As we all know, selecting the right location for your new medical practice is critical to your success and long-term growth. We’ve literally opened hundreds of medical practices over the years and while most have been successful, there have been a few occasions where the practice has failed after a couple years. See article on (How Your Practice Can Fail in the First Two Years)
Deciding Where and When to Practice
I would argue that the most important decisions during the first 5 years in business come in the first 5 months. Yes, the first 150 days and the decisions you make, will frame your success or failure during the first 5 years. Imagine that you’re building a house, how crazy would it be to build a million dollar home on a piece of property with no prospects of ever having running water or electricity. The worst thing you could do is to rush into decisions because of pushy realtors, unrealistic fears of missing out, hospital threats or dumb ass partners/associates. Suck it up, take a breath and don’t react to the pressure. This is a time to be calculating, controlled and composed, your success depends upon it.
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Deciding Where & When To Practice
Where to practice is often a question that is NOT asked because you make your mind up where you want to practice based on friends, family or community. These are all important factors to consider but they should not be the only things you take into account when picking your practice’s future home.
If given the option to open a practice in Miami, FL or Middleofnowhere, ND, most would pick Miami. What if I asked, would you rather have 2 million dollars in the bank, a vacation home in Miami and a country estate in ND or $100k in the bank and a home in Miami that you can’t afford? Most people with half a brain would elect option 1. Unfortunately, this is exactly how it typically works out when opening a practice in a major metro vs a rural area.
First off, you need to change your thinking (if necessary) from simply opening a practice, to launching a business that will continue to earn money while you vacation in Italy. Is your goal really to be self-employed or to own a thriving business? They are not the same thing. Launching a busy practice is a lot easier somewhere that has a 6 month wait time for new patients than somewhere that physicians are forced to see family to keep their skills up. I’m not saying that you have to live in the middle of nowhere, but how about venturing outside of the city limits by 20-30 minutes. This is actually where many of the current city dwellers will be living in 5-10 years. If you had a crystal ball and could see that those 30 minutes would generate an extra 300k per year, would that be worth it? Maybe not, but it’s something worth considering. There is still a shortage of medical providers in most areas of the country but it all boils down to the location and your specialty. Opening a practice in the most sought after area of the country has a lot of perks but it can also add years to building your business.
How can you expect to know where to practice without doing any research? What does researching a location actually look like?
Selecting a Location
First, you want a location that is close to where you live or at least where you could see yourself living. Close is relative and you need to take into consideration traffic patterns, school for kids if applicable, hospital call, surgery center, etc. Picking a location on a side of town that will allow you to go to work against the traffic ill certainly lead to a higher quality of life but it also means that you’re on the wrong side of town for people attempting to take care of their visit while at work. This is just an example of how you need to think about each decision. You also need to think about rounding and operating if applicable as every extra minute spent in the car is worth about 1/10th of a hospital follow-up visit. Imagine how much money you’re wasting in the car when this is compounded over the life of your practice.
Second, review your top referral sources if you’re already practicing in the area and if not, review the potential referral sources in a given area. Imagine as a specialist being next to a group of independent primary care physicians or next to complimentary specialists. Contrast that with opening next to a group of PCPs employed by the hospital who will never refer to you. Obviously, this is pretty simple stuff here but you’d be surprised by the number of providers that fail to take these basics into consideration when deciding on a location. When we do a location analysis (available for download here) we are reviewing the same factors that a company like Walmart or Publix would view when opening a new store. Here is a breakdown of what we’re looking at when deciding on a location.
Location Analysis Considerations (Request Our Free Location Analysis Example Here)
- New neighborhoods i.e. growth of an area
- How long are homes staying on the market and what’s the current inventory like. Is there more supply than demand or vice versa? What is the trend?
- Competition & Physician Density- what’s the ratio of providers in your specialty to residents and what is it expected to be in 3 years?
- Unemployment rate and trend
- Median Income- This will tell you what type of insurance your prospective patients are going to have
- Education level of residents
- Search engine comparison
- Ethnicity consideration- If you’re wanting to focus on serving the hispanic population, wouldn’t it make sense to know where they are? If you’re a dermatologist where majority of your patients are caucasian, wouldn’t it make sense to know the density of this patient population in a given area?
- Growing or diminishing vacancies in commercial real estate- This is typically one of the first signs of a struggling or growing economy
- Average wait time for new patients with competing organizations.
- Are the groups in the area currently recruiting
- Meet with local hospitals and gather info about their future growth plans and current
- Has a complementary practice or competitor opened in the area recently
All of this information should be gathered and analyzed, not just for one location but for multiple potential sites. You don’t want to limit yourself too much geographically if you can help it, but you also don’t want to just say that I want to open somewhere in the southeast. There are numerous resources that will help you evaluate a potential location and we can walk you through this process if you’d like some help.