Third-prize winner in our 2001 writing contest

Going solo: My leap of faith paid off

The experts told him solo practice was undoable. But this young internist proved them wrong.

By Brian S. Jacobs, MD
Internist/Indianapolis

Going solo is impossible. It can't be done in the current environment."

I heard that message repeatedly from experts, consultants, residency advisers, and colleagues. Nevertheless, after completing my internal medicine residency in July 1999, I decided to hang out my shingle.

Like most of my fellow residents, I had been approached by recruiters for groups of various sizes. I was flattered by their attention, at first. But a trip around the country to evaluate practice opportunities convinced me that they were all more attractive on paper than in reality. No practice I saw had the right combination of qualities.

Granted, I had tough criteria: I wanted a practice that offered me clinical autonomy, the power to control the daily work flow, and a good business with potential for growth. Ultimately, I concluded that if I wanted such a practice, I would have to create it. I'd always been hardheaded, and if that meant trying to do the "impossible," so be it.

To make the leap of faith complete, I convinced my wife, Susan, a grade school teacher with no experience in business or medicine, to walk away from the chalkboard and become my office manager. Little did we know at the time that these choices would provide us with opportunities to learn not just about medicine and business, but about ourselves.

We didn't make our leap without a parachute of sorts: We spent more than a year planning and saving for it. I spent hours researching how to build a practice. I learned about the credentialing process, community demographics, medical office space design, and countless other things. I figured if I could learn the intricacies and implications of heart failure, I could learn how to evaluate a business lease, accept credit cards, and other business basics.

Susan and I had also been careful about living within our means during medical school and residency. We spent our vacations visiting friends or family instead of flying off to expensive resorts. For many years, I drove a 1977 Chevy. We did buy a house, but by using every spare dollar from my income and Susan's salary, we managed to pay off the mortgage soon after my residency.

Opening shop takes penny-pinching ingenuity

My first independent judgment was that we'd need far less start-up capital than the $150,000 most consultants and experts recommended. Indeed, we managed to set up shop for around $20,000—mostly because we questioned the basic assumptions about start-up costs. For example, by negotiating a seven-year lease instead of the usual three- or four-year deal, we saved about 30 percent on rent.

Our basic criterion for any office equipment purchase was return on investment: If it couldn't be used for a reimbursable service, we bought it cheap or got it free. Instead of a complex computer system and customized software that would have run several thousand dollars, we used an aging desktop computer with $300 worth of off-the-shelf medical management software. In more than two years now, we've never had a "system-down" day.

Rather than purchasing new furniture and medical equipment, we bought most of it used at local auctions, online auctions like eBay, and even garage sales. That's how we got a 12-station six-line phone system for $150, instead of the $1,000 it would have cost for a new system; and an electronic credit card machine for $50 instead of $400.

We asked local hospitals about equipment they might be retiring, and ended up with several exam tables in good condition. Our outlay: the cost of a rental truck, instead of $2,500 apiece for new tables, or $800 each for used ones. By similar methods, we acquired a treadmill, liquid nitrogen, and a pulmonary function testing apparatus.

Searching for such bargains required an expenditure of time—which we had—in place of money—which we didn't. For our troubles, we now have a well-equipped office that cost us less than 20 percent of what the experts had estimated.

We also decided that to make the practice profitable we'd have to keep our operating expenses far below average, particularly in the early years. Again, we did so by questioning the basic assumptions of practice economics. Although we needed someone at the office every day to man the phones, we hired a medical assistant for only three days a week at first.

Although every practice I'd visited during my residency had utilized convenient but expensive note-dictation systems, I've stuck to handwritten progress notes. Instead of paying $200 a month for a telephone answering service, we pay $5 a month for a simple pager. We also opted to clean and maintain the office ourselves. After all, the degree on my wall doesn't mean I'm incapable of taking out the trash or mopping the floor.

In an effort to supplement my practice income during the early months of our venture, I went door-to-door to offer my services at urgent care facilities, emergency departments, local businesses, hotels, and nursing homes. In doing so, I found several sources of extra income.

I did chart reviews for Medicare; I became designated by the Federal Aviation Administration to do pilot physicals; I worked shifts at urgent care centers; I became medical director of a local nursing home. None of these opportunities simply walked into my office. In fact, I walked into theirs.

To promote our new practice, I did some inexpensive advertising and direct-mail marketing, but that produced limited results. So instead, I gave community health lectures, spoke to service clubs, and met with local pharmacists and specialists who might be good sources of referrals.

Perhaps the most daunting challenge was billing for our services. The experts had told us that a new practice needed an experienced—and expensive—billing clerk. Because we couldn't afford one, Susan had to learn this arcane art, starting from zero.

I called some of the physicians I'd trained with during my residency, and asked if Susan could visit their offices to learn about billing. Several of them agreed, and Susan got a few hours of apprenticeship with experienced billing clerks. With that help, and her on-the-job training at our office, she eventually mastered the art.

After discovering that we could do things our way and succeed, we questioned other conventions of medical practice. To keep our practice as simple and as hassle-free as possible, we decided to avoid most battles with third-party payers. We simply prescribe the best treatment we know. If the insurer pays, okay. If not, it's also okay.

We run up against denials on less than 10 percent of claims. When that happens, we bill the patient and leave it up to him to argue with the insurer if he wants to be reimbursed. In general, it takes less time and energy to collect from patients than from insurers, and our collection rate from the patients is close to 95 percent.

A few of our patients weren't happy with this arrangement and left the practice. That was fine with us. If they didn't feel that our services were worth paying for, they were welcome to leave. Most stayed, deciding they were willing to pay more in exchange for the personal attention we provide.

We have never accepted—nor will we ever accept—any form of capitation. In fact, we've begun to question the need for a third-party payer standing between our patients and us. Our ultimate goal is the liberation of our practice from the insurance industry, even though the experts all tell us that's a potentially disastrous idea.

Although we're busier now, we've retained the option of same-day appointments whenever possible. When patients call the office, real people answer; there's no annoying telephone triage system. Clinically, my independent path has forced me to do most of my own diagnostic research. When I don't know something, I look it up—there's no one else to ask in a solo practice.

I do it on my own, my own way, in many other areas, too. For example, just because most primary care docs in my community don't do inpatient work doesn't mean I won't. I make a point of seeing my patients in the hospital regardless of why they were admitted. Similarly, just because other internists don't routinely do treadmill tests doesn't mean I shouldn't. As in all things, I weigh the data, then decide what to do.

The greatest challenge: a test of the soul

While our new practice brought many business and clinical challenges, the greatest test was of the soul. There were many days in the early months when the schedule was empty, and it seemed as though our main activity was writing checks. As those days wore on, Susan and I often glowered at the meager handful of charts in the rack.

Yes, there were definitely times when we considered giving up. But, when I sank into despair, Susan was there to pull me up. When she wavered, I did the same for her. Despite our occasional doubts, we both knew that our idea was sound and that the practice would eventually thrive—as it has.

The practice is more than two years old now, and while our schedule isn't full, we're certainly busy. I'm seeing 80 to 100 patients a week, and working 60 to 70 hours, including the time I spend on paperwork. Of course, I have the advantage of Susan's full-time service as an unpaid office manager. But we're doing pretty well for what's basically a mom-and-pop operation.

In our first five months in 1999, we barely broke even. In 2000, we grossed about $250,000 and netted $175,000, with expenses running $5,000 to $6,000 a month. Last year, our gross was up to $325,000 and we netted close to $250,000.

Two reasons for that impressive net is our constant focus on the bottom line and our careful watch on expenses. With a new practice, it's easy to spend lavishly because people are always trying to sell you fancy computer, dictation, and medical record-keeping systems, and other electronic gadgets. Sure, they may make things easier, but unlike lab equipment they don't bring in any money, so they don't help the bottom line. With most new equipment, my rule is: If we can't bill for it, we don't buy it.

While we're very pleased with our financial success, what we've accomplished has much more value than money. Most important, we've come to trust our own judgment and instincts rather than the experts' advice. Since we didn't know—or, more precisely, didn't believe—that what we were trying to achieve was impossible, we somehow managed to do it.

 

Brian Jacobs. Going solo: My leap of faith paid off. Medical Economics 2002;7:64.