The world of medicine continues to change. In a 2018 American Medical Association (AMA) survey, 47.4% of the physicians were employed by various health organizations, while 45.9% owned their own practice. Ten percent of physicians were employed by physicians owned practices. Overall, 54% of physicians worked in a practice owned by physicians (AMA, 2019).
Graduating residents and fellows have a hard time starting their own practices for multiple reasons, including student loan burden, family obligations, lifestyle issues like being on call, and lack of management training. As a result of these challenges they look for an employment opportunity.
Starting and running a practice is a lot easier than getting into a medical school, graduating from medical school and surviving a grueling training program. Go into private practice, be your own boss and enjoy.
In this article I present a road map to go into solo practice.
Under the right circumstances the private practice model can be immensely satisfying. You can be your own boss. You can choose who to work with, build a respectable business, provide excellent patient care, and have more control when it comes to time management. It’s empowering to deliver patient care without external interference.
Get buy-in from family
Having a private practice means that you are committing to a small business — complete with its risks and rewards. Before committing to this option, talk to your spouse or significant other about the pros and cons of starting the practice.
For example, it will take time to build a practice, and as a result, it will take time to build a satisfactory revenue stream. Work-life balance also needs to be addressed. This may be even more pertinent to a female physician because of possible pregnancy and childcare. The private practice is a business and may encroach on personal time.
Frank discussion about these things is crucial. Your spouse or significant other may not be part of the practice, but the practice will be a part of his or her life, because patient care and business needs don’t automatically stop at 5 p.m.
Develop a business plan
You will need to develop a pro forma, or a document that demonstrates that your business will be financially viable. As you develop it, be conservative vs. overly optimistic, because you do not want to make financial commitments based on unrealistic expectations. If you’re looking to get a loan, keep in mind that the bank will need to see this.
The following information should be included in this document:
- It’s critical to start a practice in an area where there is need vs. competing with existing successful practices.
- Hospital privileges. If the practice involves inpatient care, you should apply for hospital privileges. It may take several months to get privileges, so start this process early. There are very few hospitals with closed staff models, and with proper documentation about your medical license, medical training and letters of recommendations, etc., it shouldn’t be too challenging to get privileges.
- The office will need a variety of staff members, including an office manager who can manage day-to-day operations. Also, the duties performed by your staff will depend on the type of practice you have. In primary care you may need staff to manage many more patient encounters than in a surgical practice.
- Equipment and supplies. You will need to furnish the space and depending on your specialty, procure necessary equipment needed to support patient care. For example, if you are a vascular surgeon you may need an ultrasound machine to image vessels. The clinical and clerical supplies will need to be ordered.
- Various types of insurance will be needed to run the practice and mitigate the risk, including professional liability to defend you in case of a malpractice lawsuit; workers compensation insurance since it is the law; business interruption which would be pertinent right now with COVID-19 interrupting business; practice overhead insurance in case you are not able to work for a period of time; and cybersecurity insurance in case patient records are compromised. On the personal side, life insurance and disability insurance should be obtained.
- Credentialing and contracts. As soon as the location has been decided upon, you should apply for a Medicare number for the practice. After receiving this number, approach other insurance companies for contracts. Without a Medicare number you will not be able to have contracts with other insurance companies. The credentialing with various insurance companies can be time consuming and can take several months.
- Regulatory compliance. It’s important to be compliant with OSHA and HIPAA and any other state regulations. There are published guidelines that should be followed.
- Under the Affordable Care Act it was mandated that all practices use an EMR. These can be expensive and difficult to operate. Consider using the same EMR as the one being used in the hospital where you are planning to have privileges. This will make data sharing much easier.
- Practice management software. Along with the EMR, software is needed for practice management issues, including scheduling, billing, and collections. Most of the EMR systems also offer this module.
- Billing and collections. Billing and collections can be done in house or can be contracted out to a billing company with a good track record. Outside company usually charge between 4-8% depending on the services being used by the practice.
- Good communication with referring physicians and excellent patient care are the best marketing tools. Also, consider using digital, print, audiovisual, and social media to market your practice. A comprehensive website is crucial to the success of the practice. You can write articles for local newspaper and appear on local TV and radio stations. Social media like Facebook can be used to promote the practice. Presentation to local physicians can be very helpful in developing the practice.
- Managing the office. An employee manual should be created and made available to all employees. Job descriptions should be written and followed. Also, in a small practice, employees should learn one another’s jobs, as sometimes they will need to substitute for each other. For example if the front desk person falls ill, the medical assistant responsible for getting the patient ready to be seen by the doctor can also work at the front desk.
Clinical Professor of Surgery at Western Michigan University Homer Stryker M.D. School of Medicine. Dr. Jain is CEO of National Surgical Ventures LLC, President and CEO of National Office Endovascular labs LLC, and is Editor of the book, Office-based Endovascular Centers.
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