Your First Medical Office

You’ve picked a name for your private practice, you’ve become incorporated and now you need to find the office space that will soon become your home away from home. I’ve gone through this process a few times, finding my first private practice office then moving and adding offices, and I learned something new each time. The factors you need to consider will depend, of course, on how much start-up capital you have and who has an interest in your success.

The first place to start looking, probably before you even contact a commercial realtor, is the medical staff office of your admitting hospital as well as the Department Head for your specialty at that hospital. The hospital and Head Physician know the local landscape, who might be retiring from the staff with an office to rent, and who has space and equipment for you to buy or borrow (often at a rate below market value). They can refer you to the realtor used by the hospital in their expansions. You might also find out that the hospital wants to help you by investing in your success somehow. I know a physician who received office space at a very reduced rate because he was willing to fill a hospital department position that no other physician wanted.

Although a primary care physician probably needs an office that he or she can access 24/7/365, a specialist starting a new practice might be able to sublet space from other specialists (depending mostly on equipment and space needs) which greatly reduces the amount of start up capital needed. There’s usually no deposit, or a minimal one, required and a specialist’s patients are often seen by them in the local ER after hours anyway. An established pulmonologist might be thrilled to have a cardiologist use the office on the pulmonologist’s day off for example. When I started I shared not only the office, but I paid my share of a receptionist to answer my phones, and outsourced my medical billing. In a year I was able to break off and establish my own infrastructure.

I would caution against a specialist subleting space from a primary care practice, however, as other primary care practices might be reluctant to refer patients to the specialist housed under their competitor’s roof!

Other considerations are important too. For example, starting a pediatric practice in a medical office building where there’s an established Obstetrics practice would be very astute. As I mentioned in a previous post, locating your practice in the part of town where other doctors have set up shop makes sense, even if there is a practice in your same specialty. Think about how fast food restaurants or gas stations all seem to cluster near the same intersection. If you want to practice in a busy neighborhood, try to find the office with ample parking, handicap accessibility, and a traffic light or side-street access so your patients can easily turn left into or out of your parking lot. If your office is not on the first floor, elevators are absolutely necessary of course.

Many new medical buildings now have a “temporary office” that you can lease for one or two days per week. They are nicely furnished and supplied, and have basic equipment like BP cuffs and oto-ophthalmoscopes for you to use.These arrangements allow you to work in several locations per week, as many specialists do, or expand to a second office with your original office serving as your “home base”. With an assistant or two, cell phones and your laptop computers, you’re good to go.

Once you find the perfect location, you’ll have to put down a security deposit and sign a lease. If your new office is furnished and built-out so it won’t need major remodeling, you can often get the landlord to agree to an initial lease of one-year while you grown your patient base and cash flow. You run the risk that your lease will greatly increase the next year, when you will be asked to sign a five or ten-year lease, but often the monthly lease stays the same or decreases I found. I was also able to put down my initial security deposit incrementally over several months.

Finally, if you are in a multi-unit office building or office park, you can request an exclusivity contract from the landlord in exchange for you signing a five or ten-year lease. That contract, from what I have experienced (I’m not a lawyer, mind you!), prevents a medical practice similar to yours from setting up shop in your building or too near you. (Although a new practice might want to locate near similar established practices as noted above, once you’re established you probably don’t want the competition so close to you. This strategy is especially useful to primary care practices, in my opinion.)

So what are your thoughts? Agree or disagree, I’d love to hear your ideas.