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Tips to Start a Medical or Dental Practice

February 25, 2015

Tips to Start a Medical or Dental Practice
There are many benefits to starting your own medical or dental practice. You get to be your own boss, make decisions quickly, decide what types of patients you want to serve, match your practice to your lifestyle, set the tone and culture of your office and become more creative because you’re the main decision maker. If you’re thinking about or have already decided to start a practice, these tips can help you get started.

Start With a Business Plan
A solid business plan provides a clear roadmap to starting and running your practice. Among many things, it outlines your business philosophy and goals, marketing plan, financing needs and projected financials. If you require a loan, many financial institutions require a business plan. Free business plan templates and other start-up tools are also available at the Small Business Administration.  Your banker can also offer suggestions to help you complete your plan.

Choose the Location
Choosing a location may be one of the most difficult steps to starting a practice. You will need to include an address with all of your business start-up documents like licenses, loan applications, vendor applications and insurance, so choosing your location should be a priority. A few questions to ask yourself include: Where do you want your practice located and where do you and your family want to live? What is parking and transportation like to and from your office? Often the area, if it is high rent or low rent, will dictate the type of patients you serve.

Do you want to buy or lease your location? Your banker or a financial professional can help you consider the pros and cons of both options. If you are seeking financing, you should conduct a market study of the location.

Before you sign the lease or buy the property, you’ll want to mystery shop the competition and test the market. If you call nearby competitors as a mystery shopper and can’t get an appointment for months, there is likely room for another practice. But if you learn the competitors in the area are taking same day appointments, you may find the market in that location is saturated.

Secure Financing
Some physicians save money and gain experience by working for someone else prior to starting a practice. Others start shortly after becoming certified. In either situation, keep your initial expenses low, and be cautious about buying more equipment than needed. Set up an accounting system to monitor your cash flow. Working with a financial professional can help balance spending, income and purchases.

Get Professional Advice
Hire experienced, seasoned professional advisors. Your team of advisors may include an accountant, attorney, banker and insurance provider. An accountant can help you set up your business structure i.e. a Limited Liability Company (LLC), Partnership, Corporation or Sole Proprietorship.  Your advisors can assist with setting up any permits and licenses required in your geography and practice focus. If you don’t already have a team of advisers, ask colleagues and others in the industry for recommendations.

Purchase Medical Equipment, Computers and Supplies
You will need operating and medical equipment to run your private practice, which can be a large expense. Working with medical equipment suppliers and vendors can help, however, be sure to compare selection and pricing between vendors. To help reduce initial startup costs, consider buying used equipment or leasing new equipment. You will also need to purchase a computer system to store patient files and records. 

Insure Yourself and Your Practice
To protect yourself and your practice, you’ll need insurance. Your insurance advisor can help you identify and select what types of insurance you will need. For example, some practitioners may require malpractice insurance. If a loan is required, lenders may require life insurance on the physician, with the financing institution being listed as ‘loss-payee’ or a beneficiary on the policy. Get started on insurance applications early because the process can take a couple of months.  

Hire Support
Hiring can be a difficult step in the initial startup process. You will want your team to work well with each other, and work well in the work environment you envision. Depending how you want to run your practice, i.e. as a solo practitioner, partnership or a group practice, you may need to hire other physicians.

Based on the size of your practice and expected patient base, you may want to hire a bookkeeper, medical biller and receptionist. Invest time in interviewing and hiring. Work with an HR consultant to help you cover all Federal and State hiring requirements, as well as setup employee manuals, employee guidelines and standards.  Work with your accountant and banker to determine your employee costs and appropriate market-based wages.

Have a Marketing Strategy
A solid marketing strategy can help you successfully launch, grow and maintain your practice and patient numbers. Start by identifying your ideal patient or client base, the services you offer and how your services and practice make you stand out in the marketplace and to your patients. By knowing these basics, you can better market your practice to your target patient.

If you have patients from a prior clinic or office, you may be able to contact them if you don’t have a non-solicitation clause in your prior employment contract. If they remain your patient in your new practice, ask them why they use your services and consider using their feedback in your marketing strategy.

Your marketing strategy should include a customer service plan, a plan for attracting new patients and a plan for retaining existing patients like referral and loyalty programs. Include traditional and digital marketing methods in your plan. Traditional methods include print ads, radio spots, postcards, an open house or public relations. Digital marketing methods can include a website, social media, email newsletter or online ads. Know your competitors and how you plan to differentiate your practice from what they offer. Do you plan to offer better service? Experienced doctors or dentists? New medical services? 

The commercial lending team at Peoples Bank is familiar with the financial and operational challenges and needs of starting a medical or dental practice. Our lending team offers personalized advisory and lending services for medical and dental practices at all stages of the business’ lifecycle.

The information provided in this article is general guidance based on industry best practices. While Peoples Bank staff can give expert advice on the financial products and services we offer to professional practices, the information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," and without warranty of any kind, express or implied. Member FDIC.

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