Monday, October 11, 2004

Going Solo Together

There are probably as many ways to configure a high quality, low overhead practice model as there are physicians. Greg and Heather Sharp are a physician couple who have set up a shared practice. The following describes how they did it:


Practice Design
On Sept 6th we opened our practice in Woodland Park, CO. Some of you may recognize this as the home of Michelle Eads, who has been a wonderful help and encouragement to us and pointed us to this listserve group initially. We are a husband and wife pair of family doctors who are sharing one full time practice. We are drawing from Gordon Moore's low-overhead, high-quality model of practice, my Father's home office in Houghton Lake, MI and the SimpleCare approach to practice billing. We have one insurance contract and offer a 25% discount for anyone who pays at the time of service by cash, check or credit card. We hope to attract the uninsured, those with high-deductible insurance/HSA, and anyone who doesn't meet their plan's annual deductible and wants accessible, personal, and affordable care. That being said, over two thirds of our first month's patients (28 in all) have had the one insurance we contracted with. In the name of simplicity, and to fully commit to a discounted fee for service model we have opted out of Medicare and Medicaid. This has been a challenging decision and we are not sure yet if this will be a permanent decision, but we would like to give a hassle-free approach a fair try.

We remodeled 750 sq ft in a professional building next to the town post office with a small office, one exam/consultation room (10x14 is a nice size), one procedure room, a restroom, and waiting room. We are paying $12/sq ft/yr plus triple net expenses that comes to just over $1000/month for a two year lease. The landlord split the remodeling costs with us 50/50 but this had to be negotiated. We are quite happy with the amount of space that will allow both of us to be in the office from time to time.

We are using Amazing Charts for EMR (and eagerly awaiting the next version), but are not using much beyond the patient record and prescription/order writing features. We have had good results with "printing" orders and scripts to the fax machine and have them sent directly to pharmacy, lab, etc. We are using Microsoft outlook to store patient demographics and business contacts which helps with storing fax numbers for use with sending faxes as described above as well as improved mobility with patient contact info in our PDA, and emailing with patients which Amazing Charts messaging does not support. In order to allow us to schedule appointments remotely, we are using the calendar within Outlook which also will interface with a PDA. We looked into PDA/cell technology that would allow real time synchronization with the office Outlook remotely but don't feel the technology is quite there yet.

We bought one new Dell desktop with hyperthreading processor and it has handled everything well so far. We enjoy our dual flat-screen monitors as well, which make running several programs simultaneously so much easier. We wired our office with Cat5e cable for additional computers and bought a network ready Brother printer (HL5170DN) with extra paper tray that has worked extremely well. The additional tray is used for a green security paper for printing prescriptions out of amazing charts when we can't fax them to the pharmacy. Our current network of the computer and printer only required a netgear VPS318 router that is VPN ready (Virtual Private Network for home access).

We just purchased a Visioneer one touch 7300 USB scanner this week and am happy with the one-touch scanning to PDF files which can then be marked with comments/highlights on the computer and stored to a patient file library on the hard-drive allowing us to go paperless. This requires the full adobe acrobat program, not just the free acrobat reader. We have a CD-RW drive which we are using to backup our files weekly.

We currently have one cell phone, one voice line at the office, and one fax line. We tried to put the fax and phone on the same line with a distinctive ring feature, put this was not practical because we wanted to forward calls. We are forwarding calls after one ring to the cell phone while one of us is with a patient so that the other one at home takes the call. We have voicemail on the cell phone. For office calls that aren't answered (when call forwarding is off) we have an answering machine with a message that includes our cell number for urgent issues. With only one person in the office, we also ordered call waiting so that we can avoid patients getting a busy signal if we are on the office line.

We are using QuickbooksPro2004 for our practice accounting as well as patient billing. We are also using the Quickbooks card swiper and merchant services for credit card service (VISA, MC, Discover, Amex). No problems so far with credit cards. The swiper was cheap, it auto-enters everything into Quickbooks, it takes up minimal space on our desk and there is a discounted card-swiped rate for transactions. For insurance claims, we are producing HCFA 1500 forms with the EZClaim software and then printing them and mailing them in or giving them to patients for reimbursement from insurances we don't participate with. EZ Claim also has an EZ Link module which exports the HCFA 1500 data to Quickbooks as invoices so that we can track our accounts receivable/insurance payments. At my Dad's recommendation we also purchased FlashCode which has been very helpful in building our fee schedule and exporting CPT and ICD-9 codes to Amazing charts, EZClaim and Quickbooks (for invoices/cash and credit receipts). The FlashCode customer service has been the best I've seen. I am still waiting on the Quickbooks Customer Manager software which should eliminate double entry of data between Quickbooks and Outlook.

We were fortunate to get used exam room equipment from our former employer when they sold the practice to the local hospital. We were able to get exam tables, an autoclave, surgical instruments, mayo stands, trash cans and procedure lights from them for a good deal. We also had some exam instruments left over from medical school. Most of our new medical equipment purchases have been for disposable items. These supplies have cost roughly $2650. I have our inventory lists as an Excel file for any of you who might be interested.

As has been said on the listserve before, word of mouth seems to be the primary method of marketing that works. We had an article about our practice in the local paper business section that was also very productive. Newspaper ads have been disappointing, but without a listing in the phone book they probably serve a purpose. Most of our patients have come from personal contacts around town, and the local chamber of commerce has been a great help. They are holding a ribbon-cutting ceremony for us in a couple of weeks. We left a full practice 3 hours away to come to a new town, so we knew that we would have to count on slow growth. We have actually been quite happy with how our model has been received and with our panel of 28 patients after one month. The female aspect of our male-female team is undoubtedly an asset in marketing to the community. Our future plans include arranging talks at the senior center, to civic groups and hopefully in the schools to spread the word about what we are doing. Dr. Eads' practice has already made the public here more receptive to a non-traditional format of practice.

With the help of my brother and the websites of others on this listserve, we do have a practice website which describes our practice philosophy in more detail. It's We hope to make it more interactive for patients in the future.

We hopefully have the bulk of our startup costs behind us and have currently borrowed $26,000. We don't plan on having a salary for a few more months. We are paying student loans with the proceeds from the sale of our previous home in Alamosa and living with family until the practice is established. We have a cash-flow projection that has us paying off our start-up loan by the end of our first year and a joint salary of $70,000. Only time will tell how close this is to reality. We have planned for the long haul with advisors telling us to count on up to 18 months to break even. I don't think it will take that long because thanks to low-overhead, it's no longer that hard to break even. We are enjoying this new pace of practice and the freedom of setting up a new business immensely.

Thanks again to all of you. I hope this is helpful. We really appreciate the encouragement of you like-minded pioneers out there.

Greg and Heather Sharp MD
Ideal Family Healthcare, PC
PO Box 4918
Woodland Park, CO


Congratulations to Greg and Heather for taking the leap! While I don't expect this practice model to replace what's out there now, the fact that more and more physicians are trying this shows that there is a unfulfilled need for this kind of simpler and more personal kind of medicine that is greatly satisfying to physicians and patients alike. This isn't how most of primary care medicine is delivered now, but perhaps it should be.

Thursday, October 07, 2004

Really Solo

This article hasn't even officially come out yet, but it's already available on the American Medical News website. It is a Q&A about my "Gordon Moore-type" practice.

Obviously this is not the only way to find satisfaction as a physician. For example, physicians who are tired of working for themselves can go work for a chiropractor. I prefer to be able to look at myself in the morning, however.

Saturday, October 02, 2004

Friday, October 01, 2004

How to Get Started in Solo Practice

To continue explaining my practice for those who may also be contemplating going solo, I answer more of my own questions (and hopefully some of yours, too):

What information resources did I use to go solo?
In many ways, I was like a resident looking for a new job when I first thought about going solo. I had been relatively sheltered at Kaiser for 13 years, which is a closed, self-sufficient health care system. We never worried about insurance or billing, because only patients with Kaiser insurance could see us. We didn't worry about administrative issues, unless you were one of the few physicians in an administrative position. No fee schedules because we got paid the same no matter how many patients we saw. We never even had to do any ICD-9 or E&M coding until about 3 years ago. (Kind of makes you wonder why I left, huh? Read my previous entries for answers to that question.)

I bought "On Your Own: Starting a Medical Practice From the Ground Up" from AAFP for $50. ($75 for non-members). It provided a lot of invaluable information for someone like me who was totally ignorant about what it took to set up my own practice. It discusses everything you can think of, from malpractice insurance to credentialing, how to set up an office, how to market your practice, how to set up a computer system, etc. I highly recommend it.

Next I'd recommend Family Practice Management journal. It is published by AAFP and has had several articles on going solo (1) (2) (3) and practice management advice. They also have a section for residents who are new to practice.

Medical Economics magazine (which I used to consider a throwaway journal, but is now one of the few I save and read) has also had a number of helpful articles, including this one profiling 4 physicians who went solo, and this one on startup basics.

Probably the most helpful thing I did (besides listen to my wife) was sit down with a group of financial experts (referred to me by my wife - thanks, honey!) who acted as practice consultants. They asked me questions about every aspect of my future practice: assumptions of insurance mix, demographics, revenue sources; mission statements; how the practice would run; handling of telephone calls; retirement; competition, etc. At first, they were very skeptical that a solo-solo practice model could generate enough income to be feasible. But after plugging in all the numbers, they came up with a business plan that showed that it was doable, with a forecast projected annual income of about $100,000 by the end of year 2. Best of all, it was done for no charge, because I was helping them by being a guinea pig for them to see if they wanted to add practice consulting to their services.

I remember getting a quote from a practice consultant for about $10000, and I thought that was way too much. (I mean, a third of my startup costs??? I don't think so.) I don't know if I remembered wrong or if they lowered their price but they now quote a range of $1260-1980 for a start-up practice consultation. This sounds much more reasonable, and I would have paid that amount for the amount of valuable advice and information I got. Other practice consultants can be found on AAFP's FPAssist page.

I also asked some friends in private practice what it was like, and visited one friend's busy office to get a first-hand look at what it was like in the "real world". But after seeing his busy multiphysician office with nurses and medical assistants running around and a waiting room that was packed, I realized that this didn't really give me an idea of what my future practice would be like. Instead, I would recommend that anyone who really wants to see what a low overhead practice should visit a physician who is practicing that model already, such as the ones on this list (in Excel format).

How did I finance my solo practice?
Although a mortgage refinance would have been an option, my wife and I agreed that I would not tap into any family funds or borrow against our house for this venture. But for many people who already own a house, this is probably the easiest source of cash and given the relatively low interest rates, makes the most sense for startup funds. The downside is that if your practice fails or you are unable to make your refinance payments, then you risk losing your house.

For my startup costs, I borrowed $20000 and then another $10000 from my 401k plan with a 5% interest rate over a 5 year period. This was after having a loan officer at a bank investigate sources of funding for a small business, and what he told me was that nobody was willing to make that *small* of a business loan for a startup practice. I also briefly considered some loan companies that seem to specialize in making loans to physicians, but frankly I don't know if I trust them as they tend to be companies that I've never heard of. You can easily find a bunch by Googling the words "doctors loans". One other financial source would be from your family and friends, but if you default they may not be your family or friends anymore. Best to put these kinds of loans in writing so that there is no misunderstanding.

I kinda sorta looked at Small Business Loans (SBA) sponsored by the Federal US government, but it seemed like a lot of paperwork, and the 401k loan I took out was so easy and low-interest that I thought it was a no-brainer which way I should go.

In retrospect, I should have taken out a larger loan. I had anticipated my startup expenses pretty well, which came out to about $25000. What I forgot to account for was the monthly operating expenses that would continue while I was waiting for patients (and revenue). Unless you know you will be bringing a lot of patients to your new practice with you, I'd say plan for 6 months of operating expenses in addition to the startup costs. Since starting, I've had to take out cash advances on my credit card totaling $10000 to cover operating costs and additional supplies as I wait for revenue to come in. Obviously borrowing against a credit card is not a low interest way to go, but it's possible. I'm hoping I won't need to take out any more loans now that I'm catching up on sending in medical claims.

How successful has my practice been so far?
I think my startup practice is atypical from some of the others who have tried this so far, in that my patient panel has grown slowly, more slowly than I anticipated, but that has been a blessing in disguise. It has given me time to learn about all the things I didn't know about starting a business. I've heard from various sources that you should expect to take 2-3 years to fully grow your practice.

So far, I have seen 100 unique patients and had 139 patient visits after 7 1/2 months of solo practice. And even though I have advertised that I do house calls, only 1 patient (a 91 year old) has ever asked for one. My monthly visits have been as follows:
February: 0
March: 14
April: 5
May: 10
June: 17
July: 10
August: 38
September: 45

How have patients heard about me?
50% Word of mouth (friends, family, neighbors, etc.)
13% Newspaper ads
10% Relatives of current patients (immediate family members)
7% Newspaper article
4% Hospital referral service
4% Former patients at Kaiser
3% Yellow Pages
<2% Other sources (website, internet, charitable sponsorships)

What kind of patients are in my practice?
I have a youngish patient panel so far with the average age being 36. Youngest = 5 months old. Oldest = 91 years old. At Kaiser, I did primarily adult medicine as most children were automatically diverted to the pediatricians, so it has been refreshing for me to see kids again. Gender breakdown: 52% female, 48% male. Ethnicity reflects the local area which is primarily caucasian, but a good mix of Hispanic, Asian, African-American and multi-ethnic backgrounds thrown in.


I saw my 100th patient a couple of days ago. I had meant to give out a $25 gift certificate to our landmark local pharmacy, but somehow I lost count and didn't realize she was my century patient until after she had left. No matter. I called her on the phone to see if she was feeling better from her URI (she was), and to thank her for being my 100th patient and that I wanted to give her a gift certificate. She declined being photographed for the occasion (too embarrassed), so I told her I would just mail her gift certificate to her.

It has taken me about 7 1/2 months to reach 100 patients. At times, I have felt like an invisible gorilla and wondered why nobody is noticing me. Others trying this low overhead practice model have had faster growth. Mark Newberry opened his practice in Holland, Michigan in July 2003 and reached 900 patients within one year. Kevin Egly in Sandwich, Illinois took only 4 months to see 172 patients. Michelle Eads in Woodland Park, Colorado closed her practice to new patients after less than a year with a patient panel of 450. Nancy Guinn in Albuquerque, New Mexico has about 850 patients after 14 months. John Brady in Newport News, Virginia has close to 1200 patients after 16 months. It just depends where you're at, whether you brought any patients with you from another practice, and how great a need there is for your services. Maybe nobody needs an invisible gorilla doctor?