THE KEYS TO STARTING A PRIVATE PRACTICE

1. THE KEYS TO STARTING A PRIVATE PRACTICE Part II FINANCIAL PLANNING and MARKETING A Presentation of the AACAP Member Benefits Committee

2. John E. Dunne, MD Co-Chair, Member Benefits Committee 16040 Christensen Road, Suite 217Tukwila, WA 98188jedunne@u.washington.edu

3. YOUR DEFINITION OF SUCCESS • Professional goals and aspirations • Personal/family considerations • Leisure time with family and friends • Avocational and recreational interests • Financial expectations

4. FIVE AND ONE YEAR PLANS • Degree of detail for the five year plan is variable • Answers the question “How do I want my practice and professional life to be in five years?” • Revised annually • Detailed plans are necessary for the one year plan • Answers the question “What do I have to do this year to move toward my five year goals?” • Annual review • Answers the question “How did I do?”

5. DEVELOPING A BUSINESS PLANA. ESTIMATING EXPENSES • Capital Expenses • Furniture, waiting room and office • Desk and desk chair • Comfortable chairs/couch, end tables for sessions • Filing cabinets • Coordinated chairs, end tables for waiting room • Small refrigerator, water dispenser, and microwave • Office equipment: computer, fax/copier, telephone, credit card machine, play equipment, scale, stapler, waste baskets, etc.

6. Furniture Desk $700 Desk chair 250 Couch 1800 Chairs (2) 800 End tables 400 Play table 120 Play chairs 100 Book case 400 Storage unit 400 Décor 2500 WR chairs 2500 WR end tables 600 WR table lamps 375 Sub-total $9970 Equipment Filing cabinets $250 Scale 250 Computer 1000 Fax/copier 350 Telephone 120 Credit card machine 350 Printing calc. 80 Play equipment 800 Refrigerator 300 Microwave 200 Miscellaneous 1000 Sub-total $11,900 Total Estimated $21,870 Estimated Capital Expenses

7. Operating Expenses • Rent (includes the additional cost of build-out) • Insurance premiums • Malpractice • Business • Disability • Telephone, internet connection • Web services, e.g., EMR, appointments • Office supplies • Printed forms, including prescription pads • Paper, ink, files, etc. • Postage • Publications, professional and waiting room • Professional education and dues • Advertising • Wages +/or contracted services • Administrative services • Billing service • Accounting • Legal • Taxes: excise, L+I, employment security • Loan payment

8. Estimated Operating Expenses Expense 1st Month 2nd Month 3rd Month 4th Month…………….12th Month Total Rent $1000 $1000 $1000 $1000 $1000 $12,000 Malp. Ins 1000 0 0 1000 0 4000 Bus. Ins 215 0 0 0 0 215 Disability Ins 200 200 200 200 200 2400 Telephone 150 160 170 175 210 2200 Web serv. 300 300 300 300 300 3600 Office Suppl. 900 150 50 75 200 2800 Postage 250 0 0 80 75 580 Publications WR 150 0 0 0 0 150 Prof. 100 25 40 0 200 450 Prof. Ed./Dues 0 0 180 0 1200 1800 Advertising 300 75 25 0 230 750 Services Admin/bill 200 500 600 700 1200 9000 Prof. 2500 150 200 250 400 6000 Taxes, lic. 450 200 350 500 800 7500 Loan pmt. 800 800 800 800 800 9600 Totals $8515 $3560 $3915 $5080 $6815 $69,600

9. B. ESTIMATING INCOME • State your assumptions • Degree of specialization of services • Direct payment vs. medical insurance • Participation in managed care • Fee structure, sliding scale, discounts • Estimate of community need • Other sources of income • Part time positions • Pharmaceutical speakers bureaus • Contract work for Juvenile Justice system, schools • Working spouse

10. Estimated Income A. Assumptions 1. Cash basis 2. No managed care contracts 3. Community has unmet needs and is moderately affluent 1st Month 2nd Month 3rd Month 4th Month……….12th Month Total income #3 #5 #8 #12 #8 16 hrs 22 hrs 30 hrs 42 hrs 135 hrs $3600 $4950 $6750 $9450 $30,375 $229,625 B. Assumptions 1. Balance billing (collecting co-pays) 2. Managed care contracts and insurance preferred provider agreements 3. Community has unmet needs and is predominantly blue collar 1st Month 2nd Month 3rd Month 4th Month……….12th Month Total income #20 #20 #20 #20 #12 68 hrs 88 hrs 104 hrs 130 hrs 168 hours $600 $7684 $9944 $11,752 $18,984 $174,144

11. CREATING A BUSINESS PLAN • Description of services to be provided • Five year plan • One year plan • Estimated capital expenses • Estimated operating expenses • Income estimates during the first 12 months and at 5 years (do not include other sources of income) • Available liquid assets to offset costs • Anticipated financial shortfall, i.e., the amount needed in a line of credit • Estimate of how long until the practice is financially viable

12. MARKETING YOUR PRACTICE • Get to know your colleagues • Lunch/coffee, professional meetings • Volunteer for organizational tasks/jobs • Get to know the primary care physicians in your area • Lunch meetings or informal presentations • Find out what their needs are and how you can help • Mail letters of intro, brochures, business cards • Offer to speak to local groups, such as CHADD, PTSA, school counselors and special ed. staff • Follow up phone call and/or letter after evaluating a patient • DO NOT sit in your office waiting for the phone to ring

13. YOU ARE YOUR BEST MARKETING TOOL

14. February 23, 1 PM EST Part III THE NITTY-GRITTY