Doctors are a pretty conservative bunch. We get to where we are by saying no to many things that are a lot more immediately enjoyable than studying biochemistry. It can and has been said that doctors are a risk-averse group. Why then would any physician in their right mind say “yes” to private practice when there are no financial guarantees, no colleagues, maybe even no employees, no 401(k), no one paying your malpractice insurance, maybe you have some patients, but maybe you don’t even have that!

Why on earth would you say yes to private practice?
Well, for me, it felt like a necessity, and I suppose many adventures start out that way. I have run a private psychiatric practice for the past 5 years. I call this a “holistic” practice because I want to work with the whole person, not just in a reductionistic, psychopharmacology model and also not in a 10-15 minute medication check, high “productivity” practice. I started a private practice because I felt it was the next step in my ongoing medical education.

After I had been running my practice for awhile, I came across the term, “micropractice,” and I realized that is what I was doing. Low overhead, no employees, 30-90 minute appointments (longer sometimes for initial evals), I came to call what I do quality care as opposed to the quantity care that I had experienced in other practice settings. So, I found out that I wasn’t the only doctor striking off into this hazy territory of private practice who was compelled to practice medicine according to my own rules rather than the rules of health care delivery systems. It reminded me of the old punk rock DIY (Do It Yourself) attitude!

For the first year or so of private practice, I found I had to say no to a lot of other things in my life in order to really stay on top of the responsibilities I had taken on. Learning how to do billing, tracking down denied claims, figuring out the multiple reimbursement systems (Public Aid, Medicare, and the myriad of private insurance companies), returning phone calls, scheduling and rescheduling patients, phoning in prescriptions, all of these things took exponentially more time than I had thought they would. If you have “support staff” where you work, I can tell you that you are probably not fully appreciating all that they do for you!

After about two years, I felt like I was able to take a deep breath. I started having more of a social life again. I started to get back into things that supported me, exercise, painting, music, watching movies, and seeing friends. I found that it was really important for me to start saying yes again to social life, and let me tell you, with a private practice, it can be a constant struggle to keep the practice from eclipsing the rest of your life.

Eventually, I realized that with the full-time clinical work, coupled with the late nights and weekends of doing administrative work, I was not feeling like a whole person anymore and as I am fond of saying to anyone who will listen (unfortunately, I myself am not always that listener) you have to be a whole person to treat a whole person. I then started saying yes to anything that would get me out of the office and put me in touch with other people, teaching at the community college, getting an appointment at the local medical school, running workshops, sharing both sane and crazy ideas with colleagues, intentionally networking with other people, not always sure where that might lead – curating an art show in my office space, ok, why not!

In the movie, Yes Man, Jim Carey’s character is putting all of his energy into avoiding anything life has to offer. He joins a cult-like self-help group and takes the challenge to say yes to anything someone asks him, any opportunity that comes up, no matter how crazy. Things go exceedingly well for him – up to a certain point, and then they don’t go so well. He learns that you cannot literally say yes to everything. Certain “yeses” exclude other possibilities. There is only so much of oneself to go around. It could be said that what he learns is to not say no out of fear, out of arguing for one’s limitations, out of a fixed risk-averse attitude. What he learns is that what is important is saying yes to the right things, saying yes to the things that your heart is really in. That leads to the question, how do you know what is really in your heart. Maybe you are lucky and you already know, otherwise you just have to try something different and see if you like it.

Here I am, encouraging you to say yes to private practice. What am I doing? I am closing my private practice! Why on earth am I doing this after putting so much work into creating this darn thing that was supposed to free me from the restrictions of other health care delivery systems? Well, it may seem hypocritical writing about starting a practice at the same time I am closing mine. What I am realizing, though, as I go through this process is that I am seeing a lot of things more clearly in my practice now that I am starting to get some distance from it. Sometimes you don’t know what you are learning when you are in the thick of things. I’ll invoke H.D. Thoreau, here, “I left the woods for as good a reason as I went there. Perhaps it seemed to me that I had several more lives to live, and could not spare anymore time for that one,” (The Portable Thoreau, Walden, p. 562).

The truth is, I felt like my practice was getting imbalanced. I looked at several ways to re-balance it, I spent more time teaching and networking (and my income went down proportionally), I then tried to see as many patients while still squeezing in the things that I loved and needed to do (the outcome is probably obvious: a frazzled, stressed, and sleep-deprived “holistic” doctor), I hired a part-time office assistant, I looked into finding a business partner, I looked into the possibility of starting a non-profit holistic health center, but none of these seemed to get things back in balance. I felt like I had committed myself to saying yes to things that my heart was no longer in. I don’t know if I would say that I burned out so much as that my heart had moved on before the rest of me followed. It was kind of like realizing that I had learned all that I needed to learn in the practice.

So, what am I doing instead of the practice? Well, my wife and I are moving to New Zealand! I haven’t been this excited about something since starting medical school. The idea of moving someplace new and experiencing different cultures and working in a new health care delivery system (a national health service) sends a thrill of excitement through my core. Saying yes to this new reality means saying no to private practice, at least for now.

However, I really do feel like I have such a clear perspective on my practice as I am ending it. I hope to share more of my experiences and what I have learned, here at PrivatePractice.MD, about starting and running a holistic psychiatry micropractice.

And who wants to plunk down thousands of dollars in furnishings, equipment and staff to open a new office, when you could be sharing an existing office for a fraction of the cost? That’s why I want to advise you about a great website called ShareMedicalSpace.com, founded by a doctor in Brooklyn. There, one can post and search for medical space to share, and you can search by location, specialty, day-of-week availability, number of exam rooms etc. This is much faster and more efficient than word-of-mouth or craigslist.

Our fees are not going up any time soon, and sharing space is an ideal way to dramatically cut the costs of running a private practice- why pay overhead by yourself, when you could be sharing it with another doctor? Searching on the site is free, and the fee for placing an ad is reasonable- $79.00 a month, which would pay for itself many times over when you find a doctor who will pay you rent.

Writing a Medical Practice Business Plan

If you need to write a business plan, you are probably:
• Planning to open a private practice
• Planning to expand your practice significantly
• Planning a major investment in space or equipment
• Planning one of the above related to an ancillary business

And…you need money from a bank or an investor or support from a partner such as a hospital. If you’re not involved in one of these activities, you may need a strategic planning process but you probably don’t need a formal business plan. (Strategic planning is a topic we’ll cover in a later article.)

Okay, so what if you do need a business plan? First, check with whoever is requesting the plan to be sure you understand what they really want. If your bank is looking for financial statements and a projection, you and your accountant or controller or practice manager can probably produce the information internally. If, on the other hand, the request is for a bona fide business plan, you will have to plan and execute differently. It’s very typical for banks that are working with the SBA (small business administration) to require a business plan; it’s pretty much a given if you’re working with any kind of investor.

A business plan needs to include:

• Description of your current practice or business if you are expanding or proposing to build on current revenue or experience
• Description of the market you are going to serve, why they care about your product or service and what your competitive advantage is over others offering the same or similar products or services.
• Description of exactly what you propose to do, how much money you need and how you will use it
• Description of how you are going to operate the business including facilities, personnel, equipment, advisors
• Description of how you are going to market and sell your product and service including pricing and sales projections.
• Complete financials, i.e., sales projections, profit and loss statement, cash flow statement, balance sheet

Do not turn the business plan writing project over to your CPA or your lawyer. They are not the right people to do this work but they do need to be members of the team that it takes to put together the information. Chances are, you are not the right person either, unless you have taken some higher level business training and you have the time and mindset to pull everything together. Your practice manager is the most likely person to write the business plan but frankly, unless he or she has done it before and is very comfortable with the process, you will be better served by bringing in a writer who develops business plans as part of their consulting work.

You need a professional with healthcare experience who can help you work through all of the issues related to your project such as the ownership structure (along with your attorney), the market demographics, operations planning (along with your administrator), target market identification and competitive analysis, marketing approach and revenue projections, costs and uses of funds (along with your financial advisor). That professional can turn your project into a compelling story that sells your financial partner on the merits of the project, the market need and competitive edge, the mitigation of risks, the financial solvency and returns and the ability to execute successfully.

While it is very difficult to know how much a business plan should cost to have written, there are some parameters you can use. A simple plan to start a practice should be at the low end of any range. Practice expansion takes more time because you have to start by assimilating all of the existing information and building on it in a fashion that makes sense with the historical pattern. If you are creating a new kind of business where the market is less defined or there is unusual reimbursement issues involved, expect to pay more. The same holds true if you are planning to create some sort of “roll up” business where you create multiple sites and manage them in some central way because the plan will require several sets of financials.

Avoid using Internet business plan writing mills. They are cheap but you get what you pay for. It is possible, however, to work with someone in an online relationship and that is frequently less expensive because the consultant may be located in a lower cost area with prices to reflect that and they don’t have bricks and mortar overhead costs. You might also get a recommendation from your attorney, your accountant, through your local Chamber of Commerce, Rotary or county Medical Society. You don’t necessarily need the services of a major healthcare consulting or accounting group; you will pay too much money and may be relegated to third level associates.

When you find a potential consultant, negotiation is fair. If your practice manager will do some of the work or your accountant will prepare the financials, ask for a fee reduction.

Final piece of advice, don’t hire someone and walk away. You will be sitting in front of the funder to make the case for your project. You need to know how the plan was put together, be a party to the assumptions and be comfortable with financial projections.

Susan Brissette
SB Cass Associates
East Nassau, New York

Many “best practices” are being developed as protocols and as we become aware of them we will post them on the PrivatePractice.MD website (probably under the “Resources” section). I list here just a few situations which call for planned actions, organized as a protocol:

1.) Patient Emergency in your office. Do you have a code cart? Is it fully stocked with necessary equipment and medications that haven’t expired? When was the last time its items were checked? Do you know which drawer holds the ambu bag? While you attend to the ill patient, did your staff call 911 for the ambulance? Is a staff member controlling the situation in the waiting room? Are other patients peering out of their exam rooms in response to the ruckus? Obviously you need to think through such a possibility well before such a situation arises, and run a “mock code” in your office just like you did in residency.

2.) What about fire drills? Does everyone know where your fire extinguishers are and if they should even attempt to use them? Do you smoke detectors have fresh batteries placed in them every six months? How will you get your old or very young patients out of the office to safety if there is a fire? You need to practice a fire drill once in a while also.

3.) How do you handle patients who might have TB, or chicken pox, or some other highly contagious disease as they come through your office? Do you meet them outside and put a mask on them before they enter your office? Does your staff know how you want them to guide these patients through their visit with you?

4.) The front desk personnel have their own full set of issues to handle, and protocols would be wisely prepared and practiced. What happens if a dangerous person shows up in the waiting room, perhaps an irate ex-spouse who just heard his child is there for an “emergency”? How do they process phone calls to you from other doctors? Are those calls prioritized, so that you’re interrupted or paged when a doctor calls to speak with you? How are faxes and mail handled? Who keeps the waiting room and bathrooms for patient’s use clean and tidy during the day? How are urgent appointments scheduled? Are they squeezed in or are there “acute slots” available?

The list of situations needing protocols is a pretty long one and we’ll be discussing it on an on-going basis. Just be sure to think about developing protocols when starting your practice, and as a repeating exercise as you go through your private practice day. Keep thinking, “How can I automate and delegate” this task so I’m most efficient and utilize my expertise best?

Seeing that I was starting out, he offered to also set up my scanner, printer server, and install some software at a reasonable “bundled” price. He explained deceptively that he received discounts from software manufacturers because he ran a computer business and could pass those discounts on to me. I was under the belief that I was paying for my own full version of original software. To make a long story longer, when I needed to upgrade my software I discovered that he installed limited or upgraded versions (he had the original software discs) that I was unable to upgrade. I had to buy the original software “again” to upgrade. Needless to say I never utilized that computer vendor again. But I digress.

The only other exception to my advice to buy only used/refurbished equipment when starting out is your waiting room furniture. You want that to be new, clean, and up to date as it is the first impression of you to your patients arriving at your office. But even furniture can be rented for cheaper than buying when starting out. The goal is to minimize money out until you have sufficient cashflow coming into your practice each month. Only then should you buy new waiting room furniture and other equipment for your office. Take it from someone who learned the hard way.

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.