There are very few things when starting a new practice that we would identify as “easy.” Missteps can put your plans for an independent practice at risk. Our hope with this article is to review some simple yet effective ways to mitigate your risk and increase your chances of real, long-term success. These strategies take time, but they can help you make more informed decisions before committing significant resources.
To begin, if you haven’t read The Lean Startup by Eric Ries, it’s definitely worth your time. One of the topics covered in the book is the development of an MVP or minimum viable product. The idea is simple: make sure you’re offering something that works and that people want before building a business around it. It is a simple step, but one that is often overlooked. In the same way you’d validate a new product before launch, that’s precisely what you should try to do with your new practice. By the end of this article, you’ll be equipped with the tools and strategies to answer this question with actual data.
Do you have a minimum viable service (MVS)?
Before we go any further, take a minute and put on your product glasses. View your practice as a new Amazon widget and ask yourself if you’d buy it and if so, why you’d buy it over the countless other similar products available. This is the first question that must be answered clearly and with evidence from the people you hope to serve.
Do you really feel the community would value what you’re offering?
Obviously, you’re going to be a little biased when it comes to your belief in this new business, so how about you ask a few people that aren’t afraid to tell you the truth. When I’m launching a new business, product, or service line, I always put together a small committee made up of people I trust who aren’t afraid to tell me what I don’t want to hear. If you’re a specialist, ask some potential referral sources if they feel there’s a need in the community for what you’re offering. Seems so simple but you’d be surprised at how many new practices fail to actually talk to colleagues their new business will eventually rely on.
Practice Validation Through Analytics
When testing an MVP, you may use a marketing budget to split-test the various iterations of your new product, which gives you the data necessary to ensure you’re only bringing the best product to market. While it’s impractical to split-test iterations of your new practice, what you can do is test the market’s interest (and therefore the feasibility) of your location and any unique or direct-to-consumer services offered by your practice. There are ways to measure interest regardless of the specialty of your new practice but it can sometimes be difficult to figure out how to do it if you’re new to this.
Ways to test interest in your practice
Run two to four different Google or Facebook ads marketing your new practice. It could read something like this for a pulmonologist:
- “COPD Treatment & Second Opinion- Visit Dr. Pulmo’s New Office” (Address to follow).
- You would run the same ad with three different locations, using the exact same wording but with the different addresses.
- “Trouble Breathing or Sleeping- Learn About Our Planned New Office”. You would then do this same ad using the different addresses or just use targeting to only target certain zip codes.
- Play around with the services offered in your ad to test the various services offered by your practice. You would then try different services offered by your practice with each potential location. This will tell you which office/service combination receives the best response.
- In the same manner you split-test product iterations, you would build a website with each ad linked to a page specific to that location. You would have a form that allows patients to submit a consultation form after which they would receive an automated email with your expected date of opening. Google can actually set up different tracking phone numbers for each ad if you really want to measure interest. You would review the analytics provided through your website and advertising medium to see how patients are reacting to your ads. This seems like a lot of work but isn’t your new business worth it?
You Have the Data. Now What?
At this point in the process, you should be getting excited about the potential you now possess. Instead of taking stabs in the dark like most new practices, you have data that can help you assess market interest in your new practice. Evidence of current market interest can help you assess whether your minimum viable service (MVS) meets a community need.
Now, we all know that areas change over the years so it’s not just about what the data says today but what it’s likely to say in the future. In addition, the demographic makeup of an area may not work for your practice. A couple of examples of an inappropriate demographic composition would be a cosmetic practice opening in an area that is primarily Medicaid or a dermatology office opening in a college community instead of an area dense with retirees. The data helps ensure the area you’re considering has enough market interest but doesn’t necessarily mean that it represents the best opportunity for your new practice. If you haven’t already read our article on selecting your practice location, we recommend reading this and downloading our practice location analysis. These resources will fill in some of the missing elements when determining your location. In addition to the article on selecting the best location, we also recommend reviewing our article regarding the costs of starting a new medical practice. The location guide is linked above, and the cost guide is included below. We hope this article gave you some ideas on ways to mitigate the risks of starting a new medical practice.