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How to Start a Successful Private Practice with Steps & More

Posted by Capson Team on Jun 21, 2018 4:21:12 PM

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What is a Private Practice and Why do Doctors Start Them?

A private practice is an independent organization created by a medical professional with the intent of helping people with issues about health, mental wellness, diet & lifestyle, and more. Starting a medical practice is just like starting any other small business – give or take some paperwork. And the possibility of getting it right the first time is low. Without the experience, knowledge, resources, and an understanding of what questions to even ask, the chance of success is very slim. But, there can be an upside if you prepare and put in the upfront effort to surround yourself with the right guidance and counsel. With the right planning, your work can be both rewarding and, potentially, financially lucrative. Let’s take a look at some of the considerations you need to take on your way to establishing a successful private practice. According to a 2016 study conducted by WebMD, doctors who go into private practice can make up to $348,000/year. An "employed" physician with the same training will make $74,000 less than their private practice counterparts. Private practice doctors also set the rate of their own business. The national average of patients seen by physicians each day is 21. In a private practice, you control if you want more or less patients than that.

Benefits of Starting Your own Private Practice

For starters, you are in control of every aspect of your business. You get to choose what nurses, staff, and other employees you work with. You don't have to answer to administration, which lets you help patients without unneeded red tape. As you grow, you can also choose what other physicians to take on. You're also in control of your own income. Working for a medical system means that percentages are taken out of each paycheck you get. As a doctor in private practice, each payment goes to you first. After this, you choose how you want to pay for your assets and staff. Perhaps you choose to scale back on operation costs creating a leaner, more hands-on business. Or, instead, you could opt for a lower income but fuller staff to handle more of the administrative tasks. Your private practice is yours. With that control, you can guarantee a less stressful atmosphere for patients. This can help client retention rate, giving you numbers that sustain your practice for years to come.

Step by Step Checklist for Starting a Successful Medical Practice


To set you and your practice up for success, we've researched the 9 most critical steps for creating a stable and successful medical practice.

1) Decide on a name for your private practice

Pick a clear, concise name that tells prospective patients about your practice quickly. Don't try to sound "cool" or "edgy" – use a simple, emotional name that evokes trust, safety, and expertise. This helps people know what your business is about before they even enter your doors. It’s also best to make sure this name is an available domain name because having a website is critical to a business’s credibility in modern times. Some examples of good, concise names include Premier Family Physicians, Victory Medical, and Cedar Park Women's Center. The first two are indicative of quality/feeling, then specialty of being general or specified. The third name indicates location and specialty.

2) Register your business under your preferred filing (LLC, PLLC, S Corp, C Corp)

When you've chosen your name, it's time to register your business. What you choose is critical for protection, liability, and how you will handle taxes.
  • C Corporation - not recommended for small businesses. C Corporations are set up as separate tax payers. So, if any profits are then given to you and other co-owners, you would pay taxes on both your personal income and extra profits.
  • S Corporation - You get the perks of a corporate status, but without extreme taxation. All losses, profits, and other tax pieces go through the corporation and directly to you. This prevents the corporation from paying taxes.
  • LLC (Limited Liability Company) - The benefits of S Corporation, but with greater flexibility of accounting. Profits can be shared more freely. Any failures on the company's part are distributed among the owner(s) and don't rest solely on the company.
  • PLLC (Professional Limited Liability Company) - In many states, doctors are not allowed to form LLCs. Instead, they must form PLLCs. PLLCs separate liability between the company and the individual. However, you will not be protected from malpractice claims caused by your own malpractice.

These procedures vary according to your medical specialty and the state you live in. Without getting the right permits and licenses, you could suffer significant consequences, both financially and legally. As a medical professional, you will need to get a professional license to show your expertise. You will also need to get relevant tax permits, such as an income tax withholding permit, unemployment insurance tax, and more. We recommend consulting with an attorney or account to help lock down needed licenses.

3) Get permits/licensing from governing bodies such as medical boards and state legislatures

These procedures vary according to your medical specialty and the state you live in. Without getting the right permits and licenses, you could suffer significant consequences, both financially and legally. As a medical professional, you will need to get a professional license to show your expertise. You will also need to get relevant tax permits, such as an income tax withholding permit, unemployment insurance tax, and more. We recommend consulting with an attorney or account to help lock down needed licenses.

4) Find an office/location

Put in the time and research to find the optimal location for your practice. Work with a commercial realtor to identify the best location you can afford. Also, let your business goals influence your location. If you want a lot of patients, placing yourself in an urban center may lead to greater business (and greater operation costs).

5) Identify necessary equipment, supplies, and costs of doing business

You can only do so much by yourself. You will need to buy and use the following:
  • Computers
  • Medical software such as patient classifying software, insurance programs, and billing programs
  • Medical equipment
  • Supplies
  • Medications
  • Support Staff

You may need to take out a small business loan or seek investors to cover these costs. On top of this, you will also need to cover payment processing for both patients and insurers. The average credit card processor for a brick-and-mortar business like yours is between 1.95% and 2% per transaction. This can add up quickly. Check with your state to see if you need to register your equipment, too. For instance, if you have X-ray equipment, you will need to register the machine through your state's health department.

6) Protect Your Business and Assets

Medical malpractice insurance is an antiquated, necessary evil but, when you need it, you need it. Medical malpractice insurance still protects your practice and you from lawsuits. This helps protect and sustain the growth of your business. Even if you go with a Capson competitor, make sure you are covered. Losing everything at the hands of legal costs from frivolous lawsuits or flat out mistakes is heart-breaking. You will also need to get professional liability insurance, commercial property insurance, and more depending on your needs. You could also bundle these insurance packages into a business owner's policy. This policy can simplify the insurance-buying process and (hopefully) save you money. The business owner's policy is more widespread for home-based businesses but could be used for your interests. 

7) Create a marketing plan to drive more patients

If no one knows your practice exists, then they cannot give you business. Work with marketing professionals to achieve business goals and help get your message to prospects. A great, passive way to market yourself is to become an in-network provider for large insurance companies. Being listed on your state's biggest insurance providers' lists will help bring in referrals to your practice.

8) Plan for growth and what that looks like

One of the biggest mistakes a business can make is growing for the sake of growth. While you might be making more money, your growth could result in strained resources. Strained resources lead to unhappy patients, which leads you to being overworked. Create a plan for growth, including:
  1. When to bring on more employees for business
  2. How to attract talent
  3. How to provide compensation packages to help employee retention

You could also get around a lot of initial private practice growth steps by taking over a retiring private practitioner. By doing this, you could take over their client load, have equipment ready and registered, and ultimately spend less on set-up costs. Growth is also going to mean an increase in your exposure and, inherently, an increase in risk. According to Dr. Jay Staub, OB/GYN and Capson Medical Director, preventative and proactive efforts on your behalf coupled with choosing a Physician Protection Provider that offers a holistic approach towards safeguarding you, your reputation and your brand will be key in helping to mitigate the risk of new threats from this digital era.

9) Enjoy the fruits of your labor

You've now created a private practice from the ground up. Don't forget to reward your own hard work by treating yourself well. Buy an expensive car, treat your loved one to great food…do something for yourself. Self-compassion can help sustain your business, allowing you to be objective when the hard times come around.

 

Risks of Starting a Medical Practice

Your practice won't assemble itself overnight. It's estimated that putting together a successful private practice can take between 10-12 months. Couple this with astronomical startup costs and you could be operating in the red for a long time. Dealing with changes in health care legislation and insurance companies can also hinder the progress of your business. You may find yourself footing the bill for patient care when waiting for insurance companies to reimburse you. And, if you're operating with a small staff to offset this burden, you could be dealing with lengthy workdays that lead to exhaustion. On top of all this, you and your private practice could also get sued in the event of malpractice or perceived malpractice. While this may not be unique to just private practices, the financial burden of a malpractice suit is more likely to be catastrophic. Having malpractice insurance can help reduce this burden in the event of a lawsuit and can help sustain your business by keeping cash flow within the confines of the business and not towards any other incurred fees.

 

Conclusion

Starting a private practice is not for the faint of heart, but you don't have to do it alone. The U.S. Small Business Association offers free counseling to help you get the most out of your private practice. And, with a little networking, you could create a support team to help you survive the first years. By asking for help and using your resources, you can build a private practice that will stay healthy and thrive for years to come.

Tags: Best Practices

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