Opening a new practice requires planning

Practice Pointers. By Karen S. Schechter, AMNews contributor. Sept. 17, 2007.

PRACTICE POINTERS

Answers to questions about the business side of your practice

SEE ARCHIVES

Question: I am an established physician working in a single-specialty group practice, and I am thinking about going out on my own. What is a reasonable timetable to consider, and what are the critical tasks that contribute to the success of the transition?

Answer: Starting a new practice is a time-consuming process, even for an established physician. The optimal time period is three to 12 months.

Success is defined as being able to service patients in a pleasant and well-equipped environment, submitting electronic claims to insurance companies and receiving payments within 30-45 days of clean claim submissions. This is no easy feat.

The amount of time it takes depends on the physician's resources (financial and staff), availability to complete certain tasks, and relationship with the current practice.

It's important for physicians contemplating starting a new practice to have a clear understanding of what the startup and ongoing costs will be and what capital resources are available to cover these costs.

The startup costs vary, depending on the specialty, the location and size of the office space, number of staff, equipment needs.

Once the practice opens, there needs to be enough money available to cover expenses for at least four months. This might not necessarily include paying the physician a salary (or at least not an amount to which he or she is accustomed). In most situations, banks and other financing institutions will require physicians to give personal guarantees for the startup business loans.