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Jerry was a successful Ob/gyn on 61st street in Manhattan. He went to work each morning with a bagel and a coffee in his hand walking quickly to his office. While there he saw his patients, gave his opinion to pharmaceutical companies over the phone and vacuumed his own office each night. He napped at his desk between jobs. He made $2000.00 an hour and he taught at the hospital to cover his medical malpractice insurance. He was a television doctor and frequently appeared on the morning shows of the big networks. His clientele included supermodel Naomi Campbell, wealthy long island housewives, and all the ladies from Bloomingdale's.

He lived in a three million dollar townhouse with his tax attorney wife and dined out every evening at any restaurant of his choice but always finished with drinks at Gino's with Harry Winston's brother while celebrities like Gwyneth Paltrow dined at the back of the restaurant. He was married several times and had about 150 suits in his closet. He always took the subway or the bus and never ever took a taxi. He once received an expensive watch from one of his patients for saving her life.

He always received financial statements in the mail which Bobby, his receptionist always poked through and then told everyone how very rich he was. His children were successful professionals and he had his hand in many businesses, including McDonald's franchises and telecom businesses. He rented out his office to two other doctors and he kicked himself for not buying the building when he had the opportunity. He was well respected by all and had a great sense of humor, but how did he get this lifestyle? It wasn't easy.

He began life as an immigrant boy with seven siblings living in a tenement in new jersey. His father was a shopkeeper and the children used to take turns getting dressed for school around the oven in the kitchen. There was never enough food to eat. Regardless, he was a good student and when he wanted to go to college the Army paid for it and he in turn repaid the Army with his time in Korea where he was a surgeon.

When he came home to the US, he had a job where he had to work with a nurse who was drunk all the time. It was so miserable that he saved all his paychecks and told me that he used to live on tomato soup. He would take the tomato ketchup packets and put them in a saucepan with water and that would be dinner. Eventually, he saved enough money to open his own practice and get out of the daily grind with people he didn't want to work with. Whenever I saw Jerry, he always used to ask me "Did you eat?" That was always foremost in his mind, having enough to eat even if it was from hot and crusty bagel or the street vendor.

Now to get back to our subject, the best way to establish your own practice is to get a job...you may be saying "What? That doesn't make any sense." Yes, it does. You need to get a hospital job or similar job which pays for your malpractice insurance. This is one significant handicap that can stand between you and opening your own practice. The average cost of malpractice insurance is at least $35,000.00. If you can get the hospital to pay for it for you, then you've unloaded a serious debt. Even if your parents are going to fund your own practice for you, who will come? How will you get paid? You still need a job to gather clients, credentialing and to unload your malpractice insurance cost on someone else. You're the survivor. This is the most practical solution.

Ideally, you should have 2-3 jobs. Your job at the hospital to cover your insurance cost, your job at someone else's practice so that you can build rapport with patients, get a paycheck which you'll save for your practice from and get credentialed with insurance companies. If you are daring and after you are established, you can decide not to take any insurance at all. You may find that you make a lot more money, faster with less hassle. Then, there's your practice. When the time is right which means when you have your financing in order, you have built rapport with patients and you have the okay from as many insurance companies as you can, then you can make the switch to your own practice. You will be phasing out the job at someone else's practice and informing patients about where you're moving to. You should have built up savings, gotten a loan from a lending company and made friends of your patients. Any free time will be spent building your practice. Make sure that informing the patients about your practice doesn't violate any non-compete or non-solicitation agreements you may have. Best not to sign those things from the beginning if possible. Try to look far ahead into the future with decisions you make. Your goal is not to rush but to make this a project of gradual change that is on a time schedule of about 9 months, yet another reason for having multiple jobs. This also avoids calamity.

Use your attorney to open your personal corporation and to negotiate your business lease, you can also use your attorney as a realtor or just use a realtor. You need an objective opinion as to the location and look of your new office. The three most important words in real estate...location, location, location. They will see things that you don't see, like accessibility. You also need to do your homework as to the demographics of your prospective location and if it can handle another doctor of your specialty. The litmus test is to find out the waiting time of an appointment with other competitors. If the waiting time is more than two weeks, there's room for another physician.

Another obstacle you need to overcome is not having enough money for unexpected expenses. You may have credit but you will need to save a pile of cash for office-related expenses such as computers, software, medical equipment and staff. Try to get as much as possible on credit, and use your loan money for the rest. Staffing is very expensive so it's best to avoid it when getting started.

Advertise for interns, business and medical interns. Use them as a medical assistant, a nursing intern for a nurse, a business intern for clerical work and answering the phones. If you must pay an employee, be sure to have their payroll money each and every week otherwise you'll have problems that are difficult to solve. Using interns is the best way to scout for new recruits, you can test the waters before making a bad hiring decision.

To make the office rent, make sure you rent out your office when you're not there to other doctors. Even if you don't need it, it's best to do it when you are first starting your practice. You want to ensure success.

If your practice is small and you want to minimize the costs of salary and benefits, you may want to consider streamlining your billing and collections functions by selecting a practice management system software that handles revenue cycle management and medical records, as well as claims submission, like SkyEMR. Let patients use the Internet to request appointments, provide demographic information, handle prescription requests, get lab and other test results, pay bills on-line and perform other administrative functions which can all be done through the right EMR software.

You must go over your numbers and project the following items:

Revenue from Patient Care: days revenue outstanding, days payable outstanding, units of service, payers, estimated gross/net revenue, contractual allowance and allowance for bad debts, other sources of revenue.

Expenses: accounting, contributions and public relations, consulting fees, continuing medical education, dues/subscriptions/books, capital equipment, equipment rental, general insurance, information technology support (both for start-up and for ongoing support), malpractice insurance if applicable, lab fees, legal services, maintenance/ repairs/cleaning (do your own), marketing and advertising, medical supplies, office supplies, postage, rental/lease expense, salary/ wages/benefits, taxes, telephone/ telecommunications, travel, interest, depreciation, physician monthly draw, professional services, Web site, other expenses. You can also get a graphic design intern to do a free website for you. Advertise at different schools.

Once you have a good sense of your direction in each of the categories listed above, ask your accountant to run numbers for a 5-year period. If your break-even point comes later than you want it to occur, adjust the assumptions. Go back and forth between assumptions and numbers until you are comfortable with the expectations for your practice as well as with the amount you will have to borrow from the bank.

As for your accountant you should have a monthly amount that you pay him/her which will cover all your accounting expenses and also cover all your questions. You want to be able to pick up the phone whenever you have a question and get an answer within a reasonable amount of time.

Tips to Opening Your Own Practice

Get a hospital job to cover your malpractice insurance

Get another job to build a client base and complete credentialing processes

or opt to not take insurance.

Secure a loan

Use your credit

Have an attorney negotiate your business lease and incorporate for you or be your realtor

Hire a realtor

Use interns and give great letters of recommendation

Rent out your office in the hours you're not there

Take all the free lunches you can get from pharmaceutical reps. Schedule them

Streamline your practice with the right EMR and go paperless

Project your expenses

Hope this helps. Good luck with it!
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By Alexandra Brooks Cabot
Article Source: http://EzineArticles.com/?expert=Alexandra_Brooks_Cabot