Zenith Finance Blog

RBA Finance

Medical and allied practitioners

It is not what they expect, but medical practitioners do have to wear a business owner’s mindset; otherwise you’re running on the same spot

You spend 6-10 years in study and training to be a medical practitioner but what you are not taught is finance and business. Medical practitioners and allied health professionals are often woefully prepared for the business side of private practice. That’s fine if they join an existing practice as a partner – most of the accounting systems will be in place and mostly, equipment needs will have been satisfied. But when doctors go into private practice, they learn about profits and losses on the job and they learn too; that business choices – to rent or buy, for example – as well as finance and cash flow issues are part and parcel of being a medical practitioner.

(By the way, some business education is not bad thing; we are not talking about a $50k, 2-year full time MBA; there are many, many short courses an well as thousands of books both paper and e-books that can be useful; for example Small Business for Dummies (part of the Dummies series; which ironically is quite advanced) which deal with the issues faced by small business owners and that might well be you – ways to run your small business better; everything a small business needs to know, including vital topics such as business planning, budgeting and GST, marketing and online sales. If your practice is in a highly competitive space you may wish to develop a marketing strategy – that is, find your unique selling point, build your brand and set sales goals. Or, better understand the importance of customer service — deliver beyond expectations, listen to customers and transform complaints into sales; understand your legal obligations as an employer, recruit the best employees and build a great team. If you are engaged in marketing off a website or need to develop a website, secure high rankings on the search engines and build online sales, then that is covered off as is the basics to understand P &L reports, manage profit margins and set budgets).

Whether a medical practitioner joins an existing practice or whether he is establishing a new practice, equipment and fit-out costs will need to be considered and planned for. One customer, a doctor, moved into a surgery which is about 25 years old. The rooms looked tired and worn and not at all contemporary and compelling. He thus decided to do a new fit out of the surgery and, once he had consultants come in, estimated it would cost $135,000, to cover fit out.

Included in the fit out are new carpet, walls, examination room, kitchen, furniture, partitions
plus some new medical equipment. The finance was done via a commercial hire purchase agreement; which is suited to medical or allied health practices.