Bankers need to be informed

Practice Management. By Mike Norbut, AMNews staff. Sept. 26, 2005.

Whether you're starting a new practice in town or you're well-established in your location, your relationship with your bank will play a critical role in your business success. But these days, your relationship has to be based more on data than on just a smile and a handshake.

"Literally, medicine is a business now," said Daniel E. Watkins, president of Watkins, Pagano & Associates P.A., an accounting firm based in Altamonte Springs, Fla. "Bankers are becoming so tight, they rely more on profitability and projections. If you go in stone cold and say you want a $10 million loan, you'll probably be backed up against the wall and frisked."

Physician groups need loans for any number of expenses, such as capital equipment, an investment in ancillary services, or building expansion. While some banks are starting to employ lenders who specialize in health care financing, many still do not.

It's not impossible these days to get to know your lending officer, but the foundation of the relationship is through information. It might be the gateway to favorable interest rates, better loan terms and earning the benefit of the doubt, should your practice go through some tight financial stretches.

Many banks not only are larger and more impersonal than they once were, but they also harbor a healthy skepticism when it comes to physician practices. Rising costs, including medical liability premiums in many states, and declining reimbursement rates are making profit margins razor-thin.