Starting your own practice can be an exciting opportunity, and a great way to take ownership of your medical career. That said, the decision to go it alone can be challenging, and it’s not without significant risk.
Doctors are all about quality of care, but owning a practice will mean you also have to be very good at doing business, sometimes, on a grand scale. Often these two drivers conflict.
To keep your new practice on track, you'll need a clear and precise plan right from the start.
While most surgeons appreciate the benefits of private practice, many remain concerned about the risks so avoid taking the leap of faith.
Those who do though, often seem rewarded on a scale unheard of as an employee.
A private practice revolution is afoot and impacting the way surgeons set up a clinic.
Gone are the days when surgeons would set up their rooms, and what limited equipment they needed, in a family home.
Today, surgeons typically set up their practice in a large private space, such as an office, clinic, or a surgery centre.
They generally also need to set up as a private business, trading trust or limited company. With all the legal requirements and obligations that come with it. There's the HR to consider, insurance, accounting, certification and licensing, along with funding and law.
Many great surgeons are risk averse by nature (after all, no-one wants a heart surgeon that loves a gamble). As a result, they doubt their capacity to develop a successful private practice from the ground up.
Opening a practice is difficult, but it's far more productive, and less stressful with professional assistance to balance the grit and determination you'll need to succeed.
Three reasons to start your own practice
Every surgeon has a different motive for starting their private practice. Let's explore a few.
Some seek full autonomy and demand complete control over the type of patient care they deliver. The tight constrains of a public practice can often frustrate those wanting to push the envelope.
As your own boss, you can buy whatever medical equipment you choose. You will not be required to fill out any documents or wait for approval from the hospital administration, or other partners.
As a surgeon in private practice, you can also tailor the office workflow to your own needs. You have complete authority over hiring your personnel and any medical experts to assist your practice.
Lifestyle can be a major factor for anyone seeking self employment. The ability to schedule holidays with the family, attend seminars at leisure or network as needed to grow your practice can be appealing. According to research, 49% of doctors would accept a pay cut in return for more leisure time. - Medscape
When you own your own practice, you have complete control over how many hours you work, how many vacation days you take, or more importantly, how much time you spend with patients. After all, a good work-life balance is more popular than ever.
An opportunity for increased profit shouldn’t be overlooked.
Yes, there are pitfalls and overheads but ultimately, with good advice, in a successful private practice, you’ll be able to earn more, and keep it.
As the boss, of all you survey, you can scale the practice to multiple sites, or disciplines. You can structure your personal tax affairs in a way that maximises the financial return for your skill and effort, far more effectively than an employee can.
Ultimately as the practice gains popularity and turnover, your assets (and net worth) increase.
You are not just working for an income, you are building a financial future, an asset, with the possible added upside of a passive income for when you decide to spend more time on yourself.
What type of medical practice will you build?
1. Private Practice
When you start your medical practice, you assume all responsibility.
This will provide you complete control over how your practice runs. You will probably face more significant initial expenditures though for things like marketing and medical equipment, and you'll likely have to put in more hours because you're working on both the business and clinical side of the practice.
On top of that, you'll face the additional “dangers” that come with beginning a business, including competitive pressures, staff and often, debt.
2. Practice in groups
When you establish a private medical practice in a group, you split the workload (and profits) evenly with partners. Often this reduces the stress and general workload, but remember, with each reduction in input, comes a reduction in output.
These shorter hours can come at the sacrifice of having complete control over your practice as a private surgeon, but you may have easier access to working capital, minimising your initial costs.
Ultimately at this can be a great way for a young surgeon wanting to start out in private practice. Joining forces with more experienced business, or medical heads can ease a transition.
If this is the route you’re thinking of taking, remember to get great legal advice (as opposed to average legal advice). With lawyers, like plastic surgeons, you often get what you pay for.
You want to allow for a buyout of either partner, for a host of reasons, and of course some reputation and asset protection in the new partnership agreement. Amongst other things.
So, what's the best way to establish a medical practice?
There’s really no universal strategy for launching a private practice. By their very nature they’re bespoke and tailored to the requirements of the practice location, the practitioner, and their patients.
It‘s worthwhile to employ a professional consultant who has previously established medical practises, or at least successful startups, and is familiar with the dangers and challenges both can bring. Someone that can assist you with medical malpractice, compliance and workers' compensation strategies, to name but a few.
The specifics of launching a practice can even change by speciality, with some rules and regulations varying by location.
Seek advice, network with others and throw some ideas around before you dive in deep.
It’s important to understand what your point of difference will be (location, equipment, speciality?). Think about your cash burn while getting established, and whether your pocket (or credit) is deep enough to cover a worst case scenario.
Great planning can make, and save you millions.
If all the boxes are green - launch! Most that do, never look back.
YESpbm’s 5 top tips to get you started in private practice;
Tip 1 - Create a powerful framework to secure funding
A framework can be a simplified version of a full business plan with realistic income and debt estimates.
Include all of your expected practice expenses, debts, and projected income in your documents.
Bankers can detect which estimates are reasonable and not; it's their responsibility to make prudent investments, so you should back up whatever numbers you use.
Solid planning would allow for at least three years projections, and up to five years, in some instances.
Tip 2 - Save money
Get a great consultant - You can often submit your framework and loan request to the bank's medical department if one exists. These individuals specialise in the medical industry and are familiar with its risks, expenses, and revenue methods.
Examine your options - Submit your plan and loan requests to several banks. Shop it around. They want your business, as much as you want their money. If you do, you should receive several offers, each with somewhat different terms.