THE KEYS TO THE KEYS TO STARTING A STARTING A

PRIVATE PRIVATE PRACTICEPRACTICE

Part IIPart II

FINANCIAL PLANNING and FINANCIAL PLANNING and MARKETINGMARKETING

A Presentation of the AACAPA Presentation of the AACAPMember Benefits CommitteeMember Benefits Committee

John E. Dunne, MDJohn E. Dunne, MDCo-Chair, Member Benefits CommitteeCo-Chair, Member Benefits Committee

16040 Christensen Road, Suite 21716040 Christensen Road, Suite 217Tukwila, WA 98188Tukwila, WA 98188

jedunne@u.washington.edujedunne@u.washington.edu

YOUR DEFINITION OF SUCCESSYOUR DEFINITION OF SUCCESS

Professional goals and aspirationsProfessional goals and aspirations Personal/family considerationsPersonal/family considerations

Leisure time with family and friendsLeisure time with family and friends Avocational and recreational interestsAvocational and recreational interests

Financial expectationsFinancial expectations

FIVE AND ONE YEAR PLANSFIVE AND ONE YEAR PLANS

Degree of detail for the five year plan is variableDegree of detail for the five year plan is variable Answers the question “How do I want my practice and Answers the question “How do I want my practice and

professional life to be in five years?”professional life to be in five years?” Revised annuallyRevised annually

Detailed plans are necessary for the one year Detailed plans are necessary for the one year planplan Answers the question “What do I have to do this year Answers the question “What do I have to do this year

to move toward my five year goals?”to move toward my five year goals?” Annual reviewAnnual review

Answers the question “How did I do?”Answers the question “How did I do?”

DEVELOPING A BUSINESS PLANDEVELOPING A BUSINESS PLANA. ESTIMATING EXPENSESA. ESTIMATING EXPENSES

Capital ExpensesCapital Expenses Furniture, waiting room and officeFurniture, waiting room and office

Desk and desk chairDesk and desk chair Comfortable chairs/couch, end tables for sessionsComfortable chairs/couch, end tables for sessions Filing cabinetsFiling cabinets Coordinated chairs, end tables for waiting roomCoordinated chairs, end tables for waiting room Small refrigerator, water dispenser, and microwaveSmall refrigerator, water dispenser, and microwave

Office equipment: computer, fax/copier, telephone, Office equipment: computer, fax/copier, telephone, credit card machine, play equipment, scale, stapler, credit card machine, play equipment, scale, stapler, waste baskets,waste baskets, etc. etc.

Estimated Capital ExpensesEstimated Capital Expenses

Furniture DeskFurniture Desk $700 $700

Desk chairDesk chair 250 250

CouchCouch 1800 1800

Chairs (2)Chairs (2) 800 800

End tablesEnd tables 400 400

Play tablePlay table 120 120

Play chairsPlay chairs 100 100

Book caseBook case 400 400

Storage unitStorage unit 400 400

Décor 2500Décor 2500

WR chairs 2500WR chairs 2500

WR end tables 600WR end tables 600

WR table lamps 375WR table lamps 375

Sub-totalSub-total $9970 $9970

Equipment Filing cabinetsEquipment Filing cabinets $250$250

ScaleScale 250 250

ComputerComputer 10001000

Fax/copierFax/copier 350 350

TelephoneTelephone 120 120

Credit card machineCredit card machine

350350

Printing calc.Printing calc. 80 80

Play equipment 800Play equipment 800

RefrigeratorRefrigerator 300 300

MicrowaveMicrowave 200 200

MiscellaneousMiscellaneous 10001000

Sub-totalSub-total $11,900 $11,900

Total Estimated Total Estimated $21,870 $21,870

Operating ExpensesOperating Expenses Rent (includes the additional cost of build-out)Rent (includes the additional cost of build-out) Insurance premiumsInsurance premiums

MalpracticeMalpractice BusinessBusiness DisabilityDisability

Telephone, internet connectionTelephone, internet connection Web services, e.g., EMR, appointmentsWeb services, e.g., EMR, appointments Office suppliesOffice supplies

Printed forms, including prescription padsPrinted forms, including prescription pads Paper, ink, files, etc.Paper, ink, files, etc.

PostagePostage Publications, professional and waiting roomPublications, professional and waiting room Professional education and duesProfessional education and dues AdvertisingAdvertising Wages +/or contracted servicesWages +/or contracted services

Administrative servicesAdministrative services Billing serviceBilling service AccountingAccounting LegalLegal

Taxes: excise, L+I, employment securityTaxes: excise, L+I, employment security Loan paymentLoan payment

Estimated Operating ExpensesEstimated Operating Expenses

ExpenseExpense 11stst Month 2 Month 2ndnd Month 3 Month 3rdrd Month 4 Month 4thth Month…………….12 Month…………….12thth Month Total Month TotalRentRent $1000 $1000 $1000 $1000 $1000 $1000 $1000 $1000 $1000 $12,000 $1000 $12,000Malp. Ins 1000Malp. Ins 1000 0 0 0 1000 0 4000 0 1000 0 4000Bus. InsBus. Ins 215 0 0 0 0 215 215 0 0 0 0 215Disability Ins 200 200 200 200 200 2400Disability Ins 200 200 200 200 200 2400Telephone 150 160 170 175 210 2200 Telephone 150 160 170 175 210 2200 Web serv. 300 300 300 300 300 3600Web serv. 300 300 300 300 300 3600Office Suppl. 900 150 50 75 200 2800Office Suppl. 900 150 50 75 200 2800PostagePostage 250 0 0 80 75 580 250 0 0 80 75 580PublicationsPublications

WRWR 150 150 0 0 0 0 150 0 0 0 0 150 Prof. 100 25 40 0 200 450Prof. 100 25 40 0 200 450

Prof. Ed./Dues 0 0 180 0 1200 1800Prof. Ed./Dues 0 0 180 0 1200 1800Advertising 300 75 25 0 230 750Advertising 300 75 25 0 230 750ServicesServices

Admin/bill 200 500 600 700 1200 9000Admin/bill 200 500 600 700 1200 9000Prof. 2500 150 200 250 400 6000Prof. 2500 150 200 250 400 6000

Taxes, lic. 450 200 350 500 800 7500Taxes, lic. 450 200 350 500 800 7500Loan pmt. 800Loan pmt. 800 800 800 800 800 800 9600 800 800 800 9600Totals $8515 $3560 $3915 $5080 $6815 $69,600Totals $8515 $3560 $3915 $5080 $6815 $69,600

B. ESTIMATING INCOMEB. ESTIMATING INCOME

State your assumptionsState your assumptions Degree of specialization of servicesDegree of specialization of services Direct payment vs. medical insuranceDirect payment vs. medical insurance Participation in managed careParticipation in managed care Fee structure, sliding scale, discountsFee structure, sliding scale, discounts Estimate of community needEstimate of community need

Other sources of incomeOther sources of income Part time positionsPart time positions Pharmaceutical speakers bureausPharmaceutical speakers bureaus Contract work for Juvenile Justice system, schoolsContract work for Juvenile Justice system, schools Working spouseWorking spouse

Estimated IncomeEstimated IncomeA. AssumptionsA. Assumptions

1. Cash basis1. Cash basis

2. No managed care contracts2. No managed care contracts

3. Community has unmet needs and is moderately affluent 3. Community has unmet needs and is moderately affluent

11stst Month 2 Month 2ndnd Month 3 Month 3rdrd Month 4 Month 4thth Month……….12 Month……….12thth Month Month Total income Total income

#3#3 #5 #5 #8 #8 #12 #12 #8 #8

16 hrs16 hrs 22 hrs 30 hrs 42 hrs 22 hrs 30 hrs 42 hrs 135 hrs 135 hrs

$3600$3600 $4950 $4950 $6750 $9450 $6750 $9450 $30,375 $229,625$30,375 $229,625

B. AssumptionsB. Assumptions

1. Balance billing (collecting co-pays)1. Balance billing (collecting co-pays)

2. Managed care contracts and insurance preferred provider agreements2. Managed care contracts and insurance preferred provider agreements

3. Community has unmet needs and is predominantly blue collar3. Community has unmet needs and is predominantly blue collar

11stst Month 2 Month 2ndnd Month 3 Month 3rdrd Month 4 Month 4thth Month……….12 Month……….12thth Month Total income Month Total income

#20#20 #20 #20 #20 #20 #20 #20 #12 #12

68 hrs68 hrs 88 hrs 88 hrs 104 hrs 130 hrs 104 hrs 130 hrs 168 hours 168 hours

$600 $7684$600 $7684 $9944 $11,752 $9944 $11,752 $18,984 $174,144 $18,984 $174,144

CREATING A BUSINESS PLANCREATING A BUSINESS PLAN

1.1. Description of services to be providedDescription of services to be provided2.2. Five year planFive year plan3.3. One year planOne year plan4.4. Estimated capital expensesEstimated capital expenses5.5. Estimated operating expensesEstimated operating expenses6.6. Income estimates during the first 12 months and at 5 Income estimates during the first 12 months and at 5

years (do not include other sources of income)years (do not include other sources of income)7.7. Available liquid assets to offset costsAvailable liquid assets to offset costs8.8. Anticipated financial shortfall, i.e., the amount needed Anticipated financial shortfall, i.e., the amount needed

in a line of creditin a line of credit9.9. Estimate of how long until the practice is financially Estimate of how long until the practice is financially

viableviable

MARKETING YOUR PRACTICEMARKETING YOUR PRACTICE Get to know your colleaguesGet to know your colleagues

Lunch/coffee, professional meetingsLunch/coffee, professional meetings Volunteer for organizational tasks/jobsVolunteer for organizational tasks/jobs

Get to know the primary care physicians in your Get to know the primary care physicians in your areaarea Lunch meetings or informal presentationsLunch meetings or informal presentations Find out what their needs are and how you can helpFind out what their needs are and how you can help

Mail letters of intro, brochures, business cardsMail letters of intro, brochures, business cards Offer to speak to local groups, such as CHADD, Offer to speak to local groups, such as CHADD,

PTSA, school counselors and special ed. staffPTSA, school counselors and special ed. staff Follow up phone call and/or letter after Follow up phone call and/or letter after

evaluating a patientevaluating a patient DO NOTDO NOT sit in your office waiting for the phone sit in your office waiting for the phone

to ringto ring

YOUYOUARE YOURARE YOUR

BEST MARKETING TOOLBEST MARKETING TOOL

February 23, 1 PM ESTFebruary 23, 1 PM EST Part IIIPart III

THE NITTY-GRITTYTHE NITTY-GRITTY