6 Months Into My New Medical Practice: An Update

I have finally hit the six month anniversary since my medical practice opened doors. To say there has been a learning curve would be an understatement. Most of the learning curves center around how to navigate insurance companies. Choosing to open a medical practice is not for those who want an easy payday. In the past six months a lot has happened, and I mean A LOT.

The short of it is that business has been challenging at times, but so very rewarding. The doom and gloom that most everyone was preaching at me thankfully has not come true so far. I’m sure you’ve heard it before. You can not make it in primary care going solo.

Most of my colleagues were telling me that it was almost impossible to go solo without doing direct primary care. Go to any forum or Facebook group. I’ll bet that you’ll hear the same rhetoric.

But here I am… Business has been good. Actually, it has been damn good. My practice has grown so quickly that I am currently in talks to hire another physician. They should join around my one year anniversary of being in business. I’m also in negotiation to buy a 1.5 million dollar space to more than triple the size of my practice. If everything continues to go well, I’ll then hire a total of two new physicians to put 3 doctors in my new office space.

I never thought I would have grown this quickly but feel very excited to get to where I’m at today. There are so many posts that I’m working on about starting up a new practice. I’ll be excited to keep those coming in the future.

So, for those who are thinking about doing it, I say go for it! It is still possible and you can still do very well by starting up your own practice.

 

Investingdoc starting up a new practice

Jumping off a cliff into a waterfall below in Maui (It was only about a 20 foot jump down)

Taking The Plunge

For those new to my website, you can go back to previous posts about how and why I decided to take the plunge to open my own medical practice.

The anxiety about going out into the unknown and starting 100% from scratch stops most doctors from opening doors. I can’t tell you how many times I’ve heard from people that they are thinking of opening a medical practice. When I dig deeper, they tell me they have not made a single effort to open their own clinic except daydream.  For me, I decided that there is no better time than now to take the plunge. Like many things in life I didn’t come to this decision easily.

The benefit about starting your own business is that the risk is often limited. The upside is potentially unlimited.

While that may be a cliche to say, it is absolutely true. If my new medical practice didn’t work out, I would have been out less than $50,000 (depending on when I call it quits). If it did work out, the potential income growth is more or less only limited by my dreams, hard work, and how I run the business.

So, when I sat down I asked myself if I would rather spent $50-75k on my own start up medical practice or buy in for the same amount to an established practice. The answer was easy. I’m going out on my own.

I own 100% of the profits while with the other groups in my area, I would have been one of over 100 physician owners in the group. Effectively buying less than 1% of the company for my $75,000 investment with very little say in how the company is run.

 

The Balance Between Minimizing Spending and Investing In Growth: Capital allocation

This is one of the most difficult aspects of running a business in my opinion.

Turtle I found underwater while snorkeling in Maui (taken with my gopro)

Capital allocation is how a business decides to use the limited amount of cash and resources that they have. No business is immune from capital allocation.

Know the difference between being frugal vs being cheap. You can not afford to be cheap in health care.

A good example of my practice being cheap was when I was hesitant to buy new computers and hardware for the clinic. I used my home laptops and brought them to work. I used my laptop while my staff used my wife’s laptop. This slowed down how quickly the front staff was able to work and things are work were falling through the cracks because of this.

I went out and bought 3 new computers, hired a new employee and we are now able to see about 25% more patients a day as a result. A 25% gain per month adds up to much more than the cost of the computer. Don’t be like me and be cheap in areas where you can actually make more money.

 

You Are The Practice Manager

One of the biggest mistakes that I see practices make is decided to hire a practice manager. There is almost no reason a practice with 2 or less doctors should have a practice manager.

According to Glassdoor, the average practice manager is making about $70,000 a year. Don’t forget to add benefits and the employer paid taxes and this salary quickly balloons to above $80,000 per year in most cases.

A practice of 2 or less doctors is so small that this kind of salary is tough to split between several doctors. Instead, have each doctor split the roles of a practice manager and effective give yourself a raise for doing those job tasks.

I do not have a practice manager (but I do have several great employees that could fit in that role).

Sure, it would make it easier to call the plumber when the toilet clogs or calm down interoffice arguments but at this point I do it myself and save the $70,000 plus per year.

 

Biggest Mistake New Practices Make

Since my practice has taken off, I’ve fallen into a bit of a side gig territory. Every smaller independent group has started to ask me for help about how to grow as quickly and as a result I’ve started to charge money to help them out.

Many smaller new practices think they can buy their way to success. Most smaller practices make the same following mistakes over and over again:

  • Pay an insane amount of money for a company to run their Google Ads. This is easy and can be figured out with a few drinks, YouTube videos, and a bit of experimenting with it online. One of my friends was paying $2,000 a month for Google Ads when the advertising agency was only buying about $500 a month in actual ads.
  • Do not pound the pavement and go meet other doctors who might be able to refer to them
  • Buy Ads in places that do not drive traffic. Sorry but that radio advertisement or newspaper print is most likely going to be a huge letdown unless you are looking for medicare patients specifically.
  • Overspend on hardware. One doctors office I consulted for had one employee but yet had 4 large new apple computers that are over $2,500 a piece.
  • Not focus on their billing. New EMR’s often sell themselves as being cloud based and can do your billing for you. When one clinic I consulted on started to look into it, the EMR was not coding things correctly and/or not chasing down denials. There was tens of thousands of dollars just sitting there in claims that were never resubmitted.

 

Challenges ahead…

There will always be challenges in any business. You need to adapt, overcome the problem, and try to mitigate the risk of similar problems happening in the future.

One of several waterfalls in Maui we jumped into

Here are a list of some of the challenges that I faced when I opened

  • I was told I was in network when I really wasn’t and had to write off about $50,000 work of income
  • I had to fire my first employee within 2 months of hiring them and then had to struggle to find someone new since that was my only employee
  • Running out of space
  • Running out of supplies
  • Hardware such as EKG machines not working as described and trying to source equipment
  • Realizing that Facebook ads for a medical practice are often times a huge waste of money
  • Having uncertainty if we can stay in our lease or not for next year
  • Not having our billing system perfected and having patients walk out the door without paying or ever having a chance of getting payment from them
  • Competition from other groups

There will always be something that comes up and tries to get in the way of a successful business.

 

Life is Amazing Working For Yourself

If you want to show up, collect a paycheck, and not have to deal with any administrative challenges then opening your own practice is not for you.

In the beginning I spent way more time on bureaucratic issues instead of patient care. I would say that 6 months in and I’m still spending about 15 hours a week on bureaucratic issues.

However, with each month I spend less and less time on the business of medicine and spend more time treating patients.

I’m now seeing about 80 patients a week with about 70% ish of these being new patients each week.

I’m now making more each month with net income than I did when I was a part of my previous group. I am happy that I took the plunge and can’t wait to see how the next 6 months treat us.

 

 

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