Opening a new medical practice can be fraught with the challenges of servicing today’s dynamic healthcare industry. Despite the challenges, establishing a medical private practice can be an incredibly rewarding accomplishment for a medical professional, providing the chance to make key decisions that directly influence the standards of care delivered to patients. It is therefore crucial to strike a balance between being a leading medical practitioner and an innovative business owner.
We explore the most common pitfalls encountered by new medical practices, and provide some actionable insights on tackling these challenges to ensure the success and longevity of your new practice.
The opportunity and cost of starting a medical practice: 5 insights to help practitioners avoid the most common mistakes
1. Not having enough capital
This is a challenge common to establishing any type of business. However it can be a prohibitive roadblock for new clinics as the costs associated with starting a medical practice can be significantly higher than other new business endeavors.
In Australia, the cost of starting a medical practice can be as low as $30,000 in regional areas, but in metropolitan areas this can easily rise to over $200,000. It is therefore crucial to make sure you are well prepared for the realistic establishment costs. These include costs such as the building lease, fit out, and equipment costs but also potentially large additional costs associated with marketing, tax and legal advisors, medical malpractice insurance, operational costs, and medical supplies.
Not having enough starting capital puts you at a disadvantage from the outset. Reduced levels of capital or high levels of debt may put you in a position where you are facing additional stress levels or undue financial risk.
2. Investing in expensive technology that doesn’t support your team
This is also the time to ensure that you are investing in the right tools and technology to support your practice from the outset. The need for expensive servers and hardware setup costs are no longer necessary, as cloud-based practice management systems now offer a superior solution at a fraction of the cost.
It is vital that your practice management system works effectively not just for you and your team, but for your patients too. The purpose of modern cloud-based platforms is to streamline your practice’s processes and ensure there is a truly seamless and secure flow of information; allowing you to allocate more of your time and resources to providing quality patient care.
3. Lack of long-term strategy
Long-term planning is essential to your long-term success. This applies to everything from effective forecasting to strategic hiring. The best strategy is to develop a comprehensive business plan that covers not only the establishment of your practice, but is also able to be continually revised as your business grows. This gives you a tangible road map for your practice that you can continually refer to and allows you to monitor and benchmark the ongoing performance of your clinic.
Try to create yearly business plans and involve as many people in the clinic as possible so that everyone is on board with the direction and goals of your practice.
4. Underestimating the business skills required
At its core, a medical practice is a business, and therefore requires the same type of financial and management skills that are crucial to all enterprises. These skills extend not only to the financial management of the practice, but also to areas such as effective planning, forecasting, marketing and the hiring of clinical and non-clinical staff.
If business management isn’t your strength, consider investing in the services of a business advisor who can assist you in developing tailored management strategies specific to your practice, as well as providing assistance in developing or tweaking your business plans.
5. Reactive, rather than proactive, clinical risk management
One of the advantages of opening your own practice is the vast amount of decision making freedom you have around the direction of your practice and the way you run your business. By running your practice in a proactive rather than reactive manner you can help to effectively manage clinical risk.
With the right practice management software, your can further minimise many potential risks. Integrated patient portals, streamlined processes, inbuilt automation with intuitive workflows can reduce the number of errors related to manual documentation and inhibited information flow.
Over to you
Physicians operating their own medical practice cannot focus solely on the clinical aspect of healthcare. It’s vital to also embrace the business and management side of running a successful practice.
For many physicians, adopting the mindset of an entrepreneur will equip them to evaluate, evolve and ultimately produce the best outcomes for patients and practices alike. We’ve developed a guide on how to adopt the key skills of an entrepreneur and build a thriving practice – get your copy by clicking on the image below.
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.