For doctors, opening a private practice certainly has appeal and potential: Make your own money, on your own time, in your own way.
But the freedom of self-employment comes with the responsibility of practice management. A lot goes into knowing how to start a medical business, and even world-class, well-funded practitioners can falter if they lack business skills from the get-go.
That’s why the pros and cons of opening a private practice have many clinicians split on what’s the best path for them. According to a recent American Medical Association (AMA) survey among 3,500 practicing physicians, 45.9% owned their own practices. A slightly higher 47.4% worked for an employer.
If you’re considering opening your own practice, start with self-exploration to see not only if it’s something you can do successfully — but if it’s something you’ll enjoy, too. That is, before you make a business plan, get credentialed or visit leasing spaces, ask yourself the following questions.
Can I Afford the Capital Costs and Overhead?
Starting a private practice requires capital, and while it may be possible to launch on a dime (or $11,000, as one doctor did), Business News Daily notes that most physicians will need a loan of $100,000 or more for startup costs such as medical equipment, furniture and an electronic health record system. You’ll also need funds to continue running your business through inevitably slow months. If you have student loans, as many doctors do, consider your business budget along with your personal finances to make sure you and your family can afford to take on more debt.
Do I Have the Patients (and the Patience) to Start a Practice?
Assess possible competitors in your community to see if you’ll have the right patient population for your practice. The American College of Physicians recommends contacting chambers of commerce to ask for local business trends, data and economic development resources. Also check with your local and state health departments for patient demographics — and whenever possible, meet with fellow local physicians to evaluate market opportunity. Keep in mind that this legwork takes time: It’s best to start your market research at least a year out.
What’s the Opportunity for My Specialty?
Some fields of medicine have better opportunities for private practice than others. According to the AMA’s survey, OB-GYNs, internal medicine subspecialists and radiologists had the highest rates of practice ownership, emergency physicians the lowest. Also consider your specialty’s split between the hospital and the clinic: If you plan on spending more time in the hospital, a group setting may be best.
Am I Prepared for the Realities of Running a Business?
Some people want to practice medicine without the obligations of business ownership, and that’s a perfectly suitable choice. If you’re highly motivated by the prospect of helping others in your community but still want flexibility, consider other settings, like a group practice, instead of doing all the heavy lifting on your own.
To open a private practice, you’ll need to hire the right people, negotiate contracts, find suppliers and market your business, among other responsibilities. There will likely be downtimes, miscommunications and difficult conversations, too. Those pieces won’t always be easy, and that’s OK. But if you think you’d be miserable doing them, you might want to reconsider your options.
Most importantly, give yourself time to explore options and talk to as many people as you can, both those who already work in private practice and those who choose not to. Ask questions — not just the obvious ones about how to start a medical business, but the tough ones about how to know if a private practice is really right for you. Be realistic about your expectations, but don’t discount your aspirations. If private practice is your ultimate goal, you’re the only one who can hold yourself back.