Real Costs of Hiring a New Practitioner for Your Medical or Dental Practice

Has your practice begun to grow exponentially? Having a hard time scheduling all your patients? Thinking of an additional location?

If you are drowning in patient calls and your practice is experiencing forward momentum, it may seem like a no-brainer to hire another practitioner to share the load. Our business and financial advisors want to point out that there is a lot at stake, both financially and professionally. Some of the real costs of hiring are obvious, others not so much.

What’s Obvious:

• The need for a budget and new business model.
• There is a start-up cost and additional overhead that needs to be budgeted beyond salary and bonus, and recruiting fees. Think malpractice insurance, healthcare, benefits, training, credentialing, CME, additional medical and tech supplies and equipment.
• Salaries and bonuses are dictated by the marketplace, local competition, and driven by years of experience. In the case of a physician looking to hire, it might be easier (and less expensive) to recruit and retain a mid level provider. See our prior article here: https://www.fuoco.com/industries/healthcare/374--what-to-consider-if-you-are-considering-mid-level-non-physician-providers
• Beware of taking a loss directly by subsidizing or “eating” the cost yourself, or by sharing patients.
• The ideal scenario is to hire a practitioner that does not need to draw from the existing pool of patients to get started, but will be there to handle your overflow.
• Look at the new hire as an investment, they will eventually bring in enough revenue to cover costs, but be prepared to analyze revenue vs cost, you may have put in $250,000 upwards for the first year.
• Look to break even the first year, then to make a profit by the end of the second.

What’s Not So Obvious:

• Since you will no longer be a sole proprietor consider incorporating as a Professional Limited Liability Company (PLLC) and electing to be taxed as an S-Corp. It is more tax-efficient and in addition to saving you tax $$$, it will protect your business. See our prior article here: https://www.fuoco.com/resources/tax-alerts/530-small-business-structuring-for-tax-efficiency
• Don’t forget the buy/sell agreement when bringing on a partner. Have a financial plan in place for paying the purchase price when death, disability, retirement, or another event triggers the buy–sell agreement.
• Create an onboarding plan for the new hire that includes reporting and how to track performance and key metrics.
• You will need a marketing strategy for advertising and community outreach to spread the word about your new practitioner, and the unique skills and qualities they bring to the practice.
• Do your due diligence when hiring, if you don’t retain the clinician, it will cost you even more as you start the process all over again.


CONTACT US: Undoubtedly, bringing on a skilled and talented practitioner will help to ensure your medical or dental practice operates more efficiently, is increasingly profitable, and has happier employees as well as patients! Let our Fuoco Group and TFG Health Services accounting, tax and financial experts assist in setting you up for successful transition from sole proprietor. Call toll free 855-534-2727.
 

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The New York Real Estate Journal recently featured a "Ones To Watch" Spotlight, focusing on both up and coming professionals as well as industry veterans across all areas of real estate. Congratulations to Lou Fuoco CPA, CEPA, for being included in this prestigious group of “OTW” for 2019!
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