Part I: Building Your “Team”
When a physician says he is going “solo”, it could not be further from the truth. Starting a new dermatology practice is a team effort, even when only one provider leads the charge. A successful practice has a team working effectively and efficiently to ensure the caregiver can provide quality care while growing a financially successful business. Just like the best sports franchises have the best coaches and front office, a medical practice must have the best clinical and business management staff. However, before you start assembling your clinical team, you have to lay the foundation for the practice.
A new practice must tackle three things before focusing on patient care: creating a company, raising funds, and finding an office. In theory, this can be accomplished by the provider alone, but risks and mistakes are minimized with additional support. Moreover, just as a lawyer or business professional would not treat cutaneous T cell lymphoma, doctors should not be solely responsible for managing all of the nuances of a new business. Dermatologists tend be type-A micromanagers, but you need to resist the urge to manage it all. You need professional help in getting your practice off the ground. Finding a great lawyer, accountant, and tenant broker/real estate agent is critical to getting your practice off on the right foot. Unfortunately, finding the best professional support requires time and research. Do your due diligence and speak with your colleagues and friends for recommendations. Interview multiple people and always remember – you get what you pay for. Do not settle for the cheapest services. I interviewed three lawyers and four accountants. In searching for a great accountant or attorney, I suggest you look for someone who is hungry, young, and bright. Your father’s 65 year old accountant might have a successful track record, but he might not be your best, affordable, long-term option. If they are young, their hourly rates are more reasonable and then they can grow with your practice. You also minimize the risk of retirement by choosing a younger professional.
Once you have your professional support in place, the first crucial step is creating your business. Logistically, this means working with your lawyer to create the articles of organization, register with the state, and receive your Employer Identification Number (EIN). In reality, creating your business is more about setting up your legal framework. This is the time to decide what type of practice you are going to build. Do you want to focus on medical or cosmetic dermatology or both? Do you want to grow to bring in other providers? How are you going to differentiate yourself from other providers? This is a critical step because it influences every decision you make in the future. For example, if you want to grow into a full service dermatology practice with multiple providers, you may not want to name the practice after yourself. That is why my practice is not named Keaney Dermatology!
Next Steps
The next step is raising capital to start and support the practice in the first lean months. If you have saved money or have family support, congratulations! You can skip this paragraph. Otherwise, you will need to raise capital. You can raise funds by selling interests in the business to investors or by obtaining a loan. The downside of investors is that they will collect a percentage of your business and may try to dictate how your practice is managed in the future. In lieu of investor support, I opted for a bank loan. Loans come in a variety of different sizes and shapes. It is unlikely you are going to get exactly what you want. Figure out what is most important to you (loan size, money down, early payoff penalties, interest rates, term length) and reach out to variety of different banks – both national and local – to find the best package for you. Stick to your priorities but be prepared to compromise.
Lastly, you need to find an office. Once you have secured your funding, you will be able to determine what you can afford. The decision to buy versus rent is based on a number of factors – mostly cost and availability. If you are able to buy, that is fantastic. Since I was opening in the metropolitan DC area, purchasing an office space was not an option for SkinDC. The next decision is whether you want to find a medical office space or look for traditional office space and convert it to medical. The advantage of a medical office is that you will have potential referring physicians in your building. Your build-out may also be less cumbersome. The disadvantage is there may already be a dermatology practice or one nearby. The advantage of converting traditional office space into medical is that you will have more flexibility with your build-out and design. You can also identify an area with a large patient base and no nearby dermatologists. The downside is that you will need to convince a landlord that you will be a great tenant despite the dramatic changes to the building. The build out will likely be more expensive, as well, since you are building from a blank canvass. Despite these disadvantages, we choose to build a medical space from scratch. It took longer than expected and required more money than planned, but we could not be happier since we designed it ourselves and are centrally located in a prominent business district with no nearby dermatologists.
Stay tuned for Part II when I discuss my niche in the dermatology field and what helped to guide me in my career.
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