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How to start a private practice?

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  • How to start a private practice?

    Hello.  Long time reader, first time poster.  I am hoping to get some advice on an upcoming decision from the forum members.

    I am very likely changing jobs to a situation where I will be given the opportunity to either choose hospital employment or private practice.  I am a specialist and would have little to no overhead, working in a hospital-based setting.  My understanding is that I would essentially be responsible only for the cost of professional billing, as well as malpractice, health, disability, retirement etc if I were to choose a private employment model.

    My questions are as follows:

    1)  Is the work of setting up and maintaining a small private practice financially beneficial to a good employment contract?  On the face of it, my gut tells me that it is, just based on the ability to keep all of your professional revenue, rather than share it with the hospital on an RVU model.  Autonomy is also a very important factor for me, but I wouldn't want to achieve it at the price of constantly fretting over insurance battles, billing issues, etc.  I also understand that the benefits of 1099 income can outweigh W2, but I know this is not universally true and is being discussed in a separate thread.

    2)  Where is the idiot's guide to setting up a private practice?  I have, I think, a moderate level of personal finance and medical billing knowledge, but little to no clue where to start in terms of setting up a practice.  I'm sure I know the answer to this before I ask it, but is there a concise guide out there that outlines how to set up a solo/small group practice?

    3) Finally, for those who are managing solo/small group practices, particular specialists without facilities or significant overhead, do you enjoy it and find it worth the additional work?  Are there times when you would just wish to be employed?  Do you have concerns that increasing regulations from healthcare legislation will make the private practice model even more prohibitive then it already is?


  • #2
    I take it that you really have no need for a physical office. I started a solo ob/gyn practice in 1992. I would say that the biggest hassle is employees. It sounds like you may not need any. Malpractice and disability insurance will be the same no matter an employee or solo. Health insurance with no employees will mean an Obama-care type policy. I think the AMA has booklets on starting a practice. I never found any of them useful. I have always had an employee to do coding and billing. Plenty of services will do that now. If you have no employees I foresee one hassle in filling out countless forms for hospital privleges, malpractice insurance, etc. my office manager does this for me now. If you have been out a while I guess you have DEA numbers, insurance billing numbers etc. getting started is not as hard as it seems. No one knows really what will happen down the road. In general I have enjoyed being my own boss. Like I said employee drama is one of the biggest negatives and you seem like you can avoid that. The biggest overhead items are employee costs and rent so you should have low overhead.

    Sent from my iPad. Patricia Miller


    • #3
      Thanks for your perspective.  If you employ yourself, can you not purchase health insurance as an employer (of one)?


      • #4
        Yes, that will be direct off an exchange or through the insurance company as a single person, not an employer and will be expensive.


        • #5
          Obamacare caused individual policies to disappear. You can buy an unsubsidizeded policy but it is expensive.  It actually only takes one employee to be a small business however from an insurance perspective.


          • #6
            To respond to qu 2, I found the "Suddenly Solo" book helpful. Short and sweet, not all-encompassing, but has some really good tips.
            Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


            • #7
              See if the hospital will employ you for a year or two, then make a decision, depending on your experience with this sort of thing?


              • #8
                I did it earlier this year and it wasnt so bad setting up.

                -I am working as an IC, so no office space or employees

                -Agree w Hatton1 that employees drama is the biggest headache- husband is co-founder of small grp independent single specialty practice and I get to see that up close. Depends entirely on your temperament and if you think you can deal with these issues without getting overly stressed. Then again, if you dont need employees, problem solved.

                -Getting malpractice for yourself is easy- need a good agent, like all other kinds of insurance.

                -Hospital privileges was time-consuming but not difficult at all. We've done this sort of stuff for residency applications, etc.

                -Medicare application (and even hospital priv) can be outsourced to small companies/consultants who specialize in this. I did this- it was inexpensive and painless.

                -Billing issues shouldnt take up your time if you outsource to a good billing company- there are many good ones ranging between 4-8% of billing.

                Rather than any tangible thing that makes or breaks the case for going either way, I think it is mostly a personality/temperament issue. If you are even questioning which way to go, it is worthwhile to take the plunge and see how things go. If not, the hospital is always there. Vice versa may be difficult- you will likely have a restrictive covenant if you try to get out of the hospital contract.

                All the best with your decision!!