My New Location Is Profitable 6 Week After Opening
It’s been about 6 months since my last post on this blog. I’m back! Some big changes have been occurring. I’d like to take a minute to update those of you who are following my blog on how things are going and let you all know how my new clinic location has opened, how things are going.
New Medical Office Location
This is the second office that I have opened. It is about 20 minutes from my main office. It has taken much longer than I expected to open the second location. First, we had to get busy enough at our main location. Then secondly, we had to make sure that we had enough cash to support a new practice location.
In 2022, that is when things started to go crazy. Stories of people bidding 30% over ask for houses sight unseen were in my mind. This on top of one of my employees was offered a job at another office while getting her pap smear.
I was worried about where the economy was going. We were giving raises every 4-5 months to keep employees. The inflation numbers given by the fed, were in my opinion, way off from reality.
I was nervous how bad inflation was going to get. So, I decided to drag my feet on opening the second location until things stabilized.
Finally Decided To Just Do It And Open The Second Office
In mid 2023 I decided to say screw it, we built up enough cash to support 6 months of operation of the new clinic even if it brought in no money. I found a commercial agent, and found a lovely space to take over.
The First Doctor Backed Out On Us
The first doctor backed out on us. We had this lovely physician lined up to start working for us. He was going to move from the pacific northwest to join our group. However, right before starting, he called me and told me that his father in law was diagnosed with cancer, and they would need to stay in the PNW to support their family.
We let him back out of the contract with no negative implications.
How Much Did That Doctor Backing Out Cost Me?
Rent on the clinic is about $7,500 a month. It took us 8 months to find a new doctor, sign a contract, and get them credentialed with insurance companies.
In the mean time we had to pay rent and electricity on the space. Luckly the NNN is included in that $7,500 fee.
So, the total cost of the doctor backing out on us… It cost me about $62,000 including all the electric bills.
New Doctor Started In Our Second Location
In April 2024, our new physician started at the second location. In my business plan, I assumed that it would take us about 5 months before we started to make a profit.
6 weeks in, and we just had our first profitable week! I’m blown away. Never would I have guessed it would be profitable this quickly.
Now, before I get ahead of myself, I assumed 5 months before we would have a profitable month, we have had a profitable week. Hopefully this trend will continue.
At the time of the writing (it is currently the start of week 8), week 6 and 7 were both profitable. There is a chance that month number 2 will be profitable. Wow.
Third Location Opening Soon!
Next month we will be opening our third location. The doctor that we hired, we are very excited to have her work along with us.
She has been wonderful to work with so far. She has been filling in at the main office while credentiling the new office is taking some time.
Growth On My Mind
I lucked out. I have a business partner, who like me, is okay with investing back into the business in the name of growth. This means that I’m okay not taking a salary for months if need be, in the name of opening more locations and hiring more doctors or PAs.
Invest in what you know. My whole family runs a variety of businesses. Its what I grew up around, and its what I know. I also know how to proactive medicine. I am investing in the S&P index fund. However, I am also massively investing in my business in the hope for a large payout when we scale even larger. How large will that have to get? I have no idea, I’m just enjoying the ride for right now.
Wow this is awesome! Congratulations. I appreciate that you share details of both the good and the bad of running and growing your practice (as well as the nitty gritty financial details). So inspiring and helpful. Best of luck with the new location. Can’t wait to hear how things go with location #3!
Thanks for all the encoruagement, I’ll be sure to update when that happens! Right now BCBS is dragging their feet at putting that 3rd clinic in network. Thats all we are waiting for
What kinda covenants/non-competes do you have built into your new employee contracts? (given the FTCs recent rulings)
Our non-competes now basically say don’t open in the same building. We have a non-solicitation clause. We have been shifting to if you leave early then you will have to pay back a bonus or something else that we give you bc we spend a ton of money on building these practices.
Congrats on an incredible achievement, you pushed through adversity and made it happen! What do you think was a key factor for your second clinic to become profitable in 6 weeks? Did you apply and prior marketing strategies to the area?
Sounds reasonable. Have you considered adding a cash price for the practice, to accommodate for anyone on high deductible plans etc? (Surgery Center of Oklahoma does this)
Yes we sure have. We are going to soon offer a “premium subscription” plan plus add more cash pay services. Tricky part is in publishing those rates because we have to make sure that no insurance pays us more than our cash pay rates or else they could cut our pay rate.
Correct me if I’m wrong, but could you not set the cash price according to the highest in-network rate you’re contracted at across all insurers? Preventing any other insurer from lowballing you/offering an in-house rebate.