We've recently published an updated version of this article for 2019 - you can read it here.
The good news — 2017 offers big things for ambitious practice owners in the making. New legislation, latest tech trends and innovative medical treatments can help you to pave the way for better patient care and innovative practice management.
As we all know, there’s more than medical expertise needed for starting a medical practice from the ground up. There’s a plethora of business know how necessary to hit the ground running in 2017 and set up your profitable practice for success.
Leveraging key insights and essential statistics, we’ve compiled 8 considerations for opening a medical practice in Australia. Are you ready?
What to consider when you’re starting a medical practice from the ground up
1. Building a profitable business plan
“Without a business plan doctors may spend most of their time “fighting fires”, such as staff issues, unexpected expenses and changes in government health policy. Implementing proactive systems through a business plan can prevent fires in the first place.” — Dr. Neville Steer
Building a realistic and profitable business plan is the essential first step for any medical practice in the making. With a plan at hand, your practice is more equipped for obtaining financing from banks and investors, communicating important business information to key staff and stakeholders and delivering long term goals for growth.
A thorough business plan requires a strong financial component, taking into account key legislation and law around running a small business. The Australian Government’s 2016-17 budget released in May 2016 offers several benefits for small businesses, including:
- An increase to the small business tax discount — for sole traders, partnerships and other unincorporated businesses with an annual turnover of less than $5 million, the current discount is 16%
- An increase to the small business turnover threshold — more small businesses will be able to access small business tax concessions
- A simplification to business tax law, to come into effect by 2018
Your business plan also needs to include key information on: the vision of your practice, your angle for providing a unique service in a competitive market, and strategy around structure, service range, staffing, premises and processes. Making these difficult decisions now will help you to motivate your staff with the same vision in mind and avoid many future disputes around growth trajectory.
2. Financing your small business
The cost of starting a practice varies depending on the location, with a regional practice costing between $30,000 and $100,000 and a metropolitan practice costing between $200,000 and $500,000. — NAB
With a profitable business plan in place, prospecting potential investors and banks for financing becomes the next step. Compared to purchasing an existing practice, starting a medical practice from the ground up is far more affordable.
Whether it’s a lump sum loan or a monthly loan repayments with a medical finance provider, your capital needs to cover the initial cost of premises, technology, equipment and staff onboarding.
3. Investing in insurance and clear policies
“Claims arise from allegations of problems in health service provision. Including private sector claims closed in 2010-11, 53% of combined public and private sector claims cost less than $10,000, 25% cost between $10,000 and $100,000, 16% cost between $100,000 and $500,000 and 6% cost $500,000 or more.” — Australian Institute of Health and Welfare
Whatever your specialisation or the vision for your practice’s growth, investing in medical indemnity insurance is an essential in your checklist for setting up a medical practice. While compliance policies and established procedures around patient care and staff training will minimise some risk, insurance provides a necessary protection.
It can be more costly to do damage control, rather than implement clear policies and best practices first go. Anything from issues with faulty equipment, EMR systems insufficiently protected, staff behaviour or quality of facilities can lead to liability.
“Doctors have a duty to make the care of patients their first concern and to practise medicine safely and effectively. They must be ethical and trustworthy.” — Medical Board of Australia
Ultimately, establishing clear policies and procedures are about equipping practices to fulfil their duty of care. A lack of practice wide policy around practitioner and staff behaviour can open up your practice to liability should something arise.
Before your practice opens its doors for the first time, invest time for establishing policies and procedures around:
- Appropriate staff behaviour
- Safe handling of patient information
- Effective management of administration and fee management
- Maintenance of equipment and facilities'
4. Sourcing a reliable practice manager
“Not having a practice manager can cost a business tens of thousands of dollars a year in lost income.” — The Royal Australian College of General Practitioners
The evolving role of practice manager means they’re a core member of your medical practice, no matter the size. Though they often have little patient contact, their role covers aspects of management, business, finance, HR and marketing. In particular, they become invaluable with multiple specialists providing different services all in the same premises.
5. Building a support team
“Information, Media and Telecommunications; Professional, Scientific and Technical Services and Healthcare and Social Assistance are currently the top three growing categories of employment.” — CBA
An effective hiring strategy has the long game in mind. It should take into account:
- Your vision for the practice
- Your practice’s growth trajectory
- Reasonable constraints of your premises
- The work/life goals of your healthcare professionals in your specialisation
- Healthcare workforce trends
Australia is currently in the midst of an expansionist phase in medical workforce supply, with the number of specialists increasing on average by 4.8% per year. Furthermore, though male doctors continue to dominate in many specialisations, the difference between number of men and women is now less pronounced.
Ultimately, your staff are there to elevate the experience for every patient — whether they’re a specialist or support staff. Establishing clear procedures on hiring, onboarding and ongoing training will help you ensure all of your team are equipped with the tools and know how to succeed.
6. Strategic location needs
The age old motto of “location, location, location” has never been truer. Once the challenges of building out a profitable business plan, obtaining financing and investing in essentials are done — the issue of selecting a suitable location begins.
As you’re scouting out potential premises for rent or purchase, keep in mind:
- Accessibility to buses and trains
- Proximity to local car parks or ample street side parking
- Ramp or lifts access for patients in wheelchairs, elderly patients and patients with prams and strollers — stairs only facilities may fail to cater for all of your patients
- Regulations, allowing you to use premises for commercial purposes, in particular medical practice
- Facilities, such as bathrooms, for patients
- Demographics of local areas — for example, obstetrics clinics may find more value establishing premises in areas with more young families rather than retirees.
7. Empowering technology on the go
The right technology at your fingertips is empowering for your whole team. With effective IT infrastructure in place, you can help your staff to: efficiently manage patient information, organise appointments and follow ups, ensure consistent fee management and cash flow, and more.
Today’s technology needs to embrace the new ways patients are approaching their health. Through increased accessibility to important health information, patients are equipped with the know how to take greater control of their health — greater awareness leads to greater engagement. Many health apps, such trackers for calories and daily cardio, are also collating information that could further equip you to provide ongoing patient care. Ultimately, excellent patient care with the help of supportive technology is an empowering and educational process.
For those seeking out a practice management solution catering to your specific specialisation and needs, there are countless choices on the market. However, not all systems are made equal. If you’re weighing up the pros, cons and considerations of your technology, try this free checklist — it’s a handy framework so you can make the best decision for your practice.
In the first year of your practice, it’s crucial to plan and execute a thorough marketing strategy that aims to build up a strong referral network and establish a trustworthy online presence — through a website and various social channels. The premises of your practice may mean little foot traffic, leading to low visibility in the local community. This factor, along with the level of competition in the area, will determine the intensity and angle of your go to market strategy.
Over to you
With so much opportunity on the horizon, 2017 could be your year for opening a medical practice in Australia. How are you preparing for a 2017 launch?
To help you stay across all the nitty gritty of business requirements and free you up time for focusing on what you want to do (provide top patient care and treatment!) — we’ve compiled this essential guide for new practice owners. It’s a free ebook with all the must-know advice for setting up a private practice.
Clinic to Cloud does not provide tax, legal or accounting advice. This material is for informational purposes only and is not a substitute for independent professional advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. See the Clinic to Cloud Disclaimer for further information.