New doctors face choices: Go solo, join a group, buy a practice

Editor's note: Every month in Residents' Forum, a dermatologist in practice or academia discusses clinical and practice management issues affecting residents. If you're a resident and would like to see specific issues covered in this column, please e-mail the editor at mhrehocik@advanstar.com
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Dermatology residents stepping out of medical training and into their chosen profession must make a critical decision that has little to do with medicine: They must decide what kind of practice they'll be stepping into.

Some residents may choose a large hospital group or an academic setting for their first step. But many new dermatologists choose from among joining a private group practice, starting their own practice or purchasing an existing one. New doctors choosing from among these three options, says Glenn D. Goldstein, M.D., should do so with a business-oriented perspective on what's in store for them once they've made their decision.

Group practice

The group practice option has obvious advantages for new physicians, Dr. Goldstein says.

"Unlike the other options, there is no debt, no financial risk, for a new doctor entering a group practice," he says. "The organization is in place, insurance contracts are in place, there's a guaranteed salary and there's the possibility of becoming a partner. Maybe the most important advantage is that a private practice gives a new doctor the opportunity to establish a track record."

As for disadvantages, Dr. Goldstein says, "You're not in charge, and decisions are made by the group - which in turn means that it may take awhile before a decision about something is finally made."

Dr. Goldstein advises residents to seek answers to a number of key questions before deciding which group practice to join, for example:

"New doctors should also review the practice's financial statements, know the benefits it's offering, find out about its reputation and culture, and have an attorney review the contract before signing," he says.

Start a practice

New doctors who choose to start their own practice also need to consider key factors, Dr. Goldstein says.

"It's crucial to select a team of professionals, including an attorney, CPA, banker and business consultant," he advises. "The next step is to create a business plan geared toward assessing start-up costs, completing a market study, determining the best location for your practice, and whether to establish a hospital affiliation. You must also determine how many employees you'll need, prepare financial projections and, of course, acquire financing."

The advantages of this option are in direct opposition to the disadvantages of joining a practice.

"Unlike joining a practice, starting one means you're your own boss, you make the decisions and there's no profit sharing," Dr. Goldstein says. "On the other hand, it has its disadvantages - there's more risk, more debt, more commitment of your time, and no track record to market."

Buy existing practice

Some of those disadvantages are avoided when new doctors choose the third option: buying an existing practice.