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13 Vital Questions for all Entrepreneurs to Consider
By Dr. David Edward Marcinko MBA, CMP™
[Editor-in-Chief]
http://www.CertifiedMedicalPlanner.org
There is no way to eliminate all the risks associated with starting a medical practice, or launching any innovative concept in the health 2.0 ecosystem. However, entrepreneurial focused doctors can improve their chance of success with good planning and preparation. So, prior to starting your practice, merging, franchising or purchasing an existing one, ask yourself the following sobering questions. Hopefully, such reflection will enhance success, or at least prevent an unmitigated catastrophe. (www.sba.gov)
The Questions to Consider
1. Is medical practice ownership and physician entrepreneurship right for you?
It will be up to you, and your consultants; not someone else telling you to develop projects, organize your time or follow through on details. Your must be self motivated.
2. Do you like people and get along with different personality types?
Practice owners need to develop working relationships with a variety of people including patients, customers, vendors, staff, other physicians, and professionals like lawyers, accountants, consultants and bankers. Can you deal with a demanding patient, an unreliable vendor or cranky staff person in the best interest of your practice?
3. Can you make decisions and leave with ambiguity?
Practice owners are required to make independent decisions constantly; often quickly, under pressure and without all the facts. Ambiguity is a constant.
4. Do you have the physical and emotional stamina?
Practice ownership can be challenging, fun and exciting. But it’s also a lot of work. As a physician-owner, can you face twelve hour work days? As a doctor, can you offer advice, service, care and moral support 24/7?
5. How long can you live on your current savings?
Most small medical practice startups induce a declining bank balance in the early going. So, it’s wise to look at your expenses and determine how long you can live on your savings, and what personal costs you can temporarily eliminate. Emotionally, it’s easier to tighten expenses when you’re contemplating a new practice, than it is to cut back after you’ve started. Financial consultants and accountants that perform consolidated financial statement preparation and analysis are vital in this regard. A two to five year margin of safety is not unusual and may be needed
6. How deeply in debt can you go?
Medical practice business debt can be good. It can fund expansion, improve profit ratios and cash flow. For physician entrepreneurs, business debt is often personal debt. Many start a practice by deferring payments for their own labor. Although lenders may make loans to a practice, the physician-owner will often be required to personally guarantee the loan. So, although the debt is on the business’s books, is ultimately the doctors’ debt should the practice fail.
7. What about health insurance?
If your current residency, fellowship or job offers health insurance, and is subject to the Consolidated Omnibus Budget Reconciliation Act (COBRA), you might be able to keep your coverage by paying the premiums, plus another 2% for administrative costs. You may keep your coverage under COBRA for up to 18 months and is a useful stopgap. For example, pay the premiums for six months or until another health insurance plan is obtained. Others suggestions are working spouse coverage with family benefits, or an HMO; or Medical or Health Savings Account (HSA/MSA).
8. Can you line up credit in advance?
Some new practice owners may set up a home equity line of credit that will let them borrow money at 1-2 percentage points over the prime rate or less. Lenders are more willing to make loans to someone who has a steady paycheck than to a new practice entrepreneur. If you have an excellent credit rating, you can probably get a home equity or other secured loan, but with more paperwork than in the recent past. Once you’re a self-employed practice owner, you’ll probably have to provide your most recent tax returns before getting approval. But, today, the biggest obstacle to a practice loan is a home mortgage. Domestic credit has been very tight since 2007, even for physicians.
9. What if you can’t manage the practice?
Disability insurance, unlike health insurance, usually cannot be transferred to an individual policy when you leave your job to start a new venture. So, get your own disability policy while you are still employed. Once you have the policy established and are paying the premiums, you should be able to keep the policy when you go out on your own. Remember, benefits received on a policy paid by you are free of federal income tax. Benefits on a policy paid for by a previous employer were taxable.
10. How well do you plan and organize?
Research indicates that many medical practice failures could have been avoided through better planning. Good organization of financials, inventory, schedules, information technology, medical services and human resources can help avoid many pitfalls.
11. Is your determination and drive strong enough to maintain your motivation?
Running a practice can wear you down. Some doctor-owners feel burned out by having to carry all the responsibility on their shoulders. Strong motivation can make the practice succeed and will help you survive slowdowns as well as periods of burnout.
12. How will the practice affect your family?
The first few years of practice startup can be hard on family life. The strain of an unsupportive spouse may be hard to balance against the demands of starting a medical business. There also may be financial difficulties until the business becomes profitable, which could take years. You may have to adjust to a lower standard of living or put family assets at risk.
13. How do you feel about the Patient Protection and Affordable Care Act of 2010?
Most provisions of the PPACA take effect over the next four to eight years, including expanding Medicaid eligibility, subsidizing insurance premiums, providing incentives for businesses to provide health care benefits, prohibiting denial of coverage/claims based on pre-existing conditions, establishing health insurance exchanges, and support for medical research. The expense of these provisions are offset by a variety of taxes, fees, and cost-saving measures, such as new Medicare taxes for high-income brackets, cuts to the Medicare Advantage program in favor of traditional Medicare, and fees on medical devices and pharmaceutical companies. There is also a tax penalty for citizens who do not obtain health insurance. Decreased physician reimbursement is a component, as well.
Assessment
More info: www.BusinessofMedicalPractice.com
Are you a medical innovator or healthcare entrepreneur? I am available for queries – thanks again for your interest.
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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
- PRACTICES: www.BusinessofMedicalPractice.com
- HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
- CLINICS: http://www.crcpress.com/product/isbn/9781439879900
- ADVISORS: www.CertifiedMedicalPlanner.org
- FINANCE: Financial Planning for Physicians and Advisors
- INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
- Dictionary of Health Economics and Finance
- Dictionary of Health Information Technology and Security
- Dictionary of Health Insurance and Managed Care
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Filed under: "Doctors Only", Career Development, Experts Invited, Practice Management, Recommended Books, Research & Development | Tagged: david marcinko, Physician-Entrepreneur |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
On COBRA
http://www.dol.gov/dol/topic/health-plans/cobra.htm
An important topic for all physician-entrepreneurs.
Vicky
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U.S. Physicians Suffer More Burnout Than Other Workers
Physicians in the United States suffer from more burnout than other workers in the United States, new research shows. A national survey of more than 7,000 U.S. physicians reveals that close to one half report having at least one symptom of burnout. “The fact that almost 1 in 2 U.S. physicians has symptoms of burnout implies that the origins of this problem are rooted in the environment and care delivery system rather than in the personal characteristics of a few susceptible individuals.
“Policy makers and health care organizations must address the problem of physician burnout for the sake of physicians and their patients,” the authors, led by Tait D. Shanafelt, MD, Mayo Clinic, Rochester, Minnesota, write. The survey findings were published online August 20 in the Archives of Internal Medicine.
Source: Pam Harrison, Medscape News [8/22/12]
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Physician Burnout Decreases With Shorter Trainee Rotations
Shorter, 2-week clinical rotations appear to be similar to 4-week rotations with respect to patient revisits within 30 days (a measure of patient care). They may decrease burnout and stress among attending physicians on the internal medicine wards, who are training house staff and medical students, according to a new trial.
Brian P. Lucas, MD, from the Department of Medicine, Cook County Health and Hospitals System and Rush Medical College, Chicago, Illinois, and colleagues report their findings in an article published in the December 5th issue of JAMA.
According to the researchers, although some variation exists among hospitals, there is a current trend for attending physicians to be assigned to ward teams for the purposes of training for only 2 continuous weeks, which is approximately half the previous standard duration.
Source: Emma Hitt PhD, Medscape News
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Transferrable Skills
https://www.maddyness.com/uk/2021/01/07/six-skills-that-make-medical-doctors-indispensable-for-startups/
Dr. David Edward Marcinko MBA
http://www.CertifiedMedicalPlanner.org
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