Starting Your Own Medical Practice is Tougher Than You Think
Starting Your Practice
To even think about starting your practice, you need to do TONS of paperwork first. You need your NPI number, your Tax ID number, your Articles of Organization, Insurances (good luck!), hospital privileges, a website, and IT guy, and a place to buy all your stuff.
That isn't including having to figure out the budget for the next 6 months to a year, along with trying to get small business loans, and finding out how much medical equipment really costs. You need all of this for your business plan, which has to be dead on. Back in the day, banks handed out money like candy, now you actually have to prove you aren't going to run your business into the ground.
So what did I learn?
- Keep a spreadsheet for finances
- Have a super strong business plan.
- Defer your student loans for at least 6 months
- Have plenty of capital. You'll need around 3-4 months of liquid capital to pay the bills.
- Have an IT guy from the word go.
- Build your infrastructure for the future, not for now.
- Buy used for some things, like autoclaves, but buy new for treatment tables and other high dollar equipment. You get tax breaks.
- Try to find a move in ready space. Building out an office space takes a TON of time, that you don't have.
- BUDGET EVERYTHING AND STICK TO IT.
- Have an amazing website.
Getting the practice running
Once you have gotten all the paperwork done, it's time to move in and get things going. You are going to have a break down of three things.
- Medical Equipment Setup and Treatment Rooms
You really need to think this out. Make sure you have everything you need. Also, if you can't afford to setup all your treatment rooms right this second, it's ok. Setup the ones you can and then buy the other equipment as time goes on. Each treatment room is going to need an exam table, a stool, a mayo stand, sundry jars, hand sanitizer, posters, and a place to put your tablet/laptop. Also make sure you have all the consumables for at least the first 2 months. I know that sounds crazy, but you are going to go through them like crazy.
Do not skimp on this. It is critical that you are ready to rock and roll the second the doors open.
Hire a good IT guy or make friends with one you can pay in beer. You are going to need it. You need to get hooked up to your EMR, have streaming music, have computers installed, have your tablets/laptops setup and maintained, your phone system configured, and the software you need installed and configured. It's far more effort than you would imagine.
You think, oh I installed Office at home, I can do it at work. You are so very wrong. It takes a lot of time and it is time you don't have.
Plus the website, oh god the website. I mean our guy did a pretty bang up job on our web site and that is not something we could have possibly done. Looking back, we probably would have done things a little differently, but all in all it worked out well.
- Hiring Staff
You are going to need an accountant, which I outsourced, a front office person, and at least one med tech. You can do more, but many times, you won't have the budget until your insurances actually start paying you. So hang tight. With that being said, be careful with how you hire. It is easy to get bogged down in everything else and not pay as much attention here. If you don't pick the right staff from day one, you are going to have to fire and hire; which is terrible. Doing background checks, reference checks, and basically getting to know the person really does help.
Also make sure you outsource what makes sense. In our case, we outsourced coding and billing because that gave us a break on the cost of the EMR, our accountant, and IT. We couldn't really afford to have in house personnel for either of those and it didn't really make sense as it was generally a few hours a quarter for IT and accounting. For the coding and billing, it would have been fairly expensive to hire a full time head count or possibly even two, when we could give up a very small percentage of our accounts receivable and have it all done for us. Plus, the bonus is that we have legal protection there as well. If anything goes wrong, we shouldn't need to hire a lawyer and it should be less effort on our part.
Make sure your staff is the right fit for you. We are a little more laid back, we play practical jokes, and have fun in the office, but when it comes to crunch time, it is no time to sit around and it's all hands on deck.
- Plan for the Future
By 2020, all medical records need to be available to patients via a portal and paper records are gone, they all have to be digital. So, plan ahead. You also need to know what is happening over the next decade or so. Make sure that you pay attention to what the EMR sales people are saying. Sure, most of it is hot air, but if you hear the same phrases over and over, pay attention.
Also, pick the right EMR for you. Don't just pick the EMR that the clinic down the street uses or the EMR the Urgent Care around the corner picked. Find the right fit and find something that will grow with your practice. Remember, your patients don't care what you use, by you have to live with it every day for the next...well...forever. It is super hard to leave an EMR once you have started with one.
Also make sure you buy equipment that will last the test of time. Sure the blood pressure cuff was cheap today, but if you have to replace it in 6 months, it's not such a good deal is it?
Where we failed
We failed on a couple of counts. We didn't quite understand how much SEO would cost, consumables were extremely expensive and used at a far greater rate than anticipated, and the the fact we didn't factor in how long it would take insurances to actually pony up meant we under budgeted and were in trouble at the end of month two.
As you can see from the chart above, we were bleeding money. We had a fair amount in the bank, but it was getting pretty unpleasant around month 3. Liquid capital is far more important than you think. and what you are lead to believe.
Keep in mind, even if you are established with insurances, your new clinic is not. This can be a huge drag on actually being able to charge. You'll find that it can take anywhere from a few weeks to a few months for insurances to move things forward. Of course, as you know, claims can take some serious time as well.
Had we known these things, we probably could have been a little smarted out of the gate. We didn't do our homework and we got burned. Sure, that's our fault, but don't fall into our trap. Make sure you know that things are expensive and you are going to be bleeding money for at least the first month, if not the first two or three months.
Finally, do not get suckered into a huge contract with anybody. It doesn't matter what they are selling. We made a mistake out of the gate with our original medical provider. They talked the talk, but couldn't walk the walk. Make very sure you know everything about who you are dealing with.
What is the hardest to do in a startup?
What is the hardest to do in a startup?
Waiting Room Furniture
IT Equipment with Installation
Why start you own practice?
It boils down to one simple concept; you are your own boss. It is rewarding, challenging, heart breaking, stressful, and fun. Sure there are days that you wish you were still under the nice safe net of a hospital or that you were just a worker bee at a practice somewhere, but the reality is there is nothing like saying "this is mine."
Your ownership of your practice means you can treat your patients how you have always wanted to. You can work your butt off or take a month off, it's up to you. The day to day challenges can be amazingly frustrating, but they are yours. You get to decide and you get to drive how things will work.
It also comes down to patient care. Treating patients like people and treating them like you would treat your family is great. No longer are the patients just a number in the system, they are somebody with a name and you are much closer to them.
Would I go back to anything else? I don't see it happening any time soon.