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:
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?
11 hours ago