Launching an independent, or solo, practice is becoming more attractive, especially to newer physicians, who see it as a way to retain more autonomy and practice medicine as they envision it rather than toe the line of a larger, more impersonal corporate administration.
As one solo practitioner puts it: “There are no office managers or practice administrators who come to me on a daily basis asking me to see more patients per day. No one asks me why I only saw two or three new patients yesterday…In my practice, we have a very high patient retention rate…The patients tell me they enjoy being seen by the same physician for each follow-up visit. They also like the friendly atmosphere in my office.”
The practitioner adds that patients are scheduled for 15 and 20 minute slots with some schedule gaps left open for same-day call-in patients. This allows for a more efficient practice unlike many employed colleagues working for larger organizations, who are forced to see large numbers of patients, often to the detriment of care quality.
This provider isn’t alone: despite the costs and potential pitfalls (the U.S. Small Business Administration estimates that more than 50 percent of new businesses fail within the first five years) the potential for autonomy and better control over the healthcare delivery process continues to attract new physicians. Still, many believe that the rewards outweigh the risks. Here are some pros and cons as well as tips to get your practice started right. First, begin by teaming with a business consultant to create a workable business plan.
What are the expected costs of setting up a practice?
Many experienced consultants estimate that it can cost anywhere from $70,000 to over $100,000 for initial startup expenses, including office rental, insurance, staff payroll and your own living expenses for the first few months.
There are actually two forms of expenses:
Start-up costs – initial expenses incurred when starting a new business
- Initial fees for business registration and entity formation (LLC, PLC), plus trademarking a business name as well as state, and local government fees, which will vary depending on the state where the practice is located.
- Rent or leasing of office space, which normally involves a multi-year commitment for an ideal space of about 1200 to 1500 square feet.
- Purchasing office equipment and furnishings such as file cabinets, printers/ copiers, waiting-room furniture and updated computer systems. (Tip: Since average high-end costs for most of the above, especially the computer/ technology, can run $50,000 to $65,000, with a practice-management system costing upwards of $25,000, you can save some money by buying gently-used equipment and furnishings that should give you at least three or four years of normal use.)
- Partnering with a claims billing service can save money, freeing cash for other necessary expenses.
Continuing costs – ongoing expenses for maintaining and operating the practice
- Rent and utilities for your office, which are normally paid monthly, usually include electric, gas, phone and Internet connection/ server expenses.
- Office supplies and medically-related materials, such as syringes, masks, disposable gowns, used on a daily basis need to be included in a budget.
- Your insurance is one of the most critical expenses to the safety and continuation of your practice. Normally paid and renewed on a scheduled basis, it should include malpractice / liability, property coverage for the office space and your personal health and disability insurance.
- Payroll includes your office staff, nurses and other workers on your healthcare team.
Altogether, you should expect to take at least six months to get a practice up and running to the point where you can start seeing patients.
Downsides of going solo
- Owners of private practices must deal with billing patients, collections, mediating conflicts and managing the overall business – going far beyond the usual clinician role.
- No guaranteed income: unlike being a salaried employee, solo practitioners can experience fluctuating incomes based on number of patient visits, unpredictable expenses and timely reimbursement. (However, using a medical billing company can reduce the chances of slow reimbursement that impacts income.)
- Legal threats and lawsuits can be more damaging to a solo practitioner’s reputation and income.
The rewards of a solo practice
- You control how many patients you choose to see daily
- There’s more control over your work environment and who you work with
- You can build a trusted practice – your way
What help and services will I need from other professionals?
- Sound legal advice is critical to preventing costly legal mistakes, so you’ll want to retain the services of an attorney experienced in medical practices.
- Marketing and sales professionals can design your signage, letterhead, brochures, and other necessary promotional materials as well as help select a domain name and put up a website for a strong online presence.
- Insurance, tax and financial advisors can be considered as an investment to the success of a practice. Fees and services will vary depending on the area and your practice’s needs.
Medical claims and practice management services: your partners in growing and managing your practice’s revenue cycle
Since 2002, M-Scribe has been in the business of helping practices of all sizes and specialties grow and thrive, even in today’s more competitive healthcare environment, with its focus on value-based care. In the early months of a new practice, finding and hiring experienced, qualified claims coders, billers and back office staff, in addition to front desk, may be an expensive challenge, especially when you’ll have so many other competing expenses.
Working with M-Scribe is a sound investment of your start-up dollars: besides accurate and fast claims submission for better and faster reimbursement, you’ll want to check out our additional services for managing your growing practice.
M-Scribe will work with you to ensure that your claims and documents are fully compliant with the latest CMS and other regulations, while helping manage your revenue cycle. Contact us at 888-727-4234 or by email for more information about how we can be your partners in growth, now and into the future.