Is it still possible to go solo in this era of consolidation?
Absolutely yes. There was a editorial in EyeNet (the trade news magazine for AAO) about the viability of solo practice. Our extended response is on this link. We wholeheartedly believe in this editorial that more solo practitioners will strengthen our profession.
If you choose to find an associate position instead, read this article about how to evaluate an associate position. Because a $300,000 junior associate position may not be as good as it seems.
How much time does it take to start a medical practice?
Anywhere from three months to a year.
The first step is deciding to go solo. We know of some colleagues who have been "deciding" to go solo the last two years. Their job may not be intolerable but not great, so there's no huge impetus to push you to go solo.
On the contrary, one colleague’s boss sold the practice. Being the junior associate, he was told he was let go from the practice, without any warning. He hustled, so it took him less than four months to open doors. It's also easier if you're already practicing in the same area that you plan your solo practice in.
For most of us, the two rate limiting steps are finding an office space and for the time it takes for tenant improvements. Frequently, the first office space you look at doesn't work out and you're back to starting your search again. Don't count on anything until the ink dries on the lease agreement!
The other potential rate limiting step is tenant improvements. Many of us have to build out a empty shell (get an architect to help create floorplans, hire a contractor, and build the walls, fixtures, etc). This usually takes longer than predicted, frequently 3-6 months from scratch.
Here's a video tour of Ho Sun's office.
Ho Sun took about eight months to open doors. Since I had almost no tenant improvements, it took me six, but I could've opened up a month earlier, I just wanted a extra month to take vacation and get ready.
How much does it cost to start an ophthalmology practice?
The most common estimates for startup costs for ophthalmologists are between $200,000 to $300,000, with a $100,000 line of credit to cover operating expenses after opening, as it typically takes three to six months to break even. I know many colleagues who took no or minimal salary their first year.
Although this sounds like a lot, if you choose to join a practice and buy in the number can be higher. I have heard of up to $400,000 to $500,000.
The money you invest in starting a practice is not a sinkhole- at the least you should be able to sell your equipment, at the best you might be able to sell your practice to a buyer for goodwill and equipment value (a blog post on practice valuations is here, along with one about the pros and cons of buying an existing practice).
The two most important factors for startup costs are how much your equipment costs, and how much you pay in tenant improvements. If you buy lots of brand new equipment, your startup will cost more than someone who buys less equipment and buys it used.
I was fortunate that my office was previously a psychologist’s office, so all of the rooms were the exact right size for me, so I didn't pay anything for tenant improvements (TIs) nor did it take any time. Often times the landlord will give you a TI allowance (rolled into your rent), but we know of colleagues that have paid upwards of $80,000 in TIs.
Ho Sun spent about $450,000 for his startup costs, which included about $300,000 for equipment and $60,000 for tenant improvements. That's because he fully equipped his office and built out a shell. On the other hand, I only spent about $155,000, which included $125,000 for equipment. Because my lease was structured to be rent free for my first six months, I was actually profitable my third month.
What are the steps to start a medical practice?
As Ho Sun stated in his consultants re-revisited post, he figured out all the steps by himself. I used his original iballdoc blog as a general guideline, but here are the steps one by one.
Ironically, when Ho Sun read this post, even after figuring out the process himself without any outlines, he texted me "this sounds really intimidating!" He knows a lot of folks especially out of training don't have the money, guts or time to start on their own. So he created a company called Independence Practice Partners for a turnkey startup. If you don't have the time, energy or expertise to follow all of the steps on our blog, feel free to click and contact.
We want to reassure you it isn't intimidating. It takes time and legwork, but anyone can do it. Surviving medical school rotations and ophthalmology residency was much more intimidating and stressful at least for me.
There will be at least one, if not multiple blog posts, about each of the following steps to start a medical practice coming up. We will link them to this post. The comprehensive list of steps will be available to subscribers only (see end of post for requirements and instructions).
Things You Can Do Without a Practice Address
Once You Have Your Business Address
Prior to Completion of Tenant Improvements/Buildout
Things to Do One Month Before Opening Day
Things to Do Around Opening Day
Things to Do Now and Forever
- Learn ins and outs about billing and revenue cycle (so you can do your own billing or supervise to keep in house).
- Learn about bookkeeping
- Learn basics of accounting and taxes, such as the new tax law and section 179
- Stay up to date with the latest medicine in your speciality
- Pick an appropriate retirement plan for your practice (simple IRA, SEP IRA, or 401k), once your practice begins to make a profit
- Learn about personal finance. Howie's favorite book is "Personal Finance for Dummies" by Tyson. It costs $6 used on Amazon. He read it and googled to get further information. Here's what to do with your first $50,000
- Learn how to avoid penalties for Medicare quality programs (MIPS and MARCA)
- Consider buying your own office condo or building, if the situation warrants it
And this is just the beginning... setting up the practice. We also have many posts on how to run the practice!
January 2019 addendum: we have given everyone the skeleton outline with many details to start your own solo practice. This blog took a lot of time to write, as well as trial and error on our behalf to save you readers time and money.
Unlike other blogs, we aren't aiming to turn a profit off our readers nor make ourselves famous. We just feel the profession is better off when more docs especially ophthalmologists are solo and run their own business.
Burnout is a big topic in medicine these days- being able to control what you do goes a long way, just as much if not more than having a good salary. That's a big reason to see independent docs thrive.
Please contact us if you want to join our solo eye docs google group. It is a treasure trove of useful information. Several years ago, to enhance the quality and integrity of the group, we instituted a mandatory annual donation to the Surgical scope fund or Ophthpac as we strongly believe these organizations protect our ability to exist as solo practice ophthalmologists.
Similarly for our blog have made some posts private. To show you are serious about solo practice and that you care about our profession, please send us via email at solobuildingblogs at gmail.com proof of your donation of $1000 which we will verify. We will then send you a password. Again, we just want our readers to pass it forward to our profession.
If you have any questions about SSF or ophthpac and what they do please contact us. Non ophthalmologists are especially welcome to donate and should understand that these organizations indirectly help them too.