has started medical practices before and is aware of the potential pitfalls. After all, the details of starting up will vary from specialty to specialty, and some laws and regulations might be different from state to state. A professional will understand the variables and be able to help you plan accordingly. Some new practices might need to hire contractors to fit out their new offices, while others might find an available turnkey location. Overall, there are many common items that must be on your checklist when building your practice from the ground up.
Private Practice Funding Options
Like any business, startup funding is necessary for opening a medical practice and obtaining the needed capital can be tricky for a physician. Locum tenens work can be an ideal solution to the problem. One of the main reasons why physicians take locum tenens work with Mint Physician staffing agency is because they want to supplement their current income to pay off medical school loans. The same principality may be applied towards their entrepreneurial endeavors as well.
First-time business owners usually must go through the process of seeking small business loans from banks and other lending institutions to get started. While that may still be a viable option for physicians aspiring to build a practice, it’s not necessarily what they need to do. There are pros and cons involved with turning to lending institutions for startup capital. Physicians, especially hospitalists, are in high demand, and are compensated significantly more than other industries. This creates an advantage for physicians when they speak with a lender about short-term loans; providing they have the other necessary criteria that lenders look for on loan applications.
Alternatively, opening a medical practice from scratch is difficult work and one of the challenges that physicians with their own practice face is taking on administration and billing responsibilities. Hospitals are fully equipped with a staff to support the physician, alleviating them of the burden of managing a list of patients and trying to obtain payment from insurance providers. Truth be told, most physicians aren’t great with business in general and beginning a new practice with a small business loan debt may not be attractive.
Expenses and Responsibilities
It’s important to note that private practice physicians may wear various hats, like any business owner, but with added responsibilities. Typically, an expense sheet for a private medical practice will breakdown as follows:
A small medical office will generally consist of only a handful of employees, which can create payroll costs of $100k or more.
Finding a good office space is key for business. The range of rental costs can vary depending on city, practice type/needs/size, and the number of patients the physician may have. Rent may also increase over time which further contributes to expenses.
- Malpractice Insurance
The number of in-office hours will influence how much a medical practitioner may pay for insurance. This can range in the tens of thousands annually.
- Office Equipment and Supplies
These will no doubt vary in costs based on need. Common supplies that every private medical facility will require are latex gloves, bandages, alcohol/peroxide, syringes, bathroom cleaning supplies, pens, computers, etc.
- Diagnostic Equipment
This will also vary based on the practice.
Utility costs may range in the thousands each month, but heavily depends on the amount of time spent in office and what is needed exactly. Electricity and internet services are the most common expenses, but it’s possible some or all of these fees are covered in the rent at some office buildings.
Marketing expenses can be anywhere from $0 to $100k a year. This depends on the practice and the way that the physician acquires their patients. However, it is always recommended that any private practice devote at least some portion of their revenue towards digital marketing efforts.
While the journey towards opening a medical practice can be strenuous, working locum tenens for a physician staffing agency can make things easier. Locum tenens physicians have the advantage of traveling to different locations for short-term work, enabling them to get a better feel for where they would like to begin their private practice. They’re also able to build their network and thus have more resources available to them while they’re trying to get established. Before making the switch from full-time salaried physician to full-time entrepreneur/practicing physician, it may be wise for physicians to try locum tenens work to give themselves a leg up.Leave a reply →