Practice made perfect: Building a successful health business
Opening a medical practice – or two, or three – can be exciting… and nerve-racking. Longstanding NAB Medfin banker Jason Savage shares his views on how to set yourself up for success.
Going out on your own can be a milestone moment for health professionals: the realisation of a dream and the start of a new path. But how do you extend from one practice to more?
While providing excellent care to patients is likely to be your overarching goal, if your practice is to expand and prosper it’s vital you run it as an efficient and sustainable business.
Business expert and veteran NAB Medfin banker Jason Savage has shared the journeys of hundreds of practitioners as they’ve gone on to build successful businesses. He has a special interest in the dental sector and is a board member of the Queensland arm of the Australian Dental Industry Association. Here, he turns his two decades of experience and expertise into tangible advice on growing your healthcare practice profitably and sustainably. Use these six tips to put yourself on a solid footing right from the start.
1. You can think big… but start small
Buying an existing practice, or setting one up from scratch, is a significant financial investment, in rent, fit-out costs, equipment and staff. It can be easy to overspend – and there’s a downside to doing so.
Repayments and other outgoings will squeeze your cash flow. That will cut into the money available to market your practice and attract the patient base you need to achieve a healthy bottom line. Starting out more modestly will ensure you’re able to meet your commitments and pay yourself an adequate salary from the outset.
2. Follow the ‘50% rule’ for expansion
Beginning the planning process once your rooms are at more than 50 per cent capacity can allow the practice to grow in tune with demand.
Why? If you’re consistently busy, adding additional consulting rooms and finding practitioners to work in them is likely to be on your agenda. This can be a protracted process.
A fit-out typically takes between 60 and 90 days to complete, provided you have approved plans and can find a builder who can start immediately. Imported equipment, such as chairside dental mills and ultrasound machines, generally has a lead time of several months. Securing the services of practitioners can take as long, particularly right now, with international travel restrictions preventing the hire of overseas practitioners.
That’s why it’s important to put your expansion plans in train well before you’re overbooked and having to turn patients away.
3. Consider the savings of expanding… onsite
When you have an established practice, starting a second in another location may seem a smart move. And it can be – provided you don’t try to do so too quickly and over-extend yourself in the process.
Two locations mean double the overheads. That can create significant financial stress if patient numbers don’t increase fast enough to cover the added costs and you don’t have a healthy cash cushion to help you manage the shortfall.
For this reason, look at your expansion plan again and consider if you could do it at your current premises. Leasing additional space at your current location and growing that site to capacity before you take on the expense of another establishment is often a highly cost-effective way of building a health business.
4. Make your workplace an attractive one
A healthcare practice is only as good as its team.
Practitioners generally work for a percentage of fees, so providing a modern, well-equipped workplace and investing in marketing that generates a steady stream of patients can help you attract and retain high-calibre colleagues. Those who offer their team regular training opportunities, and foster a supportive and respectful workplace culture, are those often rewarded with loyalty and longevity of tenure.
5. For growth, lean on your expert advisers
Like every small business owner, you’ll need professional help to run your practice. But have you considered leaning on them for growth strategies, thinking and advice?
Gathering a tight network of advisers, including accountants and lawyers who specialise in the healthcare industry, will ensure you’re not only compliant with tax, and employment and professional obligations, but also have strong smarts on your side for any expansion plans.
Having trusted experts in your corner frees you up to focus on what matters most – building a practice that provides consistently excellent patient care, and a business that’s sustainable.
6. Have a specialist banker by your side
Equally important is working with a bank that understands the healthcare industry. A specialist health banker can support your efforts to acquire a new practice and fit out an existing one, and secure equipment finance, chattel mortgages and an overdraft facility to manage your cash flow. They can introduce you to a network of reputable suppliers and advisers and, with your authority, can liaise directly with your accountant and lawyer on financial matters such as BAS and tax returns.
Your banker can also assist you and your team to establish self-managed superannuation funds and apply for mortgages and other forms of personal finance. And if unexpected challenges arise, as they did for many practices during the COVID crisis, they can help you restructure your finances. If you’re a healthcare professional who’s focused on growing a successful practice, it pays to have a specialist banker on your team.