Thinking about starting your own medical practice? Make sure you consider the costs.
While it’s impossible to give a specific answer here without understanding the details of your situation, there are, however, several factors you should be aware of that can affect the cost of starting up a brand new medical practice.
You’ll likely find that it’s a lot tougher to start up a new medical practice in the heart of a busy metropolis where real estate is more expensive. Urban-based medical practices may also need to be larger to accommodate a larger patient base and a more expensive fit out.
In contrast, a suburban or regional medical practice may have a more affordable lease and simpler running costs in addition to a smaller team.
Building and Fit Out Expenses
Further, a new fit out to cover both functional, medical and aesthetic needs can become very, very expensive. Mind you, a refurb of an older building can be expensive too, especially if renovations are required. And even if you’re lucky enough to start up in a building that’s ready to go, there’s always ongoing maintenance costs.
GP or Specialist?
General Practitioners tend to have large teams of staff which need vast information storage systems and tech support to keep their practice running. Specialists, on the other hand, may not need as much support due to having smaller teams and a more concise list of patients. If you are a specialist practitioner, however, you may have extra costs associated with specialised imaging and diagnostic equipment.
Common Variable Startup Costs for Medical Practices
You will likely need to pay a monthly amount towards a loan or rent once your practice is established. This amount varies from practice to practice and may even change from month-to-month depending on how you structure your payments.
Medical equipment can be very pricey! Depending on your requirements, you may need to consider an equipment loan – this can be an efficient way to ensure your patients are looked after with the latest technology.
One-Time Versus Recurring Costs
Don’t forget to pay the phone bill! All doctors looking to start their own practices need to factor in the little details such as internet and utilities before they can open the doors to their clinic. You’ll have to sit down someday to calculate what those expenses will be for you and which of them are one-time costs (like a new coat of paint) or ongoing (insurance and your monthly electricity bill). Adjust your budget accordingly.
How to Save on Startup Costs for a Medical Practice
Whether you expect to pay $70,000 or $700,000 to start up your new medical practice, you’ll want to save as much money as possible to stay within budget.
One way to ensure you aren’t caught off-guard by unexpected expenses is to build into your budget an additional 10% on top of what you expect to have to pay out. That extra cash will help cover those annoying little costs that are bound to pop up.
Another helpful tip is to avoid rushing the process. True, every day you spend building and preparing your practice is another day of potential consulting time that’s lost forever. But if you rush things, you could put yourself at risk of overlooking both potential problems and opportunities.
Don’t start a medical practice without advice
When costing out your medical practice plans – it is crucial to seek advice from your medical business team – accounting, financial planning and finance.
Nitschke Nancarrow offers these services under one roof, and are experts in the business of medical professionals – whether it is running a medical practice, or a personal tax or investment matter – contact us to get the right advice.
– Kym Nitschke
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Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.