The 5 Biggest Mistakes to Avoid When Opening a Healthcare Practice

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1 The 5 Biggest Mistakes to Avoid When Opening a Healthcare Practice Opening a new healthcare practice is exciting but it's also fraught with opportunity for costly errors. Learn the top mistakes doctors make when opening a new practice and how to avoid them.

2 There are numerous challenges involved in opening a new healthcare practice. This is true whether you're at the start of your career or you re an established healthcare professional who's opening a practice as your next logical step. Increase your chances of success with this guide we're examining five of the biggest mistakes to avoid when opening a healthcare practice. Mistake #1: Failing to research your location options The adage location, location, location is as true with healthcare practices as it is any other kind of real estate. Your location can end up being a critical factor when it comes to the long-term success of your practice. page 1

3 Don't neglect this aspect. You ll first want to determine where most of your patients live and not just current patients, but also patients you hope to attract in the future. Then focus your search on an area that will be convenient for them. Once you ve narrowed down your search area, think about these questions as you look for the perfect location: Do you prefer a standalone building or space within a large office building? There are potential benefits with each option. For example, a standalone building may provide better opportunities for signage that increases your visibility. Meanwhile, space within an office building with lots of other medical practices could expose your practice to their patients who could eventually visit you as well. How much square footage do you realistically need? Your space needs might not be great right now, but think about the future as well. It might be wise to choose a location with a little more space than you need now to accommodate future growth. Is owning or renting a better option for you now? There are potential benefits to each of these options as well. By purchasing your location, you may build equity over time and your building could eventually become a valuable component of your practice. However, renting could give you more flexibility to move or expand if this ever becomes necessary. What is your budget for a rent or mortgage payment? Determine this before you start scouting locations so you don t fall in love with one only to find out that your cash flow won t support the monthly payment. page 2

4 Mistake #2: Hiring quickly just to fill roles Strong hiring is one of the biggest keys to success for any business, including a healthcare practice. Therefore, it s critical not to rush into any hiring decisions. Instead, take as much time as you need to hire the best possible people for each position you need to fill. And remember: Professional and technical skills should only be part of your critique of potential candidates. Of course, your employees need to have the proper education and training to do their jobs well. But it s just as important that they are a good fit culturally and will mesh well with the rest of the staff. Also try to determine if candidates will be able to understand and abide by your vision and values for the practice. page 3

5 Mistake #3: Not choosing your software carefully Your electronic health record (EHR) and practice management (PM) systems will form the backbone of your practice s technology. So it s critical to research different software options thoroughly and choose the right systems based on your practice s specific technology requirements. In particular, look at possible EHR and PM systems from these three perspectives: Interoperability. Can your EHR and PM systems communicate and exchange data with each other and use that data? Reporting capabilities. Are potential systems capable of generating the kinds of reports your practice will need to operate efficiently not just today, but also in the future as your practice grows? Usability. How easy is potential software to use and what kinds of training and support are offered by the vendors? Mistake #4: Forgetting that you also need to be a good businessperson You have years of training, education and possibly experience in your chosen medical field, which has prepared you to be a medical professional. However, this training and experience ultimately may have little impact on the success of your practice. page 4

6 Healthcare practice success often requires as much business acumen as it does medical expertise. The ability to manage cash flow could protect your practice from financial problems and even possible bankruptcy. One of the best ways to do this is to consolidate banking services with one bank. This gives you greater control over accounts receivable and increases visibility into cash flow and the practice's overall financial health. Ask potential bankers about the small business treasury management solutions their institution offers. Arm yourself with the basics of successful healthcare practice management and hire a strong office manager who is skilled and experienced in running healthcare practices similar to yours. page 5

7 Mistake #5: Failing to secure the proper funding from the right lender Opening and operating a healthcare practice often requires a tremendous amount of capital in fact, undercapitalization is one of the leading causes of practice failure. So your choice of a business bank is one of the most critical decisions you will make as a practice owner. Talk to several banks before deciding which one is right for your practice. And look beyond things like interest rates, fees and eligibility requirements. While these factors are important, you should also try to determine which bank will be willing to customize solutions to your specific needs and be the best fit for you over the long term. You should also look for a bank that offers a wide range of services beyond financing and checking accounts. This typically includes treasury management, insurance, institutional trust, private banking and merchant services. page 6

8 Cadence Bank offers a complete line of financial services for healthcare practices, including practice loans. Financing is available to help you meet practice startup costs as well as purchase equipment, buy in to or purchase a practice, or refinance an existing practice loan. Learn more about loans for healthcare practices. Visit cadencebank.com to learn more about loans for healthcare practices or call This e-book is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the e-book. The e-book is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes. Cadence Bank does not provide legal, accounting or tax advice to any client who receives services from Cadence Bank. page 7