Case Studies

The majority of physicians will spend part of their time in a private practice setting. A list of specialties that would accommodate Sanjay’s independence includes Anesthesiology, Community Medicine, Dermatology, Diagnostic Radiology, Family Medicine, Internal Medicine, Adult Neurology, Occupational Medicine, Ophthalmology, Pediatrics and Psychiatry. Sanjay could potentially open a clinic with training in any of the above specialties, but in some cases the procedures or conditions he could treat or manage would be limited compared with what he could do in a hospital setting. For instance, if Sanjay trained in ophthalmology, he could do LASIK surgery, but perhaps not be involved in neuro-ophthalmology cases.

Surgical specialties may not be so appealing to Sanjay because surgery requires an operating room in a hospital; however, surgeons may have private offices outside of a hospital for their clinics. In some cases, surgeons may be able to operate outside of the hospital setting; facial plastic surgeons are an example. Pathologists require access to laboratories and usually work in conjunction with hospitals, making private practice unattainable. Pediatric neurologists may have private practices, but they are usually associated with a hospital because of the rarity of pediatric neurological conditions. Physical Medicine and Rehabilitation is generally practised in hospital. Radiation Oncology and Nuclear Medicine require access to technology usually owned by hospitals, making private practice unrealistic.

Term loans, operating lines of credit and business overdraft protection are financing options available to tailor to the needs of physicians with their own offices. Sanjay might also be interested in the process of incorporating private practices.

More detailed information on these options can be found in Section B, Your Financial Life.

Aside from equipment and rent, there are other costs involved in starting your own practice, depending on the size of the practice and what type of medicine you're practicing.

 Here are a few:

• Fees for a contract lawyer to develop partnership or group agreements if you are working with other people.
• Fees for an accountant to set up an efficient accounting system and file your income tax returns.
• Fees for a bookkeeper to formulate and report on monthly, quarterly, and annual finances.
• Fees for a real estate broker to find an appropriate practice location for you.
• Fees for an interior designer/contractor to design your office space.
• Payments to support staff, such as a nurse or receptionist.

Most physicians need to borrow money to start up their practices. Young doctors like Sanjay can often barely purchase a new computer without a loan, let alone hire staff and equip an office without some sort of financial assistance. Equipping and furnishing an office can be very expensive. Sanjay will need to examine his financial resources and what furnishings and equipment has to be purchased before seeing his first clients, and what he may require for future expansions.

He should discuss with his advisor whether leasing or purchasing equipment outright is the best option for him. He will also need to decide what is needed before opening his practice versus what can wait until after opening his practice. He should do price checks and use supplier competition to his advantage, check guarantees and warranties, and ask other professionals in his field about suppliers’ customer service record, equipment maintenance and client satisfaction.

When it comes to hiring staff, Sanjay will probably find that staff costs can comprise up to 50% or more of total office expenses. That alone should prove the importance of keeping excellent hiring practices.

Here are some of the greatest mistakes that professionals make when hiring:

• hiring too quickly (i.e., the first person interviewed or the best of a “poor lot”);
• hiring staff who aren't qualified or who don’t have the characteristics needed for the job so that lower rates of pay can be offered; and
• hiring staff who lack initiative or who aren’t interested in helping the practice to grow.

Good hiring practices start with careful planning by:

• listing all the tasks that will have to be done within the office, from opening mail to greeting clients and handling finances;
• assessing the experience needed by staff members to be able to do the work efficiently and assigning each task to certain positions, such as receptionist, nurse, technician, legal secretary, etc.;
• assessing how much time each task will take on a daily, weekly or monthly basis;and
• assessing which positions should be hired on a full-time basis and which can be hired on a part-time basis, bearing in mind the importance of having continuity throughout the day.