Should I Open a Medical Practice in This Environment?

In the past few months I’ve been asked a couple of times what advice I would give to someone that is opening a practice from scratch. And in the same conversation I’m asked, do you think, considering everything that is going on now, if it is a good idea to open a medical practice.

My short answer is, go for it! My long answer is, well, more complicated.

First, I think it is important to assess one’s priorities and determine the true motivation for opening up the practice. Motivation – or the reason why – is very important because if one opens the clinic for the wrong reasons, failure is often the consequence.

Here is why… during the journey of opening one’s own medical practice, one will no doubt be challenged, get burned out and perhaps even question if this was the right thing to do or ask yourself if this is even worth it. If one’s motivation is fragile and things get tough, the likelihood one will preserver through it will be more difficult.

Thus, in our experience, the motivation has to be more than money, be your own boss or just to say you have your “own” practice.

So the question for me isn’t whether the conditions are right to open up a practice, but rather, do you have the right motivation to open up a practice in this environment. Because what one selects as the reason is what will give you the strength to forge ahead regardless of good or bad times.

Once you’ve settled that, then you can move on.

I jotted down these 12 points regarding opening up a practice. They aren’t really advice or tips per se, but more my thoughts. Here we go:

  1.  First thing first… join SOAPM. What is SOAPM? Glad you asked. Go here and here to find out.
  2. Location, location, location. Just like any other business, location is very important. Research the area. Figure out the type of “patient mix”, demographics, access and all those great things that make a great location. Tip: Census data can help you get started with this research.
  3. Understand that working for yourself is going to be more stressful and more difficult than working for someone else. Why? Because the buck stops with you.
  4. Although the work is more stressful and probably work more than you’ve ever worked in your life, the personal and professional rewards will be much greater than you’ve ever experienced (and potentially even greater financially).
  5. Understand that the practice is a “business” just like anything else. What that means is that at the end of the day, more money has to come in than go out. Don’t forget that because you can’t help people in need if you are in need.
  6. As soon as you can, hire a real business manager.
  7. Be prepared to make sacrifices. For example, sacrifice time with your family.
  8. I’d recommend finding “consultants” to help you get things in order. They will cost you money but it is a good investment. Also, find people to handle your hospital and insurance company credentialing process.
  9. Try to find other “solo” physicians in the area that you can share the on call schedule with you. Otherwise be prepared to work 24/7 until you find another doc.
  10. Although it is expensive, start the practice with a good EMR and a very good Practice Management software. Thanks to Obama, there is an opportunity to get financial help with this expense.
  11. Join a physician buying group ASAP. This will help you offset one of the largest expenses in a pediatric office (i.e., vaccines). Group Purchasing Groups will also help you get discounts on other items.
  12. Remember, if failure is not an option, either is success.

This list is not comprehensive. There are many, many more things to consider. But I figure it is enough to get you thinking about a few things before you begin the process.

The AAP also has some resources in this area: For example, Practice Management Consultant

For those that started a practice recently, what advice, tips or pearls of wisdom would you give someone that was starting today? 

10 thoughts on “Should I Open a Medical Practice in This Environment?”

  1. We are about 18 months post opening day of opening. I second all the tips Brandon mentioned with emphasis on the practice management section on the AAP website. I had no clue how to start a business let alone a medical practice when my husband approached me with the idea. I started with an article from AAP…How to start a medical practice…the rest is history. 18 months later my #1tip would be the motto…you have to spend money to make money! We moved into our newly built offices in August. In less than a year we tripled our patient list. I attribute about 50-60% of this to word of mouth and the other half through marketing. We have a lot of competition and most of those practices have been around 20+ years. We have our logo all over, ads in paper, tabling at community events, tons of giveaways including tee-shirts, annual open house with food, entertainment, information. That goes without saying…you must have a staff who will track all new patients to see how they heard about you. So far every thing we have done has been successful and more than paid for itself when I look at the number of new patients gained!

    1. The tip about tracking your patients is an excellent one. Something that I often forget to implement.

      Sounds like you’ve done an awesome job managing the practice.

      Thanks for sharing your tips. All great info.

  2. As a medical practice broker I’m naturally biased towards acquisitions vs. start-ups, but I honestly believe that an acquisition is a better option in many cases. The combination of actual startup cost and opportunity cost can far exceed the price of an acquisition. The acquisition gives the Doc an established patient base and cashflow from day 1 (assuming the proper transition period is effectuated).

    The real question is whether a Doc should consider private practice at all. A lot of younger doctors are coming out of residency and fellowship saddled with huge debts and have little interest in entering private practice. The first priority for many is to obtain an employed position and pay down debt. From my experience younger doctors are more inclined to enter private practice after 5+ years of working for a hospital or group, but a decent amount do end up entering private practice down the road.

    I hear a lot of doom and gloom predicting the end of the private practice model. I am more of an optimist. While the viability of many small practices will certainly come into question as a result of managed care, increased patient volume, EMR, quality metric reporting, etc, I don’t believe private practices will go away altogether. They will just need to get leaner and meaner in order to thrive and survive in the new health care environment.

  3. Best advice to Docs starting off-Try all you can within reasonable limits to keep your overhead low. It will make the start up period less stressful.

  4. My best advice to entrepreneur doctors: think outside the box. Name your values, build from your strengths and be prepared to work hard. I loved Guy Kawasaki’s Art of the Start. Just because medicine has always been practiced in a given way doesn’t mean you have to follow the pack. New ideas, better technology, stronger doctor-patient relationships… Everybody wins.

    The value of a good Advisory Board and regular review of your practice goals and progress cannot be over-stated. Business plans, P&Ls, budget forecasting, raising venture capital… Doctors can learn to run a business, or they should hire someone who will. Don’t ever skimp on the management. Best of luck is always important, too.

  5. The overhead necessary to start a medical practice is comparable to, and exceeds in many cases, that of a tech start up. Tech entrepreneurs, indeed, many small business people routinely stare into the abyss when the future of their companies is in question.

    Due diligence is extremely important. Quantifying costs and projecting revenues, to the penny, is critical, as is routine benchmarking to check performance relative to that plan and projections.

    Not an impossible task by any means, but so few doctors have ever written a business plan. or even a marketing plan.

    I think the question of motivation is very important, and a business plan helps more precisely define and analyze that sentiment.

    There was a great article in the New York Times recently about IBM’s CEO, Samuel Palmisano.

    Management styles can be infinitely complex, but the most elegant can be distilled to simplicity. From the article:

    He says his guiding framework boils down to four questions:

    • “Why would someone spend their money with you — so what is unique about you?”
    • “Why would somebody work for you?”
    • “Why would society allow you to operate in their defined geography — their country?”
    • “And why would somebody invest their money with you?”

    1. I have to say the hardest and most time consuming task was writing a business plan because there was little guidance I actually found on AAP or on website in general. I finally found one that a solo doctor put out on the web and it really helped me with ours. The numbers were a bit scary but than again I was coming at it from no experience and grossly underestimated our projected revenue…Thank God! What a great workshop that could be offered at annual AAP conference!

      1. I’d love to see the AAP embrace the business side of pediatrics more, but the truth is that the AAP will be focusing less on independent physicians and more on employed docs.

        There are less and less pediatricians opening up private practices, so the AAP has made a strategic decision to focus on those docs’ needs.

        Unfortunate.

        Thanks for your comments Dina.

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