Physicians Strategies For Success library
Medical Practitioner or Practice Owner: Making the Choice That's Right for You
During your professional life, you will reach a number of key turning points that will shape your career path and financial future. Deciding to move from practicing your specialty as an employee in another organization to owning your own practice is one such time.
Before making a decision, you’ll want to conduct careful research and give much consideration to the alternatives, as each inherently entails its own advantages and challenges.
Most important is ensuring that the choice you make fits your personality type and interpersonal style. This is the key to attaining not only professional success, but deep personal satisfaction and enjoyment throughout your business career. As you begin to contemplate a move to ownership, here are some key considerations to take into account.
Evaluating Your Options: Is Ownership for You?
Working as a practitioner in a hospital, group practice, medical center or other clinical setting can provide a number of advantages. You can focus on practicing your skills and working with patients without the many concerns and challenges of managing a business. You can enjoy an assured income and employment benefits, and you will have an opportunity to learn from staff colleagues. Choosing to work in an organization may also be the ideal option for you if you’re more comfortable with a predictable lifestyle, prefer to focus deeply on a few areas of expertise rather than juggle multiple responsibilities and dislike the challenge of managing the administrative details involved in owning a business.
Practice ownership provides a greater opportunity to gain control over your professional life—both now and in the years to come. You’re in charge of quality of care, the patient experience, the practice environment, customer service and the operation of your practice. And while ownership certainly involves the challenges of meeting financial performance objectives as well as personnel management, customer billing and marketing activities, it also can offer the great sense of accomplishment that comes from creating a successful enterprise.
So how do you know if it's time to consider making the move to ownership? Start by answering the following questions:
- Do you feel you have or can develop the management skills required to run a practice?
- Can you handle the responsibilities involved in running a practice?
- Are you capable of operating a practice yourself (either alone or with other physicians)?
- Is your level of confidence and clinical speed at a level where you would feel comfortable in this new role?
- Are your case presentation skills well developed?
- Is having more control over your work environment—and your potential for earning income—something you value?
- Is building something that is yours attractive to you?
If you answered "yes" to at least five of these questions, you are ready to think about – and prepare for – owning a practice.
Solo or Group Ownership?
One way to ease the concerns related to being responsible for every detail of practice ownership is to consider starting a practice with a group of healthcare practitioners. While you’re still a business owner, you’re not in it alone.
One way to establish ownership in a group practice is to create one from scratch with one or more of your colleagues. Another way is to buy into an existing practice—perhaps by working there first as an employee and evolving your role over time.
Ownership: Should You Acquire or Build?
Once you’ve decided to make the jump to practice ownership—either on your own or with other medical practitioners—the next big decision is whether to purchase an existing practice or to start your own. There are many considerations to weigh with each approach, and the right answer for you will become increasingly apparent as you delve into your research. Following are some factors to consider.
The Benefits of Practice Acquisition
When you acquire an existing practice, you gain the advantages of an established patient base and income flow. This allows for an easier transition, as you can "hit the ground running" and adjust the details of the practice over time. You’re also less reliant on needing to market or build up your practice, since you would already have a steady patient flow (hence practice acquisition is an attractive choice for those who are more introverted or intimidated by the prospects of marketing and networking). You may also find it’s easier to attain a loan for a practice acquisition, as the business has a proven track record upon which the lender can base its decision.
Remember, though, that in acquiring a practice, you inherit not only the good, but also the not so good—such as problem employees who may require training or discipline, inefficient systems that need to be overhauled, outdated equipment that should be replaced or a facility that needs remodeling. In addition, the type of medical or healthcare services being performed may not be a true fit for your ideal practice. You may need to engage in ongoing practice modifications, upgrades and repairs to create the practice you really want.
Practice Start-Up: Identifying and Assessing the Pros and Cons
Building your own practice from the ground up gives you the ultimate degree of control in creating the professional environment you want. From the facility itself to equipment and employees, you’re in charge of deciding what works best for you. You're engaged in a creative process that, though time-consuming and capital-intensive, will ultimately produce the work environment you’ve yearned for—unimpeded by dated equipment and facilities or the inheritance of someone else’s problems.
But practice start-ups can have plenty of challenges of their own. A successful start-up practice is dependent on the practitioner’s ability to create a demand for his or her services and requires a significant degree of planning and marketing skills. Before the practice is even conceptualized, an important part of that planning is ensuring that the demographics of your chosen area will support your practice—and that the area is open, willing and able to support another practice. You will want to determine:
- Are there enough residents in the community and surrounding areas for your practice to thrive?
- How about in the years to come? Will your potential patient population be growing or shrinking?
- How many similar practices are there, and how many do you feel the area will support?
- Are there ways you can differentiate yourself or your services to create a niche for your practice?
- Is the surrounding medical community open to welcoming a new practitioner with your expertise and experience?
- Would there be specialists near you that you can refer patients to, or if you are the specialist, is there a strong base of referring physicians near you?
- How is the general health of the medical community in your area? Are there new medical centers or hospitals planned, or are area hospitals struggling and in danger of closing?
Talk to area physicians and medical professionals and network through professional associations to find out the facts before you move forward. Take into account your own medical specialty and potential patient demographics, then "run the numbers" to determine what number of practices would indicate a saturated market in your area. Don’t allow wishful thinking to overshadow the facts you discover.
If you are committed to living and working in an area that already has numerous practices similar to what yours would be, then acquiring a practice with an existing client base and cash flow might make the most sense, as you simply tap into an existing patient base—and would minimize the need to establish new connections or market your business.
Another factor to consider: Some lenders may be more reluctant to lend funds for a practice start-up, as there is no income history, existing equipment or property to use as a collateral base. This is particularly true for lenders who are not specialists in healthcare practice lending.
Preparing for Ownership
Okay, so despite the hurdles, you've decided to go for it. But just as you wouldn’t want to run in a marathon without advance training, you wouldn’t want to jump into practice ownership until you’ve prepared yourself both financially and mentally.
Tap into Your Professional Resources
Only you can decide if your personal style and temperament are suited for practice ownership and whether the payoff is worth the hard work. Remember that you may actually make more income as an employee of another organization, so you need to think carefully about what’s really important to you.
No matter which path you take, practicing as an employee of an organization or choosing practice ownership, it’s wise to find a mentor. This person—or perhaps several people—can provide perspective, set a professional example, encourage your growth and celebrate your success. They should be people you can call whenever you need advice, information, motivation or a knowledgeable second opinion. A good mentor can also help you stay focused on what’s really important in your professional life: a sense of accomplishment, satisfaction and personal enjoyment. These are the true definitions of success.
Reach out to those in the medical community who are experienced with first-time practice ownership. Take advantage of the extensive network of professionals—from specialty lenders to accountants, attorneys and practice management consultants—who are available to assist you at this crucial turning point in your career.
There has never been a more exciting time to practice medicine. You have many options from which to choose in deciding how you want to practice—and every opportunity to create the practice and experience you truly want. By surrounding yourself with professionals who understand how to help you make this important life decision, you can maximize your potential for professional and personal success.
Statements of opinion not necessarily endorsed by the American Medical Association, or any of its subsidiaries, counsels, commissions, or agencies.
Allison Farey, President of Wells Fargo Practice Finance, has more than 25 years of experience in the equipment leasing and financial services industry. For more information on customized financing programs and business planning resources for prospective practice owners, contact your practice financing specialist at 1-888-937-2321.
All practice financing is subject to credit approval. Business Refinance Program is for business term debt only. Revolving credit and existing Wells Fargo Practice Finance debt are not eligible for consolidation.
The articles and materials on the Wells Fargo Practice Finance Web site are provided for general information only and do not constitute, nor are they intended as, a substitute for consultation with accounting, tax, legal or other professional advisors. Wells Fargo makes no representation regarding the articles available in the Strategies for Success Library or the completeness or accuracy of the information contained therein. The articles and the information contained therein may be incomplete, may contain errors or may have become out of date. Wells Fargo makes no commitment, and disclaims any duty, to update any of the articles or materials in the Strategies for Success Library. The views expressed in the articles are those of the authors alone. They may or may not reflect the views or opinions of Wells Fargo.
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