The Good Parts Of Owning A Medical Practice
Lately I have been a bit negative in my past several posts. Some people have even messaged me to express their concern, asking if I am even happy owning my own practice.
I have used these messages from readers as a bit of a self-reflection moment. My blog has been my attempt to show what it is like to really run a practice that does not make it into a “glamorous” Instagram post pretending that everything is great and there are no downsides.
Maybe I have gone a bit too far in the negative posts. I mean, after all I do love what I do and I love running a medical practice. I also am making more than 2x what an employed doctor would be making in my area. With that bit of self-reflection in my mind, today let us explore the good parts of owning your own medical practice.
Becoming financially independent has been a huge topic in the past 10 years. One of my favorite blogs, Physician On Fire, has wonderful posts about becoming financially independent that I would suggest you check out if you have not done so already.
To me, Financial Independence is so much more than just reaching a monetary value. Sure, you make more money on average in private practice than in an employed setting. However, I’m also talking about the financial / emotional benefit that private practice can bring and how creating a business can set you up for independence.
Having others work along with you can help lower the cost to deliver your services, and possibly make a little bit of money off of those who work in the business that you have built. Having employees who help build your independence is a huge goal for me.
Yes, I could do locums and live out of a hotel to minimize costs to reach my FI (financially independent) number. At the end of all of those shifts, I will be left with no system in place for me to have recurring revenue in the future. Instead, I’m sitting on a pile of cash.
If you only use your main job as a means to FI, then you will work until the day you either decide to stop or have to stop. Owning a business allows me to hire other workers to build recurring source of income to reach FI goals even if I decide to take a step back and work less.
Control Over My Destiny
When I worked for another group, I was at their mercy for everything.
- Scheduling. I had to work when they told me I needed to work.
- Pay structure, at their mercy on any pay cuts that need to occur.
- Little say in time off.
- Metrics for productivity and discharge metrics that I had to meet for a measly $500 quarterly bonus.
Finally, one day I realized that being in the hospital just was not the life I wanted to lead anymore. I got tired of coming in at 5am to hit my discharge metrics while the hospital admin blasted me in emails if I didn’t hit these targets. Funny how I never saw the admin in the hospital before 9am….ever.
I got so tired of being their pawn in their business making them money, only to be told how to practice medicine by a group of hospital administrators.
Owning my own practice has allowed me to be in full control of my destiny. If I want to make more money, I see more patients. Maybe I want more time off for independence now, I can scale back my schedule. If I want less business headaches, I can stop growing and just keep my practice on autopilot.
I love the control that I have over my life and my schedule. That allows me to love going to work almost every day. It also helps that I’m making way more money that I was with my previous group, speeding up my journey to true financial independence.
Income Potential Owning A Practice
This ties into financial independence but deserves its own section. I’m sure you have heard it before too. Everyone probably has told you what people told me. You will have a very hard time opening your own practice and it is almost impossible to do so in 2021. Outpatient medicine does not make any money anymore and there are too many things in your way to make any money. Sound familiar?
I used to work as a hospitalist. My shifts were 7am to 7pm with call two times per week where I stayed until almost midnight.
My best year I picked up many extra shifts and almost broke $300,000 that year.
Now, I pay my physician employee more than $300,000 to work M-F, 8-5….no weekends. No holidays.
Currently, I’m on track to make about half of a million dollars this year. The income potential is so much higher owning your own business compared to working in a large group. However, that number may fluctuate as I plan on investment even more money back into the business to grow.
Building Wealth In Real Estate / Diversification
I started my company as lean as possible. I started with 800sq ft. We shared 2 exam rooms between 5 different physicians!
Once I knew running an outpatient practice was viable, I decided to buy my commercial space. This is the space that I now practice out of.
Total purchase price including buildout was about $1.7 million. Current appraisal at the time of move in per the bank request was at $2M due to insane market appreciation. We have not even been in the new building a year. I wonder what it would appraise for now.
The rent that I now pay to my commercial real estate holding company goes into building wealth. I effectively pay myself rent through the business which pays off the mortgage on the commercial real estate. My current mortgage payment on the note adds about $4,000 a month into equity with each payment that I make.
Not a bad deal at all.
With each hire, my portion of rent that I have to pay goes down and I get others to help cover that rent note. A good deal all around.
Obtaining New Skills: MBA By Fire
Running my own company has taught me some tough financial lessons. Like my recent post, of how I lost 100k dollars on my physician employee that we had to part ways with.
I have gained valuable insight into what running a company takes. What being a good leader and boss takes.
The skills that I have learned have been incredible and a huge benefit that I didn’t even think about when starting the business.
You will learn how to manage people, how to value your company, and how to grow your business. You will learn that the secret to success is:
- Hard work
- Providing a good product (excellent care)
- Excellent customer experience and service (making sure that your practice has good protocols so that patients feel well taken care of).
Beyond that, the devil is in the details. This is the secret sauce for pretty much every company. The details are the hard part of how to make this happen and build a great culture at the same time.
Creating Culture For Your Practice
Define what your business stands for and not what your business is.
Yes, we provide medical care. Lots of places provide medical care.
However, we go above and beyond to make sure my staff is happy and feel valued at work. It is a lot nicer to show up to work where I’m involved in building the culture of the business.
There is no task that is too small for me to do, and I never ask my staff to do something that I would not do myself. For example, our voicemails had a glitch and we found out that we had over 100 voicemails in an inbox we did not even know existed. I stayed late along with my employees to answer each and every one of them.
We also treat patients like we would want to be treated. Creating the work culture for my employees and patients has fostered an environment where we now care for over 13k lives. Keep in mind the business is only 3 years old.
We want people to be healthy and happy. Maybe our clinic and values are not for everyone, and that is okay. You cannot make everyone happy; we get that but we sure do try hard.
Having happy employees and patients makes work a heck of a lot enjoyable to show up to.
Satisfaction Of Creating A Successful Business
Currently there are about 15 people who rely on my business to support their lives.
It may sound small, but those are 15 households that rely on what I’ve started to pay the mortgage, buy food, and live their life. Slightly more than 3 years ago, this company did not even exist.
To see the business become a success and provide that growth for my employees, not only financially, but professionally is such a satisfying thing to see.
I’ve done this all without taking out a loan, other than buying the commercial real estate that we practice out of. In a time where VC money seems easy to obtain, I’m happy that so far, no outside investors have been needed or present.
Not only are we growing but we are profitable every year since I started the practice.
3 thoughts on “The Good Parts Of Owning A Medical Practice”
Love it! Very inspirational. I think more docs need to do this to “save” medicine.
I would love to start my own practice, but my passion lies in teaching and mentoring residents, more so than patient care. Alas, there are no self-employed residency faculty.
Thanks for the encouragement! We need all types of people in various roles in medicine, and I would not be where I’m at today without some amazing mentors and teachers. Keep up the good work and maybe you can inspire young doctors to keep an open mind about all the possibilities that await them post-graduation.
i love your blog. it’s very informal and inspirational. Currently still in residency in the north but will be moving back South once done. private PCP with goal to expand to a multi-specialty group is my target.