In a previous post, I posed some questions to ask yourself before embarking on the journey to private practice. Today, however, I’m encouraging you to ask yourself questions about different business relationships for a private practice.
Should I own the private practice business?
I’ll repeat a stern warning I issued previously. If you own a private practice, you own a business. In most aspects, it’s no different from owning a print shop, a day spa, a furniture store, or a plumbing service. It’s a business.
Even within this model, you have some choices. In a previous post, I talked about some pros and cons of having your office in your home, having an office outside of your home, and visiting families in their own homes.
Major pros: When you own the private practice, you don’t answer to anyone other than yourself. But you’ll have a tough boss to report to!
Major cons: There’s a huge financial risk. You don’t need an MBA to own a practice, but you would be foolhardy do it without reading several books, taking a few courses, and hiring a business coach.
Could I be in private practice but not own the business?
Usually, discussions about private practice imply that the clinical expert owns the business. That’s certainly a common model. But it’s not the only model.
You could be in “private practice,” but you could deliver clinical services through someone else’s private practice.
Within that model, you’d need to decide if you should be an employee or a contractor.
Major pros: You won’t have to shoulder 100% of the business-related hassles.
Major cons: You won’t have 100% control of the business-related decisions.
As you explore business relationships for a private practice, continue to ask questions.
Would I be an employee?
You could deliver one-to-one clinical care by being employed in someone else’s private office, typically a physician’s office.
As an employee, you would have an annual salary (not an hourly wage), and, most likely, healthcare insurance and other benefits. The employer provides everything you need to do your job. That might include a waiting room with chairs, an air-conditioned office, a clean restroom, and more.
Depending on your qualifications and the needs of the practice owner(s) and clients, you might have a lot (or a little) autonomy. For example, a nurse practitioner is truly a physician extender, and oh-by-the-way, might have an area of expertise in breastfeeding and lactation.
What about your malpractice insurance? Again, the amount will vary depending on several factors, but you should certainly raise the question about who foots the bill for the malpractice insurance.
A question to raise, though, is this: I’m guessing your arrangement will be an in-house referral, but you should confirm that. If you need to recruit your own clients, that raises a level of complexity and uncertainty that you might not want to take on.
Major pros: The employer takes on all the headaches of billing, business income tax and sales tax, business licenses, and more. You have a steady paycheck and often, good benefits.
Major cons: You answer to a boss who sets your hours, your annual salary, the “house” policies, and much more.
Am I a partner?
I cringe when people these days talk about “partnering” with me or someone else. What they mean is some sort of casual, loosely-arranged collaboration. That’s not a true “partner.”
Legally, a “partnership” is “An association of two or more persons engaged in a business enterprise in which the profits and losses are shared proportionally.”
In the partnership model, each person is an owner. Hence, you can draw a regular paycheck, but you have joint decision-making and responsibility.
Most likely, you’d become a partner with a non-MD who provides a healthcare service. Often, that’s someone who offers the same or a similar service to a similar target audience. That person often has the same or similar credentials or certifications as you have.
“Partnering” in business relationships for a private practice can be anything you want it to be, but you need to get absolute clarity. The partners might benefit from having different skill sets and interpersonal styles. However, they should have similar values and philosophies.
Major pros: You have a built-in relationship with someone who can see your clients when you are unavailable. A professional partner has a vested interested in client satisfaction and hopefully has values similar to your own.
Major cons: As my father warned me years ago, “A partnership is a hard ship to sail.” Over the years, I’ve seen many breakups of professional partners. It’s the business equivalent of a divorce, and it’s almost always very messy.
Am I a contractor?
Basically, contractors just rent space to see clients. It’s like hairstylists who “rent a chair.” They find their own clients, charge their own rates, launder their own towels, buy their own supplies, and so forth.
Similarly, clinicians rent space, but have their own clientele. In other words, they are running their own practice in someone else’s space.
The contractor is not part of the regular staff and does not receive any of the staff’s benefits. Some negotiation can certainly take place ahead of time — for example, you might have a key to the back door, and access to certain equipment. You can be collegial and make suggestions or offer help — but you don’t have any real say about how the place runs.
In many or most cases, you’ll need to carry your own malpractice insurance. You should raise plenty of questions about client recruitment and referral, the terms of your contract, billing and scheduling issues, and more.
And, even though you are not an employee, you should also ask if you’ll be required to sign a “no complete” clause.
Major pros: You don’t have the hassles of establishing or growing a business. You don’t need to worry about cash flow, and your financial risks are low.
Major cons: Perception. Even though it’s not your business, clients won’t necessarily know that. If the owner runs an office where phone messages aren’t returned, or the trash outside isn’t picked up, or the Facebook comments are unflattering, you may be “blamed” even though it’s not your fault.
What issues most relate to business relationships for a private practice?
There are probably a ton of questions I haven’t thought to raise here. But generally, you’ll want to get a read on:
- Financial risk and reward
- Hassles, complexities, and uncertainties
- Autonomy or lack thereof
- Perks including healthcare insurance and malpractice insurance
- Hours, policies, and operating implications
- Values: yours, and those with whom you have a business relationship
- Perceptions of clients
Are you considering entering into a business relationship for a private practice? Have you already asked these questions? Share your experiences in the comments below!