For many general practitioners, owning a medical practice is alluring. The promise of autonomy, the appeal of potentially higher income and the opportunity to carve out a niche in a chosen specialty are just some of the compelling reasons. However, it also comes with a raft of new challenges and responsibilities, so weighing up whether it makes sense for your lifestyle and finances is essential.
Here are a few things to consider before diving in.
Business ownership isn’t for everyone
Owning a practice doesn’t just make you a healthcare provider; it makes you a business owner. This carries a wide range of responsibilities, from managing staff and cash flow to ensuring regulatory compliance and maintaining operational efficiencies. These tasks can be time-consuming and may detract from the time available for patient care.
In addition, it’s important to be aware of the potential lifestyle impacts. In the early days, you won’t be able to make significant lifestyle moves (regional, interstate, etc.), and it will be harder to take overseas holidays. Managing business finances can be demanding and stressful, and this can take a toll on other areas of your life.
That said, if you succeed in growing your practice, you will have more flexibility than ever before. It can be incredibly lucrative and a fantastic plan to set you up for retirement if you’re willing to work hard for the first few years.
Reflect on your personal life goals and how owning a practice aligns with them. Some practitioners find the sacrifice worth the rewards, while others may prefer the comparative simplicity of employment.
Specialisation can be both professionally satisfying and financially rewarding
Owning your practice allows you to focus on your preferred areas of medicine. Whether you’re drawn to a specific demographic (e.g. women’s health, paediatric or geriatric care) or a particular medical field, having your practice allows you to shape the services you offer to align with your interests and expertise.
Like any other business owner, you’ll need to research and understand the supply and demand in your chosen area. You’ll also need to consider how you will attract new patients as GP/patient relationships can be sticky.
You can build a team around you
If you work for another GP, hire a chair or work for a corporation-owned practice, you don’t have much say in the people around you, but they can have a significant impact. As a practice owner, you can hire the team you want.
A great practice manager can make a world of difference to staff, patients and the business itself. Your own practice means you can hire and build a partnership with someone who delivers the outcomes you want, from patient experience to back-end processes and billing.
Consider your professional service team, too. Having an accountant, legal practitioner and financial adviser who work together as a co-ordinated team can ensure you are making the best financial and life decisions in a tax-effective and compliant way.
Cash flow management can be tricky
The financial commitment required to buy a medical practice is substantial. Beyond the purchase price, you’ll need to consider ongoing costs such as staff salaries, premises equipment and insurance. Before making a move, perform a detailed cash flow analysis to understand potential bottlenecks.
If you intend to have a mixed billing practice, you’ll need to understand the cash flow impact of working with Medicare and/or insurers. A good practice manager can help you alleviate some pain points, but cash flow is still likely to be lumpy. This article offers some helpful tips.
Seek advice from financial experts who specialise in the medical industry. They can help you assess the practice’s financial health, project future revenues and ensure the investment is financially viable.
Long-term play needs a long-term plan
While considering an exit strategy before purchasing a practice may seem premature, having a plan is crucial. Whether due to retirement, relocation or changing career paths, understanding how you’ll eventually exit the business can influence its structural and operational setup from the beginning.
Build your business plan with a potential sale or succession in mind. This could involve ensuring the practice is appealing to future buyers or setting up processes that don’t rely solely on you.
Don’t go it alone
Owning a medical practice is a significant yet potentially rewarding venture. It promises more than just financial gains; it offers the chance to build something meaningful in the field you are passionate about. Nevertheless, it’s not a decision to be made lightly. At Apt Wealth Partners, we are committed to helping our clients explore all lifestyle and financial implications to make the right decision for you and your loved ones.
If you’re contemplating buying a medical practice, reach out to discuss how we can help you navigate this journey, ensuring it aligns with your professional ambitions, financial goals and lifestyle.
Read next: Thinking about using your SMSF to purchase commercial premises for your practice? Check out the benefits and considerations here.
General Advice warning
The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
