Six Ways To Build Your New Practice – Part One
In a recent post, we discussed some issues that a physician or dentist should consider when purchasing a practice. However, for some doctors, purchasing an existing practice is not a feasible option. For others, they may want to start their own practice so they can have more flexibility in how the practice is operated and the types of procedures they perform. While building a practice from the ground up may, at times, seem like a herculean task, it can be accomplished and—if done right—can be a very satisfying endeavor. In this post, we will be taking a look at a non-exhaustive list of six items to consider in building your new practice.
1. Location, Location, Location.
Perhaps the single most important step in building your practice is finding the right location. It is important that you find an office space near a solid client base; for example, if you do pediatrics, a location near schools would be a great place to start. You also want to avoid areas that are already inundated with other practices that offer patients the same services you intend to offer.
The space itself is also an important consideration. When assessing a potential office space, you should ask yourself if the layout allows for good patient flow, from the waiting area to the operatory or exam room, to the check-out area. A modern look can be very important to many patients, so also consider whether the interior finishes need to be upgraded. If so, then negotiate with the landlord for tenant improvements to be included in the lease. To the extent tenant improvements will not cover all of the remodeling costs, be sure to factor in those expenses for each potential office space you look at.
A final consideration related to location is curb appeal and visibility. Having a practice that looks as good as the services you offer will help you attract new patients, so make sure the area surrounding your office is presentable, whether you are looking at shopping centers, medical office buildings or a stand-alone facility. Also, make sure that you negotiate for signage from the landlord and your practice is clearly visible from the street.
Of course, when you are choosing a location, the lease terms can play a critical role. In addition to the cost of the lease, also consider the term of the lease, renewal options, whether the lease is assignable, the projected Common Area Maintenance (CAM) charges and whether the lease is personally guaranteed. You should consult with an experienced adviser when negotiating the lease, as these terms can have a significant impact on your practice.
2. Incorporate
Even before you select your location, you should establish a separate corporate identity for your practice. This usually takes the form of a corporation or limited liability company, and will help shield your personal assets from potential creditors. There are advantages and disadvantages to each type of entity, so you should consult with an advisor to determine which one is right for your circumstances. Once you decide on the entity type, you will need to apply for a Federal Tax ID (EIN). An EIN is a number assigned to your business by the IRS used for starting a new business or for hiring employees.
Finally, each state has different licenses and/or permits you must acquire in order to operate a medical or dental practice. Arizona’s Department of Health, the Arizona State Board of Dental Examiners and the Arizona Medical Board should be able to provide you with a list of the necessary documentation that will need to be submitted, as well as any corresponding fees.
3. Ensure You Are Insured.
One of the primary risks associated with building and managing your own practice is the risk that you will become incapacitated and unable to work. If you are a solo practitioner, even temporary capacity can dramatically influence your practice’s well-being. Therefore, in addition to purchasing malpractice insurance, property insurance and general liability insurance, also consider purchasing a personal disability insurance policy.
Disability insurance policies protect you in the event you become disabled to such an extent that you are no longer able to work. Although there can be obstacles to collecting, and variations in the quality of policies, ideally the disability insurance will replace your income at a time when you may need it most. If you are going into practice with other doctors as a partnership or group, you may also want to consider purchasing key-person disability insurance, disability buyout insurance, business overhead insurance, and directors and officers’ liability insurance.
We will continue this series next week with the remaining three tips, but if you have any questions regarding the best way to build your scratch practice, it is important to promptly consult with a knowledgeable, experienced adviser.