Thirteen Questions for Podiatric Entrepreneurs

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There is no way to eliminate all the risks associated with starting a podiatry practice in the current healthcare ecosystem. However, entrepreneurial-focused doctors can improve their chance of success with good planning and preparation. 
 
So, prior to starting your own practice, ask yourself the following questions, that, in my experience are key to beginning to understand the road ahead. Hopefully, such reflection will enhance success or at least help to prevent certain catastrophic results. 

The Top 13 Questions to Consider:

1. Is podiatry practice ownership and management right for you?
 
It will always be up to you, and not some consultant, advisor, banker, or broker telling you to follow through on details. You must be self-motivated.
 
2. Can you get along with different personality types?
 
Podiatry practice owners need to develop working relationships with a multitude of folks including patients, vendors, staff, physicians, nurses, and other professionals like lawyers, accountants, and bankers. Can you deal with a demanding or difficult personalities when in the best interest of your practice?
 
3. Can you make decisions and live with ambiguity? 
 
Practice owners are required to make independent decisions constantly; often quickly, under pressure, and without all the facts they would typically desire. Ambiguity, or the ability of being open to more than one interpretation, is a constant.
 
4. Do you have physical and emotional stamina?
 
Practice administration and ownership can be challenging, lucrative, fun, and exciting. But it's also a lot of work. As an owner, can you face 12-to-18 hour work days? As a doctor, can you offer patient advice, services, medical care, or on-call support on weekends and 24/7? Even if you structure your practice with deep support, or choose to clearly delineate your availability, solo practices especially can be taxing on one's time and psyche.
 
5. How long can you live on current savings? 
 
In my experience, most small podiatry practice startups lose money in the early going. So, it’s wise to look at your personal expenses and determine how long you can live on your savings, and what personal living costs you can temporarily eliminate. Emotionally, I’ve observed that it's easier to tighten your budget when you're contemplating a new practice, than it is to cut back after you've actually started. A 3-5 year margin of financial safety is not unusual and is often wise to project for in my experience.
 
6. How deep in debt can you go? 
 
For podiatric entrepreneurs, business debt is often personal debt. I see most doctors starting practice by deferring payments for their own labor. Although lenders may make loans to a practice, the podiatrist-owner is often required to personally guarantee the loan. So, although the debt is on the business' books, it is ultimately the doctor’s debt should the practice fail.
 
7. What about personal health insurance? 
 
If your current residency, fellowship, or job offers health insurance, and is subject to the Consolidated Omnibus Budget Reconciliation Act (COBRA), you might be able to keep your coverage by paying the premiums plus another 2% for administrative costs. You may keep your coverage under COBRA for 18 to 36 months and it is a useful stopgap for some.
 
Other suggestions are using working spouse coverage with family benefits, or pursuing coverage under an HMO, a Health Savings Account (HSA), or even investigating options under the Affordable Care Act (ACA).
 
8. Can you line up credit in advance? 
 
Some new podiatrist employees may set up a Home Equity line of Credit (HELOC) that will let them borrow money at 1-2 percentage points over the prime rate or less. In my experience, lenders are more willing to make loans to someone who has a steady employment paycheck than to a new practice entrepreneur. Once you are self-employed, you'll probably have to provide your most recent tax returns before getting approval. But, today, the biggest obstacle to a practice business loan is student debt, a home mortgage, or an automobile loan. So, I recommend deferring the latter two debts, if possible.
 
9. What if you get sick and can’t manage the practice?
 
Disability insurance, unlike health insurance, usually cannot be transferred to an individual policy when you leave your job to start a new practice. So, I often advise practitioners to get their own disability policy while they are still employed. Once you have the policy established and are paying the premiums, you should be able to keep the policy when you go out on your own. Remember, benefits received on a policy paid by you are free of federal income tax. Benefits on a policy paid for by a previous employer are taxable.
 
10. How well do you plan and organize?
 
Research that I’ve reviewed indicates that many podiatry practice failures could have been avoided through better planning. Good organization of accounting financials, inventory, schedules, information technology, electronic medical records, and human resources can help avoid many pitfalls.
 
11. Can you maintain motivation?
 
Running a practice can wear you down. Some owners feel burnout by having to carry all responsibility on their shoulders. Strong motivation can make the practice succeed and will help you survive slowdowns.
 
12. How will the practice affect your family?
 
The first few years of podiatry practice startup can be hard on family life. The strain of a lack of family or other social support may be hard to balance against the demands of a practice business. You may have to adjust to a lower standard of living or put family assets at risk. Work-life balance is difficult.
 
13. How do you feel about the PP-ACA of 2010?
 
Most provisions of the Patient Protection and Affordable Care Act included expanding Medicaid eligibility, subsidizing insurance premiums, providing incentives for businesses to provide health care benefits, and prohibiting denial of coverage/claims based on pre-existing conditions, etc. The expenses of these provisions are offset by a variety of taxes, fees, and cost-saving measures such as Medicare taxes for high-income brackets, cuts to Medicare Advantage [Part C] programs and fees on medical devices and pharmaceutical companies. Decreasing physician reimbursement from Medicare and private insurers is an increasing component, as well, in my observation, as are other deeply impactful coverage decisions from insurance payors.

Conclusion

What other podiatry practice start-up questions have you encountered? The above are just some of the examples of the experiences I’ve observed. Business, economic, and political climates impact this process, but podiatrists are still frequently in smaller private practices. Private equity and larger organizations are also part of this space, thus, it is important to begin to understand key considerations when making any practice decisions. 
 
Disclaimer: HMP Global does not give financial or business advice. The content of this piece is for informational purposes only. The views and opinions expressed and contents are solely those of the presenter, and do not represent the views of Podiatry Today, HMP Global, its affiliates, or subsidiary companies. 
 
References
 
1. Marcinko, DE and Hetico, HR: The Business of Medical Practice [Transformational Health 2.0 Skills for Doctors] 3rd Edition, Springer Publishing Company, New York, 2010. 
 
2. Marcinko, DE: Dictionary of Health Economics and Finance. Springer Publishing Company, New York. 2006
 
3. Marcinko, DE and Hetico, HR: Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™]. Productivity Press, New York, 2015.
 
4. Marcinko, DE and Hetico, HR: Hospitals & Healthcare Organizations [Management Strategies, Operational Techniques, Tools, Templates and Case Studies].  Productivity Press, New York, 2012.
 
5 Marcinko, DE and Hetico, HR: Financial Management Strategies for Hospitals and Healthcare Organizations [Tools, Techniques, Checklists and Case Studies]. Productivity Press, New York, 2012.
 
As a former university Professor and Endowed Department Chair in Austrian Economics, Finance and Entrepreneurship, Dr. Marcinko was a Security Exchange Commission [SEC] Registered Investment Advisor [IA] and private hedge fund manager for more than a decade. Later, he was an economics consultant for healthcare start-up technology firms in Los Angeles, Boston, Chicago, Atlanta and Silicon Valley, CA.