Although Integrating Delivery Networks in the United States are growing, there are still many Pediatricians whom leave a large group, a Hospital Group or other Integrated Delivery System to start their own practice. Starting a Pediatric Practice can be both an exciting and scary at the same time. Before any Pediatrician considers staring a practice they should look at the primary reasons why they are interested in starting a practice. Is it financial? A different level of service? What if they start the practice and makeSome of these questions include:
1. What is the demand in my market for another Pediatric Group and what additional value will my new group bring? Patients and parents need a Pediatrician. How fast your practice grows depends on the market and their choices within this market. If they have 5 other choices of Pediatric groups within a small radius and two of the practices have availability to new patients as well as many hours, the growth rate of the practice will be much less than in a town for which there is only family practice physicians. The research that should be done is to look at the population demographics and match this up with the number of Pediatricians in the area then evaluate the number of Family Practice Physicians in the area. I know of cases in which very good clinical Pediatricians make minimal salary due to the demand in the area and growth rate of their practice.
2. How should my office be configured and what are the best options for commercial real estate? When establishing a new practice, know what your goal is for the practice as well as the needed space. Fortunately, this is a buyers/renters market so the practice should be able to negotiate some favorable terms. Before looking at any commercial real estate, decide what is the appropriate square footage needed for the practice. You might consider calling a contact or service that has a background in Medical Space planning. Be careful to not over size your start-up practice: many start-up practices can manage with 2-3 exam rooms (8X10 feet), a reception area, a small lab/kitchen area and a waiting room. Some commercial real estate spaces manage the rest rooms outside of the practice while others will require the tenants to have bathrooms in their space. The location, quality and cost of the space is very important. Choosing a ‘great’ facility in a ‘bad’ location can cost the practice significant growth. Also, choosing a facility that is much larger than what is needed can cost the owner in higher expenses (this is reduced salary for you as the owner).
3. Should I start on my own or with another Pediatrician? This is a personal decision. The advantage of another owner is someone else to divide the work load with managing a Pediatric practice including seeing patients, managing staff, after-hours call, administrative items and other tasks associated with managing a practice. Some disadvantages with another partner in the start-up phases are: need a larger patient load for both Pediatricians to meet the previous income when you were a salaried employee, conflicts on choices/decisions, different work ethics/beliefs, two decision makers is less efficient than one. Being in a practice together with a partner is similar to a working marriage. Make sure that you explore this option real closely prior to joining together.
4. How should I finance my practice? There are a number of options to finance a practice including taking a line of credit on your home, obtaining a SBA loan or working with a banker to obtain a business loan. I helped my wife start her Pediatric practice through using 0% interest credit cards and our savings in the bank then moving the debt from the credit cards to a line of credit on the house. I would not suggest this method for most individuals but this allowed us to minimize the interest payments and delay a loan until we understood the amount of debt we would need. For most individuals that are pursuing financing, recommend either a SBA loan or a business loan.
5. Do I hire a medical biller or outsource my Medical Billing? Managing the revenue cycle for most Pediatric practices can be done more effectively by outsourcing to a Pediatric Medical Billing company. I have seen some pediatric practices move the ‘brink’ of bankruptcy because they had the medical billing managed by a front desk person or a biller with minimal experience in Pediatric Medical billing or questionable performance. Most Pediatrician owners can manage the front desk and Medical Assistant/nursing staff very effectively since both of these work functions are in the middle of their work flow. Managing a back office billing team requires monthly verification processes to check the claims as well as training and re-training of billing staff in the area of Pediatrics. This is outside of the scope of the expertise of most Pediatricians. Even some larger practices with Medical office staffs are not aware that half their billing staff is out of date and they are personally losing thousands of dollars a month. Unfortunately, according to the Medical Group Management Association, a high percentage (>50%) of practices have theft at the practice. Establishing strong processes and leveraging an outside Pediatric Medical Biller can help with these risks while optimizing the revenue for the practice. Additionally, this team can reduce the work load from the Pediatric Owner(s).
These are a few of the questions to ask when starting a Pediatric Practice. There are many more to ask prior to starting up a practice.