Building a Successful Physician Practice Part 2: Essential Questions and Early Decisions

Written by Dr. Amy Pearlman

1025 Words. 4 minute 18 second Read.

Co-founding my own practice with my twin sister took me to a world beyond medical knowledge.

As I reflect on the journey of establishing our practice, I am reminded of the pivotal conversations that shaped the foundation of our success to date. From navigating career changes to embracing risk and strategizing financial sustainability, there were many decisions and dialogues that played a vital role in redefining our paths. In Part Two of this series, I’ll delve into these key conversations and decisions.

From seeking advice from seasoned business professionals to minimizing overhead, each conversation contributed to a clearer vision of what it takes to succeed in the realm of healthcare entrepreneurship.

Let’s get started.

Catch up on Part One of this series by clicking here.

Learning from Business Savvy Minds

Beginning a medical practice is much like starting any business. Doing so requires a solid understanding of accounting, bookkeeping, legal considerations, financial management, marketing strategies, brand development, and commercial real estate.

If you’re like us, we had no expertise in any of these areas.

Fortunately, none of us has to be the expert. We just have to have conversations with and hire those who are.

I was fortunate that my sister had already established many of the business connections prior to my relocation from Iowa to Florida. I say this because I’m certain that both of us starting from scratch in a new area would have likely led to a failure not because of incompetence but because of the connections with experts we needed from the start. My sister and I were well-versed in building the healthcare referral network. We were less familiar with how to build a team of consultants to manage most areas of our practice.

We began by asking the right people, successful entrepreneurs who had started and exited many businesses the who, what, where, how, and why questions like:

  • “Who is your lawyer and do they have expertise in commercial real estate contracts?”
  • “What accounting firm does your business use?”
  • “Where do you like (and not like) going for your medical appointments and where do you suggest we look for an office location?”
  • “How do we go about setting up a partnership agreement now that my twin sister and I are in a family business?”
  • “Why are you unsatisfied with aspects of your current medical care and what would it take for us to exceed your expectations?”

Don’t solely rely on other healthcare providers for answers to business questions.

Based on these recommendations, we set up consulting agreements with experts to manage our bookkeeping, accounting, legal documents, and nearly every other aspect of our business (including HR, marketing and branding, and website development) so we could focus more of our time working on the business rather than for the business.

The majority of our money went to hiring the most talented people and companies we could find.

Which means, we had to figure out how to minimize cost in every other aspect of our business, which brings us to the discussion of overhead in the first year of practice.

Minimizing Overhead

In our pursuit of providing top-notch care, we quickly realized that minimizing overhead was not just a financial strategy but a fundamental aspect of delivering sustainable healthcare.

When we first conceptualized our concierge practice, we envisioned a space where personalized care met a classy and sophisticated medical office. However, we knew we couldn’t afford the dream office from the start. Rather than investing in extravagant facilities day one, we focused on optimizing the time and expertise we provided to our patients. My sister commuted long hours to a shared workspace, while I embraced telemedicine and subleased space from a plastic surgery colleague. This decision not only saved us significant overhead costs but also allowed us to maintain flexibility in our practice setup.

One of the crucial lessons we learned early on was the importance of location. Before settling on our current office space, we were on the verge of signing contracts for commercial spaces that, in hindsight, would have been ill-suited for our patient demographic. Thanks to the guidance of our network, we avoided potential pitfalls such as non-compliant ADA facilities and exorbitant rents. By waiting patiently and conducting thorough due diligence, we secured a suitable location that met both our patients’ needs and our financial constraints nearly one year after opening our practice.

Financial prudence was another cornerstone of our journey. Transitioning from our stable academic practices meant taking a significant pay cut initially. We made the deliberate choice to delay putting ourselves on the payroll until six months into starting our practice. By prioritizing savings and investments during our academic tenure, we afforded ourselves the luxury of time to establish our practice without significant financial strain.

Perhaps the most unconventional aspect of our practice is the size of our team. With just my sister, our receptionist, and myself, we’ve embraced a hands-on approach to every aspect of our practice. While the temptation to expand our team was strong, we recognized the value of keeping overhead costs low. This meant donning multiple hats, from receptionist to business manager, on any given day. Not only has this approach kept our expenses in check, but it has also fostered a deep understanding of our practice dynamics.

Don’t get the big fancy office, the latest and greatest technology, or the full array of medical office staff before you can afford them.

Closing thoughts

The reality is, many of us want to build a world-class, innovative, and patient-centered healthcare practice from the start. It takes months (if not years) to do so in a financially sustainable way.

The thousand-foot view of building a practice with my twin sister appears exhilarating, but the reality more closely resembles spending our hard-earned money on talented consultants and minimizing overhead costs wherever we can.

This approach and these conversations have helped us be profitable from the beginning and we’ll use this momentum as we go into year two and beyond.

Stay tuned for the deets on ways to optimize the patient experience in Part 3 where I’ll go in depth about simple strategies for maximizing patient satisfaction.

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