HBN has helped hundreds of practices set up and expand their practices.
Whilst there is no ‘universal’ formula to setting up a practice, the process is challenging and the task list seemingly endless. Here are some important points to consider.
1. Understand the value of an external “business” expert
Many doctors find it worthwhile outsourcing practice setup or expansion to an experienced medical business consultant (MBC) for the following reasons:
❖ MBCs are acutely aware of the pitfalls and challenges of setting up businesses because they have helped set up so many before.
❖ MBCs can review and advise on medical insurance (many doctors in Australia frequently either underpay or overpay medical specialists)
❖ MBCs are well versed in staff recruitment whether it be finding a GP for your practice, or a chronic care nurse or a practice manager.
❖ MBCs can often provide group discounts on suppliers and assist in negotiating supplier contracts
❖ MBCs can create your pro forma (business plan) to help you obtain finance.
“Many doctors may be perceived to have a negative net worth after going through the debt of medical school,” saysHBN co-founder Russell Lee.
“Having a solid business plan and a skilled financial negotiator on your side who can submit your plan to multiple lenders on your behalf can make a big difference when it comes to negotiating a better interest rate or a higher amount of capital.”
❖ MBCs can help you find the right software and even basics like the correct EFTPOS choice can also make a big difference in staff and patient satisfaction.
“Does it integrate into your practice management software and Medicare for easy, fast rebates? What percentage of the insured population does it cover? Does it have multiple doctor and account capabilities? Does it have firewall protection to prevent online hackers? All these questions need to be asked,” says Russell.
2. Know who you want to be – solo doctor v group practice v hospital v precinct
❖ 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.
❖ However there is less control and more liability so you need to choose your partners carefully. 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.
❖ Working with other physicians also means when you are on holidays you can get emergency cover while a solo practitioner only has themself 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 all parties 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.
❖ As a start, it’s a good idea to ask local GPs who they feel may be a good business partner and it’s also important to 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 (eg regional or metropolitan).
❖ Joining a hospital network can have big benefits financially in the beginning. There is less risk and expenses, you also have access to hospital marketing teams, events, and hospital equipment and theatre upgrades. This setup may be ideal for a doctor who works in urgent care and needs a ready supply of emergency patients. Or perhaps an orthopaedic surgeon who wants to work with one of the newer style No Gap hospital programs which have recently been implemented in some states of Australia.
❖ Under these agreements, doctors sign an agreement with the hospital and private health fund to No Gap patients they operate and admit to that hospital.
❖ Whilst there is generally a higher volume of patients with hospitals, the downsides are less flexibility and less autonomy and less income per procedure, especially for no gap or known gap surgeons.
Joining a health precinct is another option and the benefits include sharing the risk of setting up a new business, as well as sharing the costs of IT, staff and rent.
Doctors in regional areas where there are less competitors may also find this model ideal.
It’s often easier to market to patients who may enjoy the appeal of one consolidated, modern practice (eg dentist, pharmacy, GP practice, surgeon, rehab facility) rather than disparate health entities scattered across the community. Find out more about our health precincts here.
3. Find the right team – internally and externally
“A trustworthy office manager needs to be strategic and visionary, and whilst a huge asset does not always provide the guarantee of a successfully run office,” says Russell.
Having an external provider regularly assess and oversee your operations for billing reconciliations, fraud and practice productivity can significantly boost your practice bottom line.
HBN is highly experienced in recruiting for practice managers, chronic health care nurses and admin staff for a new practice setup as well as performing staff background checks.
“After the initial set up we can also assist with training staff in streamlining of processes, software and billing procedures and our billings consultants can also undertake regular audits of your systems to ensure for instance that practice software is reconciled against the practice bank records.”
This is frequently an issue that costs doctors thousands of dollars a year in lost income. See here for more details