Surviving and Thriving Your First Year in Private Practice

Abstract

Taking the leap toward a career as a private practice owner is daunting. When in the initial stages of starting a private practice, I searched for current advice from an audiologist who had recently confronted the same challenges I was about to face. Because of the limited information available, I documented my process in hopes of providing an overview of my startup experience to help others. Included is a timeline of startup tasks and a sample budget to use as a reference. In this chapter, I share my experiences, both the positives and the negatives, and tips with the goal of helping you survive and thrive in your first year in private practice.

Learning Outcomes: As a result of this activity, the participant will be able to (1) list three considerations of a positive first impression; (2) compare and contrast fixed, mixed, and variable costs.

Most experienced practitioners do not recommend starting a private practice immediately following graduation. However, faced with few opportunities and a desire to remain in my small hometown in South Dakota, I decided to confront the odds and start a practice. Sure, experience would help in the process, but I did not have time for experience. I was getting married 3 months after graduation and needed to establish my career in my hometown. This was not a new idea for me. I earned my Doctor of Audiology degree from the University of South Dakota in May 2015. In my third year of graduate school, I knew I wanted to have an equity stake in a private practice. There were a few options for employment in my hometown and the more I investigated those options, starting my own practice became the best scenario. I would like to share my experiences, both the positives and the negatives with the goal of helping others survive and thrive in the first year in private practice.

Small Business Administration And Recommendations From Experts In Small Business

My audiology graduate coursework did not prepare me for my venture into private practice, and my coursework included only one class on practice management. This is common in most audiology programs.¹ The course provided in my program served as a foundation; however, one course is not nearly enough to prepare one to start a business. I did not take any business courses in my elective options. Without existing knowledge of operating a business, it is a necessity to recognize what you do not know, do your homework, and use your available resources. A good place to learn more about starting a business is through the U.S. Small Business Administration (SBA). The SBA has many resources available online for assisting in starting and managing a small business.² There are recommendations and tools to help you create a business plan, choose a business structure, learn about licenses, permits, and laws, as well as financial information. I looked for additional information specific to medical practices. Because medical practices have specific intricacies, these considerations were incredibly useful. In addition to the online resources, the SBA offers in-person services across the country. I used a local Small Business Development Center in my hometown. Specifically, this organization assisted me with writing a business plan and creating financial projections on a monthly level for income and expenses. They knew what would be required by lenders for monthly financial projections and they guided me through the beginning stages of acquiring funding. Although these are things I covered in my practice management course, the SBA stressed the importance of considering startup costs, equipment, inventory, and working capital in the initial financial plans. Knowledge of necessary applications for licenses and permits and compliance with state and federal regulations specific to your city and state also can be obtained through local Small Business Development Centers.

When investigating loan options, I found it is advantageous to investigate numerous financing options: SBA loans, financing through a manufacturer, and traditional loans at large and small local banks. Financing through SBA did not work for me due to the length of the process and my timeline for opening. I found that a small local bank could be more flexible with both the timeline and terms of the loan.

Planning

I have always been a planner and have never been one to procrastinate. So it was difficult for me when, in the initial phases of building a practice, I found I could never be ahead of the game when it comes to time. I felt prepared; I knew the steps that needed to be completed and had my priorities except I discovered that everything takes so much more time than I had ever expected it to take! The time it took from securing a business loan and establishing a legal business entity, to finding office space and renovating it to fit my needs, to choosing and ordering equipment and furniture—no one seemed to work on my expected time frame. All the details needed to start a practice take so much time. In my case, it took 4 months of feverish planning before I was able to open my doors. I have included a list of tasks I completed in hopes that my timeline will allow others to advance through the process more quickly.

Timeline For Starting My New Practice

Mid-March

• Determine starting a private practice and location (ask manufacturers to run demographics to assess number of patients and where to locate office).

• Begin business plan.

• Assess manufacturers' presence in competitors.

• Investigate financing options.

  • ○Conventional loan versus SBA loan

  • ○Manufacturer(s) loan

• General idea of budget needed for loan amount (greatest contributing factors are location, equipment, and operating costs)

• Obtain audiology equipment quotes.

• Establish opening date.

• Consider events to promote the practice prior to opening.

April

• Meet with a Small Business Development Center (business plan, startup costs, financial projections, government regulations).

• Obtain quotes for building out potential office spaces.

• Obtain quotes of options for sound booths and installation.

• Create estimated budget.

• View commercial real estate properties in desired area.

• Obtain insurance quotes including professional liability.

• Meet with a marketing group for ideas and quotes for services.

• Apply for state licensure and professional memberships.

• Determine types of start-up marketing materials needed and obtain a quote (logo, business cards, introduction card/brochures, Web site).

• Receive pricing from manufacturers.

May

• Establish business entity (legal).

• Explore office management programs: compare options through demos.

• Determine clinic location and execute the lease or purchase agreement.

• Design clinic floor plan.

• Meet with bank regarding loan.

• Meet with equipment rep regarding specifications, questions, potential discounts, installation, and training.

• Obtain professional head shot photographs.

• Choose logo design and proceed with design of marketing materials.

• Obtain business and professional liability insurance.

• Get a telephone number and forward it to your cell after publicizing.

June

• Have promotional items available.

• Develop pricing for services and products—if this is ready, the practice management system may be able to import (use information from local market, business plan, expected costs, and so on).

• Create protocols and clinic paperwork forms.

• Apply for type I and II National Provider Identifier (NPIs).

• Start any insurance credentialing.

July

• Close on business loan.

• Open bank accounts.

• Start construction.

• Choose finishes for cabinetry.

• Order equipment.

• Order furniture.

• Order exterior signs for building.

• Develop Web site.

• Determine if phone book advertising is worth the return on investment for the area.

• Meet with radio station regarding advertising and demographics.

• Contact local colleges or high schools about advertising opportunities for the upcoming school year (examples: sport programs, radio advertising, and fundraising events).

• Consider hiring office staff and advertise the positions (cost, benefits, other outside factors).

August

• Submit credit applications to manufacturers.

• Promote opening of clinic at local events.

• Meet with information technology company; choose and order computers, printer, and so on.

• Choose e-mail system for staff.

• Purchase electronics (TV, speakers).

• Select a business telephone system.

• Interview and hire office staff.

• Advertise opening soon.

• Apply for state sales tax license.

September

• Schedule delivery of furniture, computers.

• Order audiology supplies.

• Purchase office supplies.

• Install Internet and telephone.

• Install audiology equipment.

• Open doors.

• Publish press release.

After Opening

• Plan grand opening event.

• Meet with manufacturing partners and discuss resources available.

Location

To determine the right location, I had to consider the size and type of space that is needed. Will the size and specifications of the space meet my needs? If it is a leased property, could I afford the rent? Is a renovation required and is it allowed? Does the location appear to be medical or retail in appearance? Which model best fits my image? Visibility and ease of access are other important factors. These were all things I had to consider. In the end I opted to renovate a leased space with excellent visibility.

Also, I asked a manufacturer to run a demographic analysis of the town to find a location that best suits my target demographic. Depending on the size of the town or city, the location information from a manufacturer may or may not be as valuable as knowing the community. In a smaller community, I felt that my opinion outweighed manufacturer input. But in a more populated area, demographics will likely be more valuable. I considered which direction is the town growing, visibility, and cost to determine the best location.

Resources

Have a tool belt full of resources and use them! I used my professional resources, family, and friends often for their input. For all of the professional expertise you have and need, it is essential to work with someone you know and trust as much as possible—this was crucial to my business working well. It just so happens that my husband is a certified public accountant (CPA) and my father is a business savvy physician. Now, I am not recommending marrying based on career, but it sure did help! However, budgeting needs to be a priority and I had my husband monitoring my every move. When you live in a small town, you know lots of people. It helped that my contractor, lawyer, banker, and insurance agent are all family or family friends. I recommend running ideas and pricing proposals past experienced business owners to gain another perspective. Working with people I know and trust made the initial stages a little less stressful! Do not be afraid to ask for help.

Marketing

I recommend purchasing an office management system that can track referral sources and results of marketing campaigns to save time so you will not have to do additional tracking. As we have all heard, tracking is a great and necessary thing for small and large businesses.³ Print advertising has been one of my main referral sources thus far. That being said, some print pieces have had a greater response than others. I continue to use what works and I am always looking for new things to try. Manufacturers may offer to help with the cost of some advertising campaigns, but these campaigns will require more planning time for creation and revisions. Depending on the manufacturer's requirements, a potential pitfall of using manufacturer campaigns could be focusing on the manufacturer and product instead of branding the professional and practice. I personally like to ask my manufacturer partners for support for high-cost campaigns like direct mailings and half-page newspaper ads, and then I use a local firm for smaller projects or when I need flexibility and speed in design. Other marketing ideas I have executed that have proven to be successful include writing a press release for the local paper for upcoming events. In fact, one press release turned into an article in the business section of our local paper. When talking with my advertising rep at the newspaper, she thought a reporter would be interested in using some information related to memory, cognition, and hearing loss. I had a huge response to the articles. Articles are more well read and trusted as compared with advertisements. I collected patient testimonials and implemented a patient referral program that has been very successful. Do not be afraid to ask your existing patients to tell their friends and family about their experiences with you. I found that patient testimonials are one of the best ways to establish credibility quickly in a new practice. These testimonials were used in print ads, Web sites, and social media, as well as other marketing mediums. Having release forms and even sample testimonials available for my patients has made it easier to collect remarks from my patients, plus it gives them something to do in the waiting room.

The early days in a new practice start slowly, so I tried to be productive with my time. I tried to expose myself and my practice to the community; by getting involved in a local organization, I showed that I was invested in the community. It also allowed me to go out and meet my referral sources. To meet physicians, I asked a physician I knew to introduce me to their partners. Having someone to introduce me helped make connections. If a physician did not stop by our meet-and-greet location within the clinic, my contact would take me to the remaining physicians to meet everyone. I met right away with specialists in family medicine; internal medicine; ear, nose, and throat; and asthma and allergy. I did not find that one specialty was more responsive than another. Each specialty was accepting of our meeting and asked questions about insurance, pediatric services, and tinnitus. I scheduled early morning meet-and-greet visits to catch the providers before they started seeing patients. I made sure to bring marketing materials, but also articles that showed the benefits of hearing and tinnitus management. I made certain the office personnel understood that I did not need much of the physician's time. It is important that both the physicians and their office staff put your name with your face. In the referral process it will often be a nurse scheduling the appointment for a patient. Take enough treats for the support staff and they will remember you!

Budgeting

Every successful business should have some form of a budget. Some are more detailed than others, but it is essential to have one in place. When forming my budget, there were many things I needed to consider. For a start-up, revenue is very difficult to project. It is challenging to know how many patients I would have as I opened the doors; furthering that challenge was knowing that I had to generate new business for several years to come before there was the potential for repeat business. Initially, I created a minimum monthly goal of number of units sold; this was based on the costs of keeping the business open. I found that consulting with the Small Business Development Center helped transition goals into projections. Operating expenses and debt service are more predictable. A good way to begin the budgeting process is to identify your fixed, mixed, and variable costs. As any good businessperson knows, there is a certain cost of doing business whether you have a full schedule of patients or not. I wanted to be very comfortable and confident that all fixed costs (rent, property taxes, insurance, utilities, and so on) were accounted for. Mixed costs such as payroll and various supplies incur initially no matter how many patients are seen, but these mixed costs will increase as patient load grows. Your truly variable costs, such as your cost of goods sold, will only grow as revenue is generated. Being able to accurately predict and control my expenses was fundamental to the budget process and a key to success. Once I had identified all the costs associated with running my practice, I had to calculate the revenue needed to break even. Very few businesses are able to generate positive cash flow within the first months of operation, but having a detailed budget in place that identifies the cash shortfalls up front is imperative to securing financing. With all that being said, my budgeting advice is to start with a focus on three things. First, set a budget for your expenses that is reasonable to attain but does not shortchange expense categories like advertising that are a must. Second, budget for steady and attainable revenue growth. As I said before, revenue is difficult to project for a start-up practice, but it should steadily increase over time. Finally, remember that a budget is just that. It is a moving target that is there to guide but not limit your decisions.

See Table 1 for a sample of a general start-up budget and budgets specific to equipment, furniture, and renovation.

Table 1. Estimated Start Up Budgets: General, Equipment, Furniture, and Build-Out.

General Startup Budget
Accounting services	$1,000.00
Legal	$5,000.00
Construction build-out	$60,000.00
Equipment	$53,500.00
Furniture	$24,600.00
Supplies	$5,000.00
Advertising	$10,000.00
General overhead	$30,000.00
Total	$189,100.00
Equipment Budget
Audioscan Verifit 2	$14,000.00
VRA system	$2,000.00
Audiometer	$8,500.00
Impedance/otoacoustic emission	$12,000.00
Computers	$15,000.00
Fitting room—surround sound speakers, amplifier, TV	$2,000.00
Booth—varies based on size and type	$53,500.00
Furniture
Lobby
Couch (1)	$1,000.00
Chair (2)	$1,000.00
4-person dining set	$1,500.00
Coffee bar	$500.00
Front Desk
Desk	$5,000.00
Chair	$200.00
2 patient chairs
Testing Room
Desk	$500.00
4 chairs	$400.00
Fitting Room
Desk	$500.00
4 chairs	$400.00
Storage	$500.00
End table
Lab
Counters and cabinets	$5,000.00
Chair	$100.00
Office
Desk	$1,000.00
3 chairs	$500.00
Bookshelf	$500.00
Breakroom
Appliances	$1,500.00
Table and chairs	$1,500.00
General wall art	$3,000.00
Total	$24,600.00
Build-out Costs
Construction contractor	$15,000.00
Subcontractors
Plumbing	$7,000.00
Electrical	$7,000.00
Tape and texture	$5,000.00
Carpet laying	$2,000.00
Flooring	$1,000.00
Countertops	$2,000.00
Cabinets and vanities	$5,000.00
Paint	$2,000.00
Overhead	$14,000.00
Total	$60,000.00

Abbreviation: VRA, visual reinforcement audiometry.

Revenue

To generate revenue from the beginning, I knew I needed to have a steady flow of patients walk through the door. Potential patients need to know who you are, where to find your office, and why to choose you over the competition. Therefore, differentiating my practice from the competition was a must. Returning home to a town with numerous dispensing clinics, I knew what I had to offer was different. I had been educated on the pitfalls of other practices, like not verifying hearing aids. I knew I had the most up-to-date knowledge on hearing assistive technology and I was looking at the patient holistically. I knew that what I was offering was not just a product, but me. I knew these things, but I was uncertain how to convey that to potential patients. Word-of-mouth advertising over time was my long-term goal. Initially I decided to invest in a local marketing company to lay a foundation for the practice. In a sea of competitors, I found consistent branding was something my competitors did not have. As the new clinic in town, I needed to present a clear and consistent image. In brainstorming with my marketing team, we decided to focus on health statistics relating to hearing loss and why a doctor of audiology makes a difference. I chose not to market hearing aids, hearing aid features, and warranties. Rather, I wanted the focus on branding myself as the professional and the patient experience at our clinic. It is easy to skimp on advertising when you start in practice, but getting your name out is extremely important and worth the investment; this was how people knew I existed.

As soon as a patient decides to contact my clinic, measures are taken to improve patient retention. The first impression of a medical office has been shown to significantly impact the patients' perception of your recommendations. In most cases, the very first interaction is a telephone call. Anyone who answers your phones or makes your appointments must be friendly, professional, and organized.⁴ It is our goal that every new patient phone call results in an appointment scheduled. After a patient arrives to a medical clinic, first impressions are crucial.⁵ A friendly face and warm greeting at the door and cleanliness of the waiting room are contributing factors to a first impression. I chose to make our clinic's waiting room appear more like a living room than a traditional medical waiting room, in the hope that this would put patients at ease in a relaxed atmosphere and create a positive feeling before our first meeting. Other articles in this issue provide additional information on how to make those first impressions positive ones for your patients. The importance of creating a positive first impression cannot be stressed enough and is a key factor in generating revenue.

In the first year of my practice, advertising campaigns have generated the most revenue. Specifically, the direct mailings for better-hearing events and newspaper inserts promoting a lunch-and-learn event have proven to be the most successful. I have had anywhere from 8 to 33 people schedule an appointment from one marketing campaign alone. These peaks in volume have been instrumental in maintaining positive cash flow. I found that hearing aid manufacturers are very helpful in developing a marketing calendar, recommending events, and designing marketing pieces, but the responsibility remains with me, the owner of the practice. I realize that as a new business, I cannot afford not to advertise.

There is no denying that hearing aid purchases comprise the majority of revenue for audiology private practices. Therefore, when patients are hearing aid candidates, help rates (the percentage of time a patient purchases hearing aids) are extremely important. I often remind myself how hard I have worked and the advertising dollars I have invested to get this patient in the door. In addition to hearing aid purchases, fee for service income cannot be ignored. Dispensing offices often discount hearing exams or advertise free screenings. However, I highly discourage giving away professional services. I have generated 10% of my overall gross revenue from fee for service: diagnostic services and unbundled hearing aid services. An audiologist's diagnostic skills and hearing aid services are valuable, and we need to convey that value to current and prospective patients. If we do not, no one will.

Record Keeping

Set goals and track everything—expenses, number of appointments, help rate, average selling price, cost of goods sold, revenue from professional services, sales of accessories, and other key performance indicators that are crucial to a clinic's operation. Brian Taylor elaborates on this topic in another chapter of this edition. Tracking takes time, and it is easy to leave this task on a to-do list, but it is extremely important. You may deceive yourself from knowing where the business really stands if you do not stay current with your tracking. I have discovered many interesting things while tracking. For example, 32% of my patients who purchased hearing aids had seen another provider first and 75% of those patients previously purchased or completed a hearing aid trial at another clinic.

Building Relationships

Create and maintain strong relationships with manufacturers of hearing assistive devices and diagnostic equipment and supply manufacturers. Not only can manufacturers help with advertising campaign ideas, calendars, and costs but they are also an excellent resource when comparisons are needed. I had goals set based on what I thought was optimistic yet reasonable, but manufacturers provided data of comparable clinics to relate my sales and business practices to others. I was able to know what equipment they used. I was able to find out how to stand out using information provided to me by a variety of sources. MarkeTrak data along with our professional associations are also great resources when starting a private practice.

Hiring

I found the hiring process to be very difficult. It was something I had no experience with, but was given some great advice: “You can teach many skills but you cannot teach personality.” So true! Susan Keane Baker also recommends hiring the kindest, most sincere person you can find as your receptionist.⁵ I did not advertise the positions but used word of mouth to find interest. As a new practice, I found that hiring one part-time employee right away was very beneficial and efficient. Having someone present in my clinic from 8:00 am until 2:00 pm allowed me to devote time to patient care. This employee was responsible for answering the telephone, scheduling appointments, coordinating the physician referrals, processing payments, maintaining the waiting room, along with other office duties. I have heard of others doing it on their own, but I would have missed patient calls and walk-ins without having an employee from the start. Six months into my operation, I hired a second part-time employee. Together, these two employees covered all operating hours. Once you have wonderful employees, make sure they know you think they are wonderful and show them your appreciation. When my employees feel valuable to my business, they provide additional care to my patients. This only improves my word-of-mouth referrals.

To say a career as a private practice owner is a major decision is an understatement. It is a lifestyle choice. To be a successful private practitioner, an audiologist first needs to be clinically competent and confident and exude professionalism. These qualities along with a positive patient experience will retain patients. Second, ambition, desire, work ethic, self-motivation, and commitment are all necessary qualities to pursue a career as a private practice owner. As a business owner, I found it rare to have a 9-hour workday, and there is no such thing as paid time off—time off is money lost. There will be ups and downs every year, especially in the beginning. The amount of time spent working as a new business owner has been the greatest sacrifice thus far. Hearing positive feedback from patients, referring providers, and the community as a whole has been one of the best parts of this year. It is imperative to feel that the potential advantages of being a practice owner outweigh the disadvantages. Choosing to start a private practice is a commitment, but one that I found to be worthwhile.

I knew starting a private practice clinic was the right decision for me and that working for someone else was not for me. I love working with patients but I was not satisfied spending all of my time as a clinician. I wanted to learn the benefits and consequences of my decisions. I wanted to understand the ins and outs of the business and be directly involved in the operations of the practice. For me, the combination of time spent with patients and all of the other necessary duties required of a business owner are fulfilling. Starting a practice is not easy but when the circumstances are right, even a new graduate can be successful.