Owning a private practice is the dream of many physicians, but starting one—or getting one in the black after a rocky patch—can be daunting. The good news is there are legal, financial and operational professionals who can help with pretty much every facet of starting and running a private medical practice. In fact, it’s not just that you can lean on them for help; you absolutely should.
One of the most indispensable is a healthcare attorney.
“It's worth having a good legal partner to make sure you are aware of the complicated laws applying to the practice of medicine and running a business, which are two very complex, separate areas of law,” said Neal Shah, an attorney in the Chicago office of Polsinelli, a national full-service law firm with a large healthcare practice.
"You can find out a lot of that information on your own, but understanding how those laws interact, how they apply in your state, is vital because they affect your practice structure and how you interact with other entities,” Shah said. “A lawyer is going to understand how they fit together.”
Shah will be sharing his expertise as just one of the excellent speakers featured in the AMA Independent Practice Accelerator Workshop, which takes place Sept. 11–12 at the AMA headquarters in Chicago. The event is designed to give physicians the essential knowledge, practical skills and confidence to launch or strengthen an independent practice in a concentrated, high-impact format. Learn more and register by Aug. 27.
Why you might start with an attorney
"Healthcare is one of the most highly regulated industries in the country,” he said. “The way that plays out for physicians is often in the compliance space, where you've done something wrong and now you've got a governmental entity, a whistleblower or some other third party coming after you for penalties. That’s when compliance becomes real, and you want to avoid that.”
In fact, many of the things that can go wrong in a private practice aren't obvious to physicians when they first hang out their shingles, Shah noted.
“They’re built into how you organize your business. What kind of entity should you create? What kind of debt should you take on? How will employees get paid? How will profits being distributed? All of those issues are fundamentally legal,” he said.
They can also have substantial financial implications, right down to when and even whether you will be able to sell your practice.
“We frequently see situations, especially when we're representing investors, where a physician is selling a practice that they set up on their own just by going through forms and marking stuff off, not really thinking strategically,” Shah said. “We can immediately identify where they opened themselves up to a compliance risk or left money on the table. And often those are two sides of the same coin. If we're buying a practice that is not set up correctly, that needs a fair amount of restructuring, the price is going to be lower.”
The AMA Private Practice Playbook introduces foundational terms and concepts that apply to private practice. It breaks out the professional advisors who can provide invaluable guidance as you develop a business plan for day-to-day and long-term operations. It also provides lays out time-tested strategies for growing your practice.
Think beyond legal with your lawyer
Many physicians only consider bringing in an attorney when they are reorganizing their businesses—say, adding a new partner—or dealing with some other episodic business issue.
“That's OK, but I would encourage physicians when they're working with an advisor to use that access for something a little bigger than just solving a problem,” Shah said, noting that most attorneys will have an initial conversation for free.
“Another good thing about working with a lawyer early on is they can often be a center point for contracting with other entities, helping you think about things you need to get done in order to operationalize your practice,” he said.
The AMA’s “Getting started in private practice” resource page highlights eight steps to starting a private practice and other resources for getting started, including expert guidance on payment and contracting.
Other essential pros to engage
It used to be that physicians in private practice needed help from just a few other professions. Not so anymore, Shah said. If you want to spend most of your time practicing medicine, you will need to rely to on an assortment of specialists to get all the other work done.
The accountant. Tax preparation—including finding and documenting business deductions to reduce tax liability—is the primary reason medical practices need an accountant. One can also be useful in establishing cash-flow management protocols and providing other services for handling practice finances.
The insurance agent or broker. Medical professional liability insurance may come to mind first, but running a business also requires general liability and property insurance, as well as disability insurance and workers compensation.
The banker. Businesses of all kinds fail every day simply for being undercapitalized. Look for a lender familiar with the financial needs of medical practices.
The health IT specialist. Besides the EHR, someone will need to advise on the optimal lineup of network connections, hardware and software.
The operations adviser. This specialist focuses on internal processes, including staffing, clinical workflows and billing.
The payer-relations specialist. Lean on this adviser for help with partnerships with insurance companies, including contract negotiations, credentialing and dispute resolution.
“It’s so much more sophisticated than it used to be. Most of these are not things you can do in-house anymore,” Shah said. “Fortunately, there are lots of experienced people out there doing them.”
The AMA STEPS Forward® podcast “Private Practice: Attending to Business” has expert guidance to help navigate business operations and efficiency solutions to create and support a thriving business.
Get up to speed first
Before engaging legal or business advisors, check out “Introduction to the Business of Medicine.”
This curated selection of AMA educational resources includes a variety of introductory business of medicine topics to help practicing physicians take a more proactive role in shaping their own futures in medicine. You can accumulate CME or COP credits while learning at your own pace, as well as earn an exclusive AMA members-only certificate available upon completion of all listed activities.
STEPS Forward is part of the AMA Ed Hub™, an online platform that consolidates all the high-quality CME, maintenance of certification, and educational content you need—in one place—with activities relevant to you, automated credit tracking and reporting for some states and specialty boards.
