A Group Practice means sharing the burden or running the business with other professionals, so there’s generally less hours involved, and easier access to loans and working capital.
“A group practice is often ideal for “team players” who enjoy working with other clinicians to provide a broader scope of practice for their patients,” says HBN co-founder Russell Lee.
Working with other physicians also means when you are on holidays you can get emergency cover while a solo practitioners only have themselves to rely on.”
Remember though that it’s important to be clear on things like how many hours each is willing to invest in the practice, whether both agree in mixed, bulk-billing or private billing.
“Joining up with a “friend” may seem a good idea at the outset but good friends are not always good business partners,” says Russell.
7 things to consider when setting up a group medical practice
1 Ask around! As a start, if you are a specialist for instance, it’s a good idea to ask local GPs who they feel may be a good business partner
2 Evaluate. Consider the proposed partner’s reputation, potential equity investments, background checks, your partner’s attitude towards profit sharing and how and where they want to practice (e.g. regional or metropolitan).
3 Your way isn’t always the best way. Personalities are not the be all and end all. One partner may be loud and passionate and the other calm and quiet. “At the end of the day they may act differently and do things slightly differently than you do, but ultimately it’s about whether they will deliver the standard of care you are happy with,” says Russell.
4 Understand the legal structure. Have you collectively determined the business model entity and legal structure? This is very important when starting up practice because there are so many legal options.
A general partnership, for instance is a very simple structure where the profits and losses are attributed to individual partners, but the disadvantages are that there is unlimited business risk and the partnership dissolves if a partner leaves.
A standard corporation protects against personal liability for business claims, (except malpractice claims) and is a separate entity from the owners.
And perhaps the most popular legal formation for a group practice in Australia today is the LLC or limited liability company, which can provide protection against personal liability for business risks like a corporation and can be taxed like a partnership.
5 Reassess your structure in due course.
“It’s a common mistake to leave your legal structure the same forever,” says Russell.
“But circumstances change and just like you review your mobile phone plan, so should a practice regularly undertake insurance and a review of their legal structure every few years.
“A new doctor doesn’t have a lot of cash flow and doesn’t have much to lose financially, while a more established surgeon may be more inclined to protect assets earned over many years at all costs.
“There are also big expenses involved in the set up and ongoing costs of some structures, while others do not incur these costs. Furthermore, there are tax implications too. A sole trader can enjoy tax benefits from being able to claim on their income tax, while those in a trust situation do not pay income tax on profits.”
6 Be on the same page. Have you collectively organised how you will network with colleagues, attract new patients, and market your practice?
7 Tick the boxes. Before considering going into business with other doctors ensure all partners’ credentials and accreditation are signed off? Have all partners agreed on a fee structure? Do all partners have adequate malpractice insurance? Should all insurances be reviewed?
“The majority of doctors in Australia are generally found to be either significantly overpaying or underpaying insurance when they are assessed a few years after opening,” says Russell.
If you’re considering a group practice, please call us today for a complimentary 20 minute consultation.
HBN has mentored many group doctors through set up and ongoing maintenance of their practice and can assist with
Background Checks (staff)
Budgets and Projections
Branding and Signage
Business Loans (with 95% approval)
Business Plans/Pro Formas
Clinical Supply Agreements
Comprehensive Business Planning
Cash Flow Forecasting
Construction and Fit-out
Find Practice Manager
Insurance and Indemnity Reviews
IT and software
Multi-Practice Set Up
Position Description (staff)
Practice Policy & Procedures
Profit and Loss Statements
Scaling Up Or Down
Service Provider Agreements
(IT, security, phone, Internet)
(GP, Chronic Care nurses, AHP)