Medical Practice Startup: 6 Key Elements for A Successful Business
Medical practices are ultimately successful based on the patient care the physician provides. But remembering that starting a medical practice is starting a small business, too, can go a long way toward supporting that success. It can increase your rewards, both financially and professionally. This can keep you excited about your practice, despite long hours and many challenges. If you’re starting a medical practice, here’s how you can set your practice up for long-term success.
Key #1: Create Your Value
Start with Education and Experience
Your medical education is the foundation for a successful career as a doctor. This is particularly important for those who wish when starting a medical practice because you will be the doctor in charge. As such, it pays to take your time and learn as much as you can first.
Consider what your patients value most about you as their physician – what are the important benefits and results you provide them. This will help you clearly articulate the guiding principles and benefits that set your practice apart. One of the best ways to differentiate your practice is to ask your patients for feedback. After conducting approximately 6 interviews themes begin to emerge, highlighting what is special about you as a physician and practice. By determining what is unique from your patients’ perspective and distinct from your competition, you can develop a clear message. This forms the basis for your branding and provides the backbone of all your communications.
Most doctors go into the profession to practice medicine, not to run a business. But starting a medical practice requires being an entrepreneur. That means developing a business plan and basic business skills related to finance, operations, hiring, and marketing, among other things. There are four different business structures that you would need to choose from to suit your needs of the business.
- Sole Proprietorship – where you’re the only owner, all debts and obligations are your responsibility, but you also get to keep all the profits and make all decisions by yourself. As a sole owner, you have unlimited liability, meaning your assets may be seized to pay for debts.
- Partnership – a non-incorporated business that is run by two or more people. Financial resources are pooled together by all the owners and profits are also shared or agreed upon in a contract. In a general partnership, each of the partners is responsible and liable for debts unless stated otherwise in the partnership agreement.
- Corporation – through incorporation you have limited liability, the ownership can be transferable and you are a separate legal entity. However, as you’re incorporated, there can be disputes between shareholders and directors. You are dependent on shareholders that can withdraw their investments and corporations are closely regulated by government bodies.
- Cooperative – controlled by an association of members and can be set up as a non-profit organization. Groups of businesses can pool resources and deliver access to common needs such as the delivery of products and services.
Key #2: Business Plan
According to David J. Zetter, a member of the National Society of Certified Healthcare Consultants, you will need somewhere between $70,000 and $100,000 to start your clinic. This will cover initial overheads and payroll until a more stable and consistent revenue stream is established. However, don’t be intimidated by this number. Before you go to the bank or apply for a grant, you’ll need to draw up an effective business plan.
The key thing that banks look for in your business plan is how you intend on paying them back, and whether this seems plausible in the set amount of time while the business continues to be profitable. Some of the key areas of focus in your business plan should be:
- A timeline of when your clinic will open to where it will be in five years
- A list of your products and services
- Market analysis
- Financial projections
- Potential problems and how you intend to overcome them
A useful tip is to incorporate statistical analysis from similar medical practices into the business plan to support your projections. Bankers can tell which projections are realistic and which are not, so showing an example of a successful clinic that you intend to emulate will give them a good context.
Research insurance options for your clinic
Having insurance for your business is a smart move. Insurance can protect you against damage to your property and equipment as well as defend your clinic against claims and lawsuits – which can be costly. There are several options when it comes to insurance, this includes general liability insurance, professional liability insurance, also known as indemnity insurance or errors and omissions insurance; and business owners’ policies. With several financial institutions and insurance companies out there, take the time to research what will work best for your clinic.
Key #3: Research The Location for Your Practice.
Choosing the right location is critical to a startup practice. The mindset must be one of total commitment. Once you invest in your practice, this will be your home for the duration of your career. Most of the information you need can be obtained for free online but does take a significant investment of time and lots of spreadsheets. Where your clinic is based can be pivotal to how much business you receive. A canny strategy is to find a location that is cost-effective but also accessible to your target audience. Key things to consider would be:
- Would patients be able to get there easily? Whether that’s by public transport, driving or walking
- Is the location near any competitors? Ideally, the location should have a limited number of physicians in your specialty given the overall population.
- Is it nearby a hospital? So that your patients can bring referrals to and from?
- Consider the demographics of the area. Is your target audience in the area? Where would the office be located relative to these facilities, your home, your spouse’s office, and your children’s schools? The more information you have the better.
Once you’ve acknowledged these, you’ll be able to establish where the best location is for your clinic. It would be counterproductive if your clinic has all the best assets to deliver terrific healthcare, but it’s difficult for your patients to get there or you’re too close to a key competitor with a loyal customer base. Numerous resources will help you evaluate a potential location and we can walk you through this process.
Key #4: Consider All the Cost
Very few people can start a business without help from a lender. The funds can be from your savings, split between business partners if a decision was made to go into a partnership, bank loans, and business grants. Undercapitalization is the number one reason for business failure. So, you need to consider the cost in need.
#1 Office space costs for a new practice:
When looking at space, remember to consider parking, ease of access, traffic patterns, waiting room size, bathrooms, patient flow, and expansion opportunities. You don’t want to box yourself into a space that can only handle 20 patients a day if your goal is to see 35-50 patients a day. Ideally, you will want to rent for the first 2-3 years with the longterm goal of owning your office. The benefits of owning your real estate are tremendous in medicine and this should be a major part of your long-term investment strategy.
#2 Hiring and Payroll Costs for a New Practice
One of the best ways we’ve found to help “specialized” employees get over themselves, is for you to do some of the very things that they don’t want to do. As the owner, you must be willing to do whatever it takes which means that your pride might get beat up a little at first. Whether you have 1 or 20 employees, utilizing a payroll service to take care of all of the taxes, benefits and regulatory BS is money well spent. A person’s wage is often a reflection of their ability and paying a little more for someone that can fill multiple roles is better than hiring two inefficient individuals for a few dollars less per hour.
#3 Selecting the Right Vendors for a New Practice
It’s much easier to start a business when you have the support you need from someone who knows the industry. A reliable business partner can provide, perspective, direction, and expertise in areas where you need it most. This business partner, however, does not have to be an individual. There are companies whose sole purpose is to assist medical professionals in starting and operating their practice. Companies that offer clinic management services often offer solutions that simplify day to day operations, boost revenue, offer marketing solutions, and even provide additional assistance like call answering and appointment scheduling. This will allow you as a practitioner to focus more on your patients while having the assurance that your clinic is being managed efficiently
#4 Equipment to Purchases for a New Practice
Determine what medical equipment is essential to your business and what can be added in the future as the business matures. Depending on the type of clinic you are considering opening this may take up a significant chunk of your budget. Identify vendors for your equipment and ensure you shop around for the best price. Consider which vendor offers the best maintenance package, warranty and do your research to see what others in the field recommend. To get your clinic operating efficiently you will need a few productivity tools in your arsenal that will meet your needs as well as the need of your patients. Practice management software, client scheduling systems and charting software are a few of those things that will make your new business operate smoothly on a day to day basis.
#5 Insurance for a New Practice
The investments you make in the early stages could have a huge impact as your practice grows. Before you install top-of-the-line equipment or software, do a cost-benefit analysis. Technology can be a boon for productivity and efficiency, but you need to quantify your benefits, particularly when it comes to cost savings or driving additional revenue. Knowing and overseeing the thousands of details required for a successful medical practice startup is not the only key to success. The key is to achieve the tasks in the proper sequence and to know which tasks are prerequisites for others. This helps keep your startup on schedule, avoids costly delays, and prevents you from delaying important decisions that impact profits.
Key #5: Marketing
Having a brand that stands out and a website that converts traffic is critical for today’s medical practices. All medical practice should have a patient portal that will need to be set up and integrated with your website. You’ll need business and appointment cards that need to be designed and ordered before opening. Before you can design a website or business cards, you first need a high-res logo which can be sent to your design team.
Traditional marketing – includes newspapers, yellow pages, billboards, referrals from peers, networking with other providers and suppliers. You can get started with a set of professional business and appointment cards, as well as letterhead and envelopes. If you decide to create a brochure, be sure it is consistent with your brand and professionally designed. Make it available to patients in your reception area and use it as a leave-behind piece when visiting those who refer you, patients. It’s best to order small quantities of these initiatives as you will likely want to tweak your message or add specific details after the first several months. All other collateral materials, signage, and name tags should also incorporate your logo and branding.
Taking out advertisements in local newspapers will be useful, but the scope is limited to whoever picks up that newspaper. In today’s world, advertising online is the way forward – you can reach a far wider target audience and constantly refine your approach.
Welcome and celebrate
Consider planning an open house reception close to, or within 1-3 months of your starting date. Building marketing momentum during the launch phase that culminates in an open house is a very effective way to generate excitement and enthusiasm, both for your patients and your team. From an advertising perspective, an invitation to an open house will trump a standard “here’s our new practice” advertisement, so consider taking advantage of this powerful opportunity.
As you introduce your new practice to patients and your medical community, you have only one chance to make a first impression. Use these well-proven strategies to start on the right foot, generate success early on, and enjoy a great return on your marketing investment
This refers to digital marketing and digital advertising to acquire more patients and retain the existing patient base. Creating a website for your clinic that lists all the services you provide and how people can locate you is perhaps the most important part of getting your business recognized. The next step is taking it to social media for further networking, running targeted ads and getting reviews and feedback. One common mistake to avoid is thinking you need to be active on all social media platforms. Find out which platform your target market is most active on and dedicate your social marketing to that.
Here, your marketing strategy is crucial. Focus on doing the key actions well:
- Improve your search engine optimization, or SEO, for keywords related to your practice
- If you are inclined to post on social such as Facebook or Twitter, to engage current and potential clients then be careful with the privacy requirements.
- Optimize your website to build trust in patients
Your practice’s digital reputation also impacts your patient acquisition strategy: patients cite reviews and recommendations as one of the top two influencing factors for choosing a medical practice. Encourage patients to share feedback and reviews online, and include a testimonial section on your website to build trust with potential patients.
One of the main challenges many new practice owners will face is acquiring new patients, and a strong digital presence ensures your practice can be found and many patients will find you and learn about you that way. Website design and development can be an overwhelming process, but the great news is you can start this now. Your website is your virtual front door and maybe the first impression your patient gets. So it HAS to be done right. It may be tempting to hire an expensive company to design and host your website. If you do not have a good eye for design or have the time needed to commit to creating one on your own, a one-stop-shop may be worth it. If you need any help with a dedicated team to get your site exposed to the digital world, don’t hesitate to get an online presence manager.
Key #6: Hire The Right People
When starting a medical practice brand, you need a great team. They’re your brand ambassadors from top to bottom. As such, you must take your time throughout each step of the hiring process. From secretaries to medical assistants to interns, a knowledgeable team is a key element to have. It doesn’t matter if you’re a dentist, pediatrician, or gynecologist – you can’t run a practice alone. Your team is what keeps your office running. Hire staff with decent levels of experience and even more passion for what they do.
The key to maintaining a healthy business is having the best possible staff in place to assist you to achieve your objectives. It can be difficult hiring exactly who you need when starting up an independent clinic, so it might be worth considering which roles are the most important:
- Do you need a receptionist?
- Do you need an accountant?
- Do you need ancillary services?
- Who do you need the most?
Although it is more cost-effective to hire inexperienced people and then offering them training, your first recruits should be experienced enough to ensure the administration elements of running a clinic are left with capable and dependable people. Once the business is stable, growing and ready for more employees, it can be a good time to consider more junior candidates, who can receive mentoring from experienced staff members, and will accept the job on a lower salary.
The Bottom Lines
Once your clinic is in a healthy place and you feel like you’re ready to take the next steps, you may want to revisit your business plan, which you should be doing at least every six months, and see if your goals have aligned with your timeline. Now that you have a clearer idea of how to go about opening your clinic, start your research and see why starting your clinic could be the best business venture you have or will ever embark on.
After getting your own office off the ground, there’s still a learning curve. Starting a medical practice is a constant commitment. Between running a team and treating patients, it might be a little overwhelming at times. Once you’re ready to open those doors, check out this helpful online presence to harness the power of social media to spread the word about your new venture.
This article is also credited to Innovate.
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