Private Practice Opportunities

[JMC_MarineCorps]

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What are the complications involved with establishing a private practice in a large metropolitan area. I imagine its establishing a referral base and treading on the turf of other well-established shrinks in the area. Is this the bulk of it or are there other factors involved?

How much of a problem is this to overcome...it seems the earning potential is greater this way, but apparently much greater risk is involved and perhaps this is why many choose not to pursue this route. (that and perhaps many don't want the stress of overhead costs and the business aspect of it all).

My thinking on the subject is that in addition to helping my patients get better, my interest would lie in the bottom line. Any other like minded individuals care to speak to this...here or in an IM. Just gathering information at this point.

Thanks,

JMC

 

[JMC_MarineCorps]

You guys disappoint me.

 

[whopper]

I'd ask the APA. I'm a resident & haven't practiced privately so I can't tell you much. The APA has depts that work to help build private practices and they may be able to help you.

 

[Doc Samson]

What are the complications involved with establishing a private practice in a large metropolitan area. I imagine its establishing a referral base and treading on the turf of other well-established shrinks in the area. Is this the bulk of it or are there other factors involved?

How much of a problem is this to overcome...it seems the earning potential is greater this way, but apparently much greater risk is involved and perhaps this is why many choose not to pursue this route. (that and perhaps many don't want the stress of overhead costs and the business aspect of it all).

My thinking on the subject is that in addition to helping my patients get better, my interest would lie in the bottom line. Any other like minded individuals care to speak to this...here or in an IM. Just gathering information at this point.

Thanks,

JMC

Well, we certainly wouldn't want to disappoint you... I'm staying in academics, but according to the seminar series we had in residency about chosing a career, the overheads for private practice can be quite high, including:

Your own malpractice insurance
Your own health/dental/eye/life/disability insurance
Cost of maintaining office space
Cost of insuring office space
Cost of insuring office space for accidental injury since it's a place of business
Billing expenses (either paying a 3rd party to bill for you, or spending significant unpaid time doing the billing yourself)
Loss of matching contributions to a retirement plan

After that you have to consider whether you want to take insurance. If you do, you obviously have a much broader patient base to draw from, but the HMOs pay you a fraction of a normal private practice fee. If you don't, it might take a while to establish a patient base willing to private pay (especially outside of the large cities on the coasts).

 

[PsychMD2100]

Doc Samson,

If you don't mind me asking, will you be seeking a tenure-track position or is it a clinical faculty position?

What are the differences in pay between those two types of positions?

 

[Doc Samson]

Doc Samson,

If you don't mind me asking, will you be seeking a tenure-track position or is it a clinical faculty position?

What are the differences in pay between those two types of positions?

I have accepted a clinical faculty position... I love teaching and don't mind writing a case-report or a review once in a while, but long-term research is not for me. I don't know much about the pay difference since I wasn't looking at any tenure-track positions.

 

[JMC_MarineCorps]

Well, we certainly wouldn't want to disappoint you... I'm staying in academics, but according to the seminar series we had in residency about chosing a career, the overheads for private practice can be quite high, including:

Your own malpractice insurance
Your own health/dental/eye/life/disability insurance
Cost of maintaining office space
Cost of insuring office space
Cost of insuring office space for accidental injury since it's a place of business
Billing expenses (either paying a 3rd party to bill for you, or spending significant unpaid time doing the billing yourself)
Loss of matching contributions to a retirement plan

After that you have to consider whether you want to take insurance. If you do, you obviously have a much broader patient base to draw from, but the HMOs pay you a fraction of a normal private practice fee. If you don't, it might take a while to establish a patient base willing to private pay (especially outside of the large cities on the coasts).

Thanks for lending your insight, this is indeed helpful.

I think I'm a risk-taker in many regards....but time will tell, I still have to match and then successfully complete a residency before I could say for sure, but private practice sounds like the way for me - at this early stage at least.

 

[PsychMD2100]

Thanks Doc Samson,

I appreciate you sharing that you're doing a clinical faculty job.

How does it work with reimbursement. Does the hospital get a percentage of who you see or are you on a flat salary? Do they have incentive bonuses?

 

[Doc Samson]

Thanks Doc Samson,

I appreciate you sharing that you're doing a clinical faculty job.

How does it work with reimbursement. Does the hospital get a percentage of who you see or are you on a flat salary? Do they have incentive bonuses?

I'm a consultation psychiatrist, so I'll be salaried. There are incentive bonuses for standard of documentation and billing criteria. There's also extra $$ available for taking call by phone.

 

[outofhere]

Well, we certainly wouldn't want to disappoint you... I'm staying in academics, but according to the seminar series we had in residency about chosing a career, the overheads for private practice can be quite high, including:

Your own malpractice insurance
Your own health/dental/eye/life/disability insurance
Cost of maintaining office space
Cost of insuring office space
Cost of insuring office space for accidental injury since it's a place of business
Billing expenses (either paying a 3rd party to bill for you, or spending significant unpaid time doing the billing yourself)
Loss of matching contributions to a retirement plan

After that you have to consider whether you want to take insurance. If you do, you obviously have a much broader patient base to draw from, but the HMOs pay you a fraction of a normal private practice fee. If you don't, it might take a while to establish a patient base willing to private pay (especially outside of the large cities on the coasts).

Malpractice for psychiatry isn't too expensive, your first year will be less than $1000, (so little exposure), it caps out after 4-6 years, and will be no more than $6000. As for health benefits, marry someone who has benefits. If you start doing inpt, you build up a good reputation for yourself among internists and you can get lots of outpt referrals. Billing service usually charges about 7-9% of whatever they collect for you. This cost is tax deductible. Don't bother doing the billing yourself- it is rather time consuming, and you can lose billing this way. You need experts for this. While you're starting out, you might want to sublet. Start out just one day a week and build it up. You may also want to sublet diff days at diff parts of the city, so you have a large population to draw pts from.
Private practice can be VERY lucrative. It is also freeing since you determine how much work you do. However, you only get paid for the work you do. It can go both ways: you can end up working whole lot more than you intended to, since every hour that is spent idle is money not collected. Or, the freedom is so amazing that you end up making no $.

 

[JMC_MarineCorps]

Malpractice for psychiatry isn't too expensive, your first year will be less than $1000, (so little exposure), it caps out after 4-6 years, and will be no more than $6000. As for health benefits, marry someone who has benefits. If you start doing inpt, you build up a good reputation for yourself among internists and you can get lots of outpt referrals. Billing service usually charges about 7-9% of whatever they collect for you. This cost is tax deductible. Don't bother doing the billing yourself- it is rather time consuming, and you can lose billing this way. You need experts for this. While you're starting out, you might want to sublet. Start out just one day a week and build it up. You may also want to sublet diff days at diff parts of the city, so you have a large population to draw pts from.
Private practice can be VERY lucrative. It is also freeing since you determine how much work you do. However, you only get paid for the work you do. It can go both ways: you can end up working whole lot more than you intended to, since every hour that is spent idle is money not collected. Or, the freedom is so amazing that you end up making no $.

Thank you sir, also very helpful.