Startup Cost of Private Practice

[Turducken21]

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After reading many posts on this forum about the subject (which have been extraordinarily helpful), I’m considering starting up a solo private practice. I want to scale it to include other physicians down the road but will for now plan on accepting commercial insurance and trying it full time myself (will plan on moonlighting over the weekend at local inpatient units while getting started). It seems like I would most likely fill by the 6 month mark based on prior posts. I have about 50k saved up for this so far and am curious if this amount seems reasonable for startup costs and a couple months of expenses? I appreciate the responses.

 

[mistafab]

Your costs should be very, very low to start. Scale up costs as business scales. 50K is plenty. You can even ask some therapy practices in your area to rent rooms by the hour to start, to save money on facility costs at first. Just some ways to keep costs low while working your main gig as this builds. Don't jump ship until the ship is closer to the dock, i.e., you're starting to make some decent money through the solo practice. You can 'start' right away with commercial insurance, but it will take months for each one going back and forth to actually be approved to see their patients as in network.

Instead of just moonlighting on the weekend, build your practice monday, tuesday only to start (for example) and do wed-fri somewhere part time. Or, do a evening only clinic and work 7a-12p at an inpatient place rounding. Otherwise, you run the risk of a week full of stressful nothing for months, followed by hard work every weekend. Just work part time while you build up, and leave your main gig when you're ready to expand.

 

[Orgone]

Your costs should be very, very low to start. Scale up costs as business scales. 50K is plenty. You can even ask some therapy practices in your area to rent rooms by the hour to start, to save money on facility costs at first. Just some ways to keep costs low while working your main gig as this builds. Don't jump ship until the ship is closer to the dock, i.e., you're starting to make some decent money through the solo practice. You can 'start' right away with commercial insurance, but it will take months for each one going back and forth to actually be approved to see their patients as in network.

Instead of just moonlighting on the weekend, build your practice monday, tuesday only to start (for example) and do wed-fri somewhere part time. Or, do a evening only clinic and work 7a-12p at an inpatient place rounding. Otherwise, you run the risk of a week full of stressful nothing for months, followed by hard work every weekend. Just work part time while you build up, and leave your main gig when you're ready to expand.

I have started up a private practice twice (after moving) and cosign all the above, especially looking into getting another part time gig several days per week rather than just weekend moonlighting. I wouldn't assume anything about how fast you will fill; every location is different. My experience is that even in high demand areas that are desperately short of psychiatrists, growing a practice tends to start slow and then momentum slowly builds. And insurance credentialling is a hugely variable and uncontrollable wild card. Might take 1-2 months, might take six. Also keep in mind that when you think of being full you want to be "full" with follow ups, not new patient evals, and that inevitably takes longer.

50k (I assume you mean for practice startup and not personal living expenses) is way more than enough. I'm in a high cost area and even here there are nice therapy offices to sublet for several days per week starting at around $500. EMR with bells and whistles another $100-200. Malpractice obviously varies by state but shouldn't be too much for a part time psychiatrist. There'll be some other incidentals but shouldn't be much more than that to start. I'd recommend not hiring any staff until things get pretty busy, not only to save money but more importantly so that you actually know how things work.

 

[Atreides]

As others have said, I wouldn't assume anything about how fast you'll fill. I take insurance and it took me way more than 6 months to fill up my half-time practice. Even now, I'd say easily 80% of cold appointment requests I get lose interest when they find out I can't see them within 24 hours. Direct referrals are willing to wait much longer of course, but if someone finds you on Google or through their insurance directory, they're looking for someone to see them very quickly. Contrary to popular belief, there's no shortage of insurance-taking "prescribers" willing to see patients. I could set up an appointment with a dozen psychiatrists and psych NP's for tomorrow without spending more than 30 minutes on a few directories.

 

[Bartelby]

The biggest cost is the opportunity cost. You need to live on very little for the first months, maybe longer. Your personal expenses thus play a huge role.

Initial expenses might be:
Office furniture/setup - 5k
Good computer setup - 3k


Monthly business expenses might be similar to:
Office - 2k
EMR - 200
Other software - 50
Malpractice - variable. 500?
Professional dues/licenses/etc - variable. 300?
Miscellaneous (business lunches, CME, random supplies) - 250?

So basically you might spend $10k in setup + 1st month rent, then maybe 3-4k per month expenses with a modest sole prop setup. These are very rough ballparks.

If 50k is all you have saved and you will need to live off of that money until your practice is generating a significant profit I agree it is wise to have some sort of side job/ moonlighting work until you are up and running.

 

[TexasPhysician]

filling is highly variable. If doing hour long therapy + med management + insurance, you will earn less $ but fill faster. If you are aiming for a typical insurance practice, I’d expect much longer to fill. NP’s are saturating many areas. You can’t put yourself on insurance panels and get floods of patients any longer. You’ll need to network, advertise, etc to gain traction. It’s getting harder and harder.

 

[Sushirolls]

I'm like 5 years or more in. Moved from big metro with ARNPs everywhere to BFE, and the rural PCPs seldom refer.
Both locations have not led to filling.
*but I'm not taking on new medicare which may be an issue.

So don't just assume psychiatry private practice guarantees robust practice.

 

[shoomer]

For those talking about difficulty with filling a patient panel, how does child psychiatry factor in to this? Significant difference or not really?

 

[TexasPhysician]

For those talking about difficulty with filling a patient panel, how does child psychiatry factor in to this? Significant difference or not really?

It helps, but it still isn’t as easy as years past.

 

[Turducken21]

I really appreciate this insight. Many of the people posting are those I really look up to in this forum and have given a lot of really good information about starting up a clinic. I guess the consensus is it is not as easy as it used to be and may require quite a bit of work/time to fill. All that said, would you all say it has been worth it?

 

[ObsequiousAplomb]

Absolutely worth it.


I'm 2 years in with one insurance and I'm still at around 10 clinical hours per week. It really depends how saturated the market is.


There are tons of NPs with back offices able to set up next day appointments. As others have said, 30 minutes for 5+ appointments with NPs who accept 10+ major insurers. They probably all make more per hour than I do tbh.

 

[clausewitz2]

This makes me think that really establishing a reputation as the psychiatrist who does X or works with niche population Y is really critical for making private practice work. For me Psychology Today remains a magic spigot that I turn on when I need to top up my panel and then can turn off when I have enough new intakes. A month ago after some patients moved out of state I changed my PT profile from 'NOT accepting new patients' to 'accepting new patients' and within two weeks I changed it back because I had eight new intakes scheduled.