Surgeons: 5 Top Tips for Setting up in Private Practice
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.
1. Autonomy
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.
2. Lifestyle
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.
3. Income
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.
Determine which terms are most important to you - interest rate, fees (total cost of money) repayment timeline, and so on, then base your decision on those considerations.
Stay traditional - When developing your framework, take a traditional approach to purchasing equipment and furniture – and stick to it.
Unless there’s a compelling business reason (such as opening a new clinic in Mayfair perhaps), you wont need luxury chairs or cutting-edge machinery just yet. All of that will come with time and success; right now, it's all about preparing yourself for that success. “Plant good seeds now, to pick a great crop later” - Aaron Banks.
Use the waiting period wisely - While the banks are reviewing your framework and deciding whether to approve your loan request, you can tackle some of the next critical steps, such as reviewing your lease, determining whether you'll need to hire a contractor to modify your space, incorporating as a legal entity, obtaining a tax ID, engaging recruiters to test the market, researching liability and medical malpractice insurance etc..
Tip 3 - Invest in good equipment and great staff
After you've secured a loan and established a line of credit, you'll be able to begin assembling the meat and potatoes of your business, employing your team and purchasing the office and medical equipment you'll require.
This process is often easier said than done, and each decision requires extensive research. In the current political climate, hiring someone can be easy, getting rid of them should they turn bad though can be time consuming, costly and exhausting!
The best entrepreneurs are out-of-the-box thinkers. Try it on for size yourself.
Why not poach a great practice manager from a competitor (It’s far easier than you think so be careful - it cuts both ways). Perhaps a receptionist you’ve been impressed by, or a former colleague that wants a little more seniority or salary, without taking the big steps you’re taking just yet.
Keep an eye out for auctions selling liquidated furniture, or better yet, medical equipment. As always, a dollar saved is a dollar earned. Although in reality, with tax and compliance costs, that dollar saved is probably now about four dollars earnt! So be careful.
Once again, with a bit of forethought and the right help, you can set yourself up for success without breaking too much of a sweat.
Tip 4 - PLAN to succeed
Before you can open your doors, you‘ve got to tick a LOT of boxes. Do this in tandem with steps one and two. Allow plenty of time before opening to organise as a legal business, obtain insurance, and set policies and procedures.
Only when all boxes are ticked, certificates issued, staff contracts signed and signage above the door should you think of seeing your first patient.
Tip 5 - Continually assess performance. The numbers ARE the numbers.
If you've come this far, you've put in a lot of blood, sweat, and tears… but haven't been paid for it yet!
Don’t worry, it’ll all be worthwhile when you cut the ribbon and welcome your first patients to your very own medical practice.
It's an accomplishment that many healthcare providers don't get to experience, so take a minute to congratulate yourself and revel in the freedom.
Once the practice is open for business, giving great care and running smoothly, you'll finally need a structure in place for team accountability.
Sure, you've recruited a great Practice Manager, but how can you hold them accountable, especially when you’re seeing patients all day?
Hire a consultant with experience building and overseeing successful businesses. They should examine operations regularly, run all the numbers and report back to you. Independent auditing of accounts, procedures, HR and their management style is vital. Plus, it gives you an arms length to have any difficult conversations with someone you’ll be working really closely with.
Financial & Legal Considerations
Many administrative, financial, and legal considerations are handled by doctors interested in establishing a private practice.
When establishing a new practice, you’ll need to seek expert assistance of solid accountants and lawyers.
Go off recommendations, not Google.
Ask around about their success rate when things go wrong, such as tax audits or legal defence (don’t just rely on Gogle, or their own marketing material). Check their fee structures. Meet with each first and go away to review and regroup before making a decision. Are you comfortable that the expert you’ve met with will actually handle the work personally, or will they palm it off to a junior? (often at senior rates).
Remember, it’s your livelihood you are putting in their hands. And your hard earned money.
It’s critical to choose an accountant and solicitor that is a good fit for you and the practice.
Don’t panic! It’ll take time and patience to establish a great practice.
Setting up a private practice, whether you intend to work independently, or with other practitioners on your team, will take time, patience, and effort.
Starting any business can be a stressful experience. It’s important to remember that all entrepreneurs, regardless of industry, face roadblocks along the way. So don’t give up!
There are ways to start your new practice without facing the entire burden on your own.
Finally, when you’re successful, you’ll enjoy the independence of being your own boss, and the fruits of your own labour, blood, sweat and tears.
If you're thinking about making the transition from employee to business owner, get in touch with YESpbm right away. We’ve helped dozens of new private practitioners get established, while protecting their wealth and their reputations.
Reach out here for a free 15 minute chat about how we can add value early on.