One of the barriers to entry in private practice is the high start-up cost. Office space, EMR and supplies can easily end up in tens, if not hundreds of thousands of dollars, in startup cost. Let me tell you how I started private practice with $1200 in start up costs.
Startup costs: The Breakdown
As I’m looking back at my spreadsheet, it’s a very short list of items, by date, that cost me money before I opened my doors to patients.
Mailbox Address
Chronologically, the very first expense is that of getting a mailbox address and renewing it a couple of times before I opened my practice to patients. At $20 for a month, it totaled up to $204.49 prior to opening.
LLC Setup
The very next day, $125 bought me my LLC. I made it myself, on my state’s Division of Corporations website. Took me under an hour, maybe less than half an hour.
Logo Design
The next item that I spent money on for the practice was to get a professional logo designed by a freelancer off Fiverr. $27. I was truly surprised by the quality of work and the speed with which it was delivered, for that insanely low cost.
Web Domain
I did not work on getting my website up and running for a while after starting my practice (not recommended). But I purchased my domain early on. That set me back a whopping $189.96.
Office Supplies
This group includes regular office supplies like gloves, masks and hand sanitizer (I was starting in the midst of the pandemic, right after the mandated closures were lifting) and the tools of my trade.
I bought a weighing scale, a thermometer and a home grade blood pressure machine. I already owned a stethoscope. These added up to $103.56. The prescription pads were $64.99 for a whole bunch- I will not need more for a while, considering that we use eRx most of the time.
The only thing that did not sit right with me through all of this was the blood pressure machine. Hypertension is my thing- I wanted an accurate, office-grade machine. And that is what I first saved towards getting once the insurance checks added up to the few hundred that it took to buy me my Welch Allyn.
In all fairness, the home machine was independently validated and perfectly accurate. The difference is more of durability and maybe standing up to accuracy under some rare arrhythmic conditions. I did not encounter either of those circumstances before making the switch over to the office-grade machine. I barely used it for five patient encounters before I’d replaced it. But it did weigh on me.
Marketing
I spent $551.51 in marketing right before opening my clinic doors. This includes $200 in business cards (that’ll get you a LOT of cards). The rest was small treats I took along when I went around introducing myself to nearby practices.
Rent
I started my clinic in a shared workspace environment. Hourly rate of $30.77, no long-term contract. So, technically, I should include that first hour I booked to see my very first patient in start up costs. $30.77.
Grand Total
All of this brings up the grand total to $1297.28. Not too bad, right?
What’s Missing?
You may be wondering where so many of the missing pieces of startup processes and their costs are. Well, here’s why some of those are missing from list:
- Practice Consultant: a little bit of upfront research and the willingness to do some of the legwork (or scutwork) can save you tens of thousands of dollars that would instead go to a practice consultant
- Lawyer fees: I set up my own LLC on the state website for this purpose. I borrowed patient intake forms from a friend with their own practice and adapted it to my own. I did not need anything more than the basic forms required by regulation for new patients joining the practice
- Insurance credentialing and contracting: I did this one, too. It is just tedious than difficult or time consuming.
- Office space: This was, by far, the biggest saving. For a solo practice, office space is the biggest overhead. If you can save on this line item, that’s a biggie.
- EMR: This item is missing because there was no upfront setup cost. I paid for the first month of usage after the month was over. Everyone I spoke to, had little love lost for their EMR. No matter how much or how little they spent on it. That made the decision easy. Why not save on EMR since they all have their own drawbacks. They’re all either “too clicky” or “too clunky”. So I picked Office Ally as my practice management system and its accompanying EMR. It is no Epic but it is fully functional. It can handle every aspect of seeing a patient, right from scheduling to e-prescribing.
Lean Private Practice: Keeping Start up costs Low
If you choose to have a lean private practice, low start-up costs are a good way to go. Your exact setup will be different from mine and therefore the costs will be slightly different too- but you get the gist of it.
#1. DIY what you can
As long as you’re not losing more money in doing so. For example, if you’re already working, making good money- quitting earlier or putting in less hours in order to DIY some of the startup stuff may actually be counterproductive.
My situation was different. I had already quit my previous gig. Then my kids’ school closed down due to the pandemic. So, one by one, I DIY’ed the processes. I had no idea when the world would reopen, so I wasn’t in any particular rush.
#2. Its not All or None
It’s about figuring out what will have ROI (return on investment) and spending adequately on it and saving on other stuff. Much like personal finance and the concept of spending mindfully.
For instance, if bringing patients in through the door is going to be hardest for you, spend enough on spreading the word. It doesn’t have to be a lot of money but it will be a combination of money, time and effort- and these are often somewhat interchangeable.
If workflow efficiency is going to be the bottleneck, invest in efficiencies- whether technology or people (or best a combination of the two).
In conclusion
I hope you find this helpful. I wanted to put this post out there to demonstrate that one does not necessarily need to take a $100-200k loan to start up a practice.
You can start small and keep reinvesting in the business and grow it as much as you like. If at any point, it appears that it will be more beneficial to the business to inject more capital sooner than later, you always have the option.
In my case, I knew that spending a bunch of money in the beginning wasn’t going to get in more patients through the door, any sooner. So, I started my practice with $1200.
#LeanPrivatePractice #NoBetterTime
