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Physician loans and direct primary care practices

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Starting or expanding a direct care practice is an exciting prospect. Whether you are launching a completely new practice, converting an existing traditional practice to the direct care model, or expanding your current direct practice to accommodate more services and more patients, you will need capital to ensure the project progresses smoothly. If you are considering a loan for that capital, there are some considerations you’ll need to keep in mind before signing the paperwork.

As a direct care physician, your revenue depends on patient membership fees. The good news is you can prepare a predictable budget based on those monthly fees, rather than attempting to project potential insurance reimbursement fees. If you decide to pursue a loan for your startup or expansion, you will need to include calculations for repayment of that loan in your budget. If you decide to fund the startup or expansion from your existing revenue, you will also need to include that amount in your practice’s budget.

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Consider options that might reduce the costs involved in your practice startup or expansion before deciding whether to secure a loan. Funding needs could include equipment purchases, payroll, or securing a new facility.

  • Payroll: While payroll is a steady figure that must be met, you can review your staffing needs to ensure that you have not overstaffed your practice.
  • Equipment: Look at options for equipment such as purchasing used items or leasing instead of buying. For example, hospitals sometimes sell older, although still properly functioning, equipment as they invest in new technology.
  • Furniture: Office furniture can also be purchased at a deep discount from other medical practices or by shopping consignment stores. As long as your equipment and your furnishings work for your needs, they do not necessarily have to be new – or expensive.
  • Location: Review your practice location needs. While a brand-new building with extra space might be enticing, if you are in startup mode you may need to scale back your plans until you are more financially secure. Determine your goals for what your patient load should look like to run your practice efficiently, then look for a facility that you can afford and that meets those needs.

If you decide you do need a loan, you have some options. Your practice is considered to be a business so you can work with the Small Business Administration (SBA) on a more affordable loan than you might find with a traditional lender. The SBA offers competitive terms, counseling and education on running a business successfully, and unique benefits such as lower down payments, flexible overhead requirements, and no collateral needed for some loans.

Review your financial considerations before deciding to pursue a loan. After a close examination of your revenue and your expenses, you may realize you do not need to go deeper in debt to finance the startup or expansion of your direct care practice. However, if you do pursue a loan, check out your options realistically and work with a funding agency that will help you meet your needs and your patients’ needs.