Starting a private practice immediately after residency

[jpa]

I'm finishing up my 2nd out of 4 years in a primary care specialty that will allow me to see both adults and children. I anticipate practicing in the Midwest, in a smaller city or cities that still have primary care shortages. I had a lot of exposure to private practice clinics in medical school, and see myself gravitating towards them instead of academics. Furthermore, it seems that many of the docs I talk to in primary care detest being employed.

With 2 years remaining, I anticipate needing to make this decision within the next year so I could start working on the necessary steps to get a practice running. I love the business side, was almost an accounting major in undergrad--so the bookkeeping doesn't scare me away. But it still seems like a big (although potentially rewarding) undertaking.

Has anyone here either started a PP directly outside of residency or know someone who has? If so, are there any books/website they could point me to? I don't want a consultant, because they look like they just charge $$$$ for info that I could learn on my own, and I want to do this with little to no debt. I'm debt averse because if i'm not going to work for the MegaHospital "Man", then I also don't want to work for the BigBank "Man"

I would appreciate any thoughts!

[zlandar]

I think insurance and billing as two of the biggest headaches. If you have to negotiate rates with insurance companies as a independent practice it can be a nightmare. Be prepared to drop carriers that lowball you on rates. An alternative would be joining a group of affiliated docs like a CIN (clinically integrated network). CINs can negotiate with insurance companies as a group.

Many practices use 3rd party billing companies. It can be difficult to find a good billing company (doesn't miss charges, good collection rates, make patients angry with incorrect billing and/or sending to collections). If you sign up with a billing company make sure there is a termination clause letting you out of the contract. You do not want to be stuck with a mediocre billing company.

[8arclay]

I dont have much to add, but good on you and best of luck. I joined a PP out of fellowship and have been thrilled with the experience. I wonder what will need to happen to see a trend back to PP

[FIREshrink]

You will need a staff of folks to manage bills and claims, and state and federal regulations. That's up front cash and part of the reason it's hard to start from scratch. Plus equipment, space, insurance, etc. How are you planning to come up with the cash for all this? Can you find a bank to loan you the money if you have no experience?

Psychiatrists do this all the time, but all they need is an office. No insurance, no staff. Not even an exam table. Capital requirements are simply far lower.

[jpa]

I think insurance and billing as two of the biggest headaches. If you have to negotiate rates with insurance companies as a independent practice it can be a nightmare. Be prepared to drop carriers that lowball you on rates. An alternative would be joining a group of affiliated docs like a CIN (clinically integrated network). CINs can negotiate with insurance companies as a group.

Many practices use 3rd party billing companies. It can be difficult to find a good billing company (doesn't miss charges, good collection rates, make patients angry with incorrect billing and/or sending to collections). If you sign up with a billing company make sure there is a termination clause letting you out of the contract. You do not want to be stuck with a mediocre billing company.

Yes, I've read several places that insurances sometimes hard-ball solo practices. I would like to start this with a second physician, but we'll still be small fish starting out. Is there an easy way to find the CINs in the states that I'm considering practicing? I think a supportive affiliate group could sway me in which state I would decide to open up a practice.

[WorkforFIRE]

I agree. You need to join an affiliated group (CIN) to get their insurance rates. But then be independent.
but that’s only the start. Then you have overhead.
and you’ll need to understand what ancillary income is available for you to keep your practice afloat bc e/m won’t do it unless your volume is insanely high.

pros of big hospital is they put you on a rvu model and you can work that much harder to make more money. Downside is you’re working for someone.

pros of being solo is you’re independent. Downside is there are lots of costs and headaches.

Good luck.

[zlandar]

Yes, I've read several places that insurances sometimes hard-ball solo practices. I would like to start this with a second physician, but we'll still be small fish starting out. Is there an easy way to find the CINs in the states that I'm considering practicing? I think a supportive affiliate group could sway me in which state I would decide to open up a practice.

I just googled "clinically integrated network midwest". I saw several results in IL and OH. You could narrow it down by state/major city.

You would want to contact a specific CIN and find out the requirements for joining and whether the CIN negotiates rates on behalf of it's affiliated providers.

[Tim]

You need a business plan and a project plan to achieve it. Besides the startup costs, you have to predict the time it takes you to reach a stable revenue stream.
The key point is many expenses are upfront and/or a short delay. The cash collections come in much later. Working capital requirements sink many new ventures. Accounts receivable don’t pay employees or the rent and utilities.
The goal is to build the revenue stream. That has been recommended as “used” equipment , furniture and equipment, leasing etc until you can afford to upgrade.

[jpa]

Yes, I think if I started looking for equipment even now so I can get good used equipment at a discount, that could help reduce start up costs remarkably.

As far as cash-flow: Most clinics I see now will require payment (at least co-pay and if high deductible plan, the entire amount) up front. This should help alleviate at least part of the cash flow problem, correct?

The areas I'm considering often have a 6 month wait for new patients, so would it be reasonable to think I could be at 75% patient panel within 1 year? I would plan on only accepting private insurance and medicare....If i accepted Medicaid, I suspect I would be full within the first 12 months.

[Tim]

Yes, I think if I started looking for equipment even now so I can get good used equipment at a discount, that could help reduce start up costs remarkably.

As far as cash-flow: Most clinics I see now will require payment (at least co-pay and if high deductible plan, the entire amount) up front. This should help alleviate at least part of the cash flow problem, correct?

The areas I'm considering often have a 6 month wait for new patients, so would it be reasonable to think I could be at 75% patient panel within 1 year? I would plan on only accepting private insurance and medicare....If i accepted Medicaid, I suspect I would be full within the first 12 months.

If I understand, your mix will be the result of your location and marketing. The impacts your buildout and decor. Are you going to need receptionist or combo office manager? Put it on a project plan and build you business plan. Website? Linked to appointment system? Tons of little things as a sole practice. Electronic appointment reminder/confirmation system. Lots of things to do.

[childay]

Do you have any money? I would think it would be near impossible to start a new primary care clinic with little to no debt, unless you have significant cash to spend on payroll, equipment, rent etc etc. Billing collections lag can be quite long. Are there not established clinics there you could join?

[Tim]

•It’s hard to build and run a PCP practice.
•It’s hard to build and run a medical business office.
Without deep pockets, it’s virtually impossible.

That is the fallacy of some med schools pushing PCP in underserved communities. There is a ceiling on earnings that make the risk/reward unacceptable as a sole practitioner. Suggest consider working as an employee to master the medical side , build some cash before you jump into the sole practioner side.

[childay]

•It’s hard to build and run a PCP practice.
•It’s hard to build and run a medical business office.
Without deep pockets, it’s virtually impossible.

That is the fallacy of some med schools pushing PCP in underserved communities. There is a ceiling on earnings that make the risk/reward unacceptable as a sole practitioner. Suggest consider working as an employee to master the medical side , build some cash before you jump into the sole practioner side.

Yes. Gonna need some startup money for sure.

[familydocPA]

Don't take all of the above advice as discouragement; it is possible, but it's true that capital and cashflow are going to be the biggest issues. You should definitely plan on having some other source of income, like working weekends at urgent care or as a hospitalist until you get reliable income.

This would be much easier to do in 2-3 years if you had paid off loans, some cash on hand, and some post-residency clinical and medical business skills. I would give that some serious thought... if you pick your first job right, you can learn a lot of the business of medicine and avoid a lot of mistakes with your own money.

Check out this guy's blog, he's been wildly successful: https://investingdoc.com/
You could also check out the "Ideal Medical Practice" movement which focuses on minimalistic PCP practices with low startup costs.

Best of luck!

[jacoavlu]

I anticipate practicing in the Midwest, in a smaller city or cities that still have primary care shortages. I had a lot of exposure to private practice clinics in medical school, and see myself gravitating towards them instead of academics. Furthermore, it seems that many of the docs I talk to in primary care detest being employed.

if there is a primary care shortage, then private practice clinics and the regional systems will be hiring. Start looking at jobs. A much better plan would seem to be to get a job in the area, take a few years to get the lay of the land and save money, then make your move. Or not, depending on what you've learned.

A small democratic private practice sounds like an ideal situation for you. There will be others who have little to no interest in the business side of things and may appreciate a partner who has the interest.