DISCLAIMER: I am not an attorney or a business consultant. I am a medical professional. Follow this advice at your own risk.
Starting a business is something you probably didn’t learn during clinical training. At least I didn’t. When I started my private practice I had no idea what I was doing (yes, I was very scared). I decided to search for “How To” articles to guide me but was discouraged when I didn’t find much on the topic. Through trial and error(s) I managed to start a successful private practice. Had I known then what I know now I would have done things differently. I hope this helps save you time. Below are my recommendations.
Step One: Big Picture Step
Ask yourself the following questions:
Where do I want to work in a big city, small town, rural area, or suburbs?
Do I want to work with a particular population?
What is my niche in Psychiatry? Is it therapy? Medication management? Consulting? Telemedicine? All of these?
As I am starting this journey, what am I going to do on the side for extra income while my practice grows?
Do I want to do private practice part time or full time?
Will I contract with insurance companies or accept cash only?
I highly recommend working part time and/or per diem somewhere a few days per week as you grow your practice. It will make life much less stressful financially and it will put less pressure on the growth of your practice. When it comes to question 6, there are a few things to consider. Accepting insurance means accepting insurance reimbursement rates.
As an example, let’s say you believe your expertise and level of education/experience justifies charging patients’ $500.00 for a 1.5 hour visit. In a cash practice, the rate is yours to determine and only patients who can afford to pay will receive your services. If you contract with insurance companies, they are unlikely to reimburse you $500.00. Instead, they may offer $200.00 for an hour visit.
So the question becomes, why would any physician want to accept insurance?
Contracting with insurance companies isn’t necessarily a bad thing. As an example, let’s say Michael’s Insurance Company is a popular insurance among people in your area. By contracting with Michael’s Insurance Company, you, the provider, are agreeing to providing services to patients with Michael’s Insurance at a set rate determined by Michael’s Insurance Company; this can be frustrating. The benefit of contracting with Michael’s Insurance Company is that the company will direct patients to you so you don’t have to worry about waiting for patients to discover you or hear about you. This means a more steady flow of referrals. But because the rates they reimburse are on the lower side, this also means seeing more patients to obtain your desired income.
Pros and Cons of Contracting with Insurance Companies
Stable Referral Source
Diverse Patient Population
Less Financial Pressures
Higher Volume Caseload