Establishing a Private Practice
Physicians wanting to start, buy into or purchase a private practice need to consider how they will approach a wide range of issues. Owning a business comes with a host of legal, financial and administrative responsibilities.
Joining, Purchasing or Starting a Practice (part 2 of the Succeeding from medical school to practice resource) is an invaluable tool for physicians interested in buying or building a private practice. The following summarizes some of the major areas of focus that are detailed in the guide.
Before you make the decision to purchase or buy a share of a practice, you should do a thorough assessment of the value of the practice. The value of a practice is affected by many variables, including location, motivation of the seller and health of the business. It’s important to remember that the value is different than the price. The price is the cost of the practice as agreed to by the buyer and the seller—who may have differing opinions on its value. Practice valuation is not an exact science, but with proper resources and due diligence, you can make an educated, fair assessment.
Employing the help of other professionals, such as lawyers and accountants, can help you navigate the complex legal, tax and financial issues you will face with your practice. This expertise is worth the investment. Find professionals who have extensive experience with assisting physicians.
Properly insuring yourself is essential for all physicians, but especially important for a physician in private practice. You need to protect yourself and your practice from events that may lead to legal action or a diminished ability to earn. Know the different kinds of insurance available to a physician, the situations in which they might be beneficial, and the steps to obtaining a policy.
- Disability insurance
Protects physicians in the event they are physically unable to earn an income, or a physician practice in the event a partner is unable to contribute to operational costs or needs to be bought out
- Medical professional liability insurance
Protects physicians and physician practices from the financial liabilities associated with practicing medicine and providing health care
- Other business-related insurance
Ensures comprehensive business coverage through several different products, including workers’ compensation, employer liability, commercial property and auto insurance
Insurance can be purchased from multiple sources. Research insurance providers prior to purchasing a policy, as coverages, service and prices vary widely.
Physicians in private practice need to develop and grow their business to be successful. Your ability to create a clear business model and strategic plan, as well as accurately measure your growth and manage your finances, will affect your ability to raise capital and hire the best employees.
Marketing is a crucial part of establishing and growing a business. Effective marketing gets new patients in the door as well as keeps current patients engaged. Take advantage of multiple communications methods to reach current and potential patients. Communications channels may include:
- A website for your practice
- In-office practice services brochures
- “Welcome” materials for new patients
- Email communications for existing patients (for example, practice news, wellness information and care reminders)
- Advertisements in Yellow Pages, newspapers and community circulars
Patient satisfaction goes far beyond the examination room. Like any other business, your practice has a brand, and that brand can be negatively or positively influenced by every interaction with your patients or potential patients. Protect and grow your practice by setting service expectations for yourself and your staff, and regularly ask your patient base for feedback on ways to improve their experience.
Private practices may require additional staff to manage administrative responsibilities. Physicians are responsible for the hiring and management of support staff. Know your legal rights and responsibilities related to human resources.