Start It Up: Space & Equipment - The Right Stuff

About This Series
Have you been pondering striking out on your own, making the leap from employed associate to practice owner? Or are you just starting out in practice, and wondering if it’s worth going even deeper into debt to start your own venture rather than getting “a job”?

Whatever your situation, Physicians Practice is here to help with our comprehensive six-part guide to starting a medical practice. In addition to the pre-opening day planning advice you may have seen in other such guides, we’ll delve deeper into the key milestones you’ll need to meet for success long after you cut the ribbon.

Keeping overhead expenses in check is a must for all practices. But for startups, securing a space and stocking even the bare minimum of equipment is expensive. Let’s discuss how to plan for that big outlay.

First, understand that we’re not talking about your grandfather’s medical office. Modern practices must go well beyond the old model when planning space - no dim waiting rooms with old issues of Highlights scattered around, no cracked vinyl exam tables leaking stuffing, and definitely no hospital-green paint.

“I think it’s important - whether you’re in a new building or rehabbing an existing building - that you convey more of a hospitality presence rather than a medical presence,” says Todd Harshman, an architect with Noelker and Hull Associates, Inc., in Chambersburg, Pa. “You want an environment that’s not sterile, but warm and welcoming. People are looking for more of an experience,” he says, noting that patients now want “a full-service medical environment.”

Creating a space that exudes warmth - that shows you care - may be more important to patients than the perfect location or even your years of experience, Harshman argues. He says this feeling can often be accomplished through smart choices when it comes to color, materials, and lighting. “And it doesn’t have to be high-end teaks or mahoganies; it could be with average materials done in a unique, cost-effective way.”

Across the country in Bozeman, Mont., family practitioner Andrea Cady and her partners came to many of the same conclusions as they were outfitting their new practice two years ago. “We tried hard not to make it look too much like a medical office, using bright colors and more personalized decor with artwork that meant something to each of us,” she says. “Patients really seem to like it and feel comfortable.”

Bricks and mortar

Rather than renting space, Cady took the unusual step of buying and renovating a building to house her first practice. Although she acknowledges that this complicated the startup process, she and her partners are glad they took the leap.

Buying a space to house that snazzy first practice may not even be on your list of possibilities, but the rent-or-own question isn’t as straightforward as you might think. As with a home, purchasing an office is often a good long-term investment - a relatively sure way to build value through market appreciation. Buying right off the bat can be risky because your holding period, the amount of time you’ll stay in that spot, is only a guess even for established practices. A brand-new business is even less certain.

There are tax pluses and minuses on both sides, too. Rent is usually fully deductible as a business expense, whereas ownership deductions may have to be taken over a number of years. However, mortgage interest and property taxes on space you own may be deductible as well.

Many physicians also forget to factor in key lease-related expenses. Your rent depends on expected things like square footage and the number of exam rooms you want, but fees and other monthly costs can pile up fast. “Is the lease going to be a triple-net, where you’re responsible for utilities and insurance and taxes, or will it be a comprehensive lease, where you just pay a flat amount and everything’s going to be taken care of for you?” asks CPA Jerry L. Love.

With a triple-net arrangement, you’re more likely to be charged for common-area maintenance on top of the base rent; your landlord may also require you to take out repair contracts on major systems like plumbing or heating. Rent will probably be higher with a comprehensive lease, but it’s covering more than just the shell you’re occupying. Either way, be sure you thoroughly understand what’s included in the price per square foot.

It can be tough to even know what questions to ask if you’ve only been an employee. Gather as much detail as possible before signing anything, advises Love: “You have to actually know the terms of your lease and whether you’re going to be responsible for things like real-estate taxes.” Whether you’re leasing or buying, enlist the help of a commercial real-estate broker who understands private medical practice and can provide advice on local zoning requirements, accessibility laws, and so on.

Well-laid plans

Before you can figure out how much space you need, you’ll have to figure out how you practice - not your idealized concept of a great work flow or a consultant’s recommendation, but how you really work. If you’re a delegating machine, for instance, you’ll be seeing more patients per hour and will need more exam rooms. Whatever your style, your goal should be an office in which you never have to wait for a patient, exam space, piece of equipment, or test result. To achieve this, all of the practice’s systems will have to be set up around your style, rather than trying to change your style to work with the office layout.

Too often, precious space is wasted through poor planning, but remembering a few layout basics can help:

• Devote as little space as possible to the waiting room. Your waiting room is nonrevenue-producing square footage. Can other areas in the practice serve this function, perhaps using nooks near equipment or a nurses’ station as secondary waiting areas (provided, of course, that the privacy of other patients won’t be compromised)? What if - gasp - you did away with the waiting room altogether by having patients escorted to exam rooms immediately upon arrival?

• The checkout area is another sacred cow you might want to butcher. Are you able to eliminate it through a smart, thorough preregistration protocol? People naturally want to leave a building the same way they came in. If you can make the exit path clear - with memorable decoration or with color - staff won’t have to spend time guiding patients.

• Keep storage areas to a minimum. Storage areas represent still more wasted space. A simple system for triggering reorders should eliminate last-minute scrambles for cotton swabs or gloves. (For an in-depth look at smart supply stocking solutions, read “Controlling Inventory.”) Remember, too, that many standard cabinets are 24” deep, but a space-saving 18” will usually do.

• Do you really need an office? How often would that room sit empty, not adding to the bottom line? Can you conduct patient counseling in the exam room and answer correspondence or make phone calls in a smaller alcove next to the clinical areas?

Here are some exam-room specs to remember:

• Make every exam room identical, even if that makes it impossible to have plumbing in back-to-back rooms. Back-to-back plumbing is perceived as a way to save money, but it can result in needless (and expensive) disorientation as staff and physicians move through mirror-image rooms. Stock each room with exactly the same supplies, too.

• Given an efficient layout, a standard 8’ x 10’ size room is usually sufficient. Tailor that layout - of tables, writing surfaces, and equipment - so it suits a right-handed work flow (unless, of course, you practice left-handed) and obviates the need for the physician or clinical staff to take even one extra step during a patient visit.

• Make sure you’ll be able to look patients in the eye as you document, and try to angle tables away from the door for privacy.

When building or undertaking significant renovations in all but the smallest, most basic of offices, the average 8 percent or 9 percent of overall construction costs you’d pay for architectural fees could translate into big savings. Provided that the firm you engage truly understands medical practice work flows, you’ll avoid many wasted minutes and expenditures over the years.

Paul Yañez, an architect with Medical Space Planners, a Carpenteria, Calif. firm, says his job is to guide physicians and keep them from overreaching. “We really kind of hold their hands and kind of spank them a little bit,” he laughs. The right architect, says Yañez, will be intimately familiar with every footstep a physician in a given specialty takes during the course of a patient encounter.

His firm often gets requests to rework plans that other architects, without benefit of specific medical-office experience, initially developed. In one case, he says, “The architect put all of the patient files way in a back room. That’s not going to work - the charts have to be up front where the patients are!”

Still, most practices don’t take on the expense of consulting with an architect about their first office space. That’s a shame: The building and design professions have plenty of insight to offer. Cady says her management consultant recommended a “wonderful” medical architect, who developed practical plans for their oddly shaped building. The practice is pleased with the design. But even Cady notes some oversights: “There are a few things we could have done differently - more work space for nurses, for one thing.”

“Most physician owners miss a piece of staff input,” confirms Harshman. “The most successful practices we’ve helped have all had [someone who could act as] a clinical care planner who understands the patient’s side of the experience and is able to give input as far as how the space should actually work. … You need a secondary look at how the facility’s run.”

As with the other professionals who will help your practice get off the ground, any care planners, designers, architects, and contractors you choose should be able to supply positive references in your specialty. You can even ask to see costs from similar projects. And when seeking estimates, get line-item prices rather than a global estimate. “Many people in the business world view doctors as a pot of cash,” notes Love. “So you need to have good advisers and have someone with your best interests at heart.”

Technology and more

After the office space itself, technology now represents one of the biggest chunks of a practice’s startup capital. Starting out without an EMR is not necessarily a mistake, but buying the wrong one is. Still, many technology consultants will tell you that you can make nearly any software system work - it’s all a matter of process, the amount of time and effort you want to (and can) devote to tweaks and refinements.

Price really shouldn’t be among the top factors you consider when evaluating an EMR - or any software system, for that matter. Just like the floor plan, any software purchases should dovetail with your preferred style of practice. Evaluate choices by stepping through the system as if you’re seeing your typical patient. With any major purchase of software or other equipment, both call and visit vendor-supplied references whenever possible, and conduct the same lease-or-buy analysis you did for your building.

Think about how the equipment you buy will work with - or stand in for - the staff you envision. Some “micropractices” choose to start and stay with low, or even nonexistent, staffing levels. This is made easier by technology aides that help patients do some of the work for you - online appointment scheduling and downloadable intake forms, for instance.

Companies like Atlas Business Solutions and Eppointments offer software for patient scheduling, and Atlas also has a number of HR-related programs that can help with tasks like performance reviews, benefits tracking, and handbook-writing. These types of products can be particularly useful in areas in which you don’t have formal training or previous experience.

Consider, too, how your use of technology trickles down to affect other purchasing habits. Practices with a large patient panel - those in specialties where most patients require infrequent appointments, or in areas with a highly mobile population - will have a high number of charts and therefore stand to save more when they don’t buy paper folders, labels, and so forth.

When you’re seeking savings on smaller purchases, there’s always eBay and other sites like WeBidz, but lots of practices get bogged down, even downright obsessed with, the auction process - finding that rock-bottom price, waiting to pounce, and crushing all other contenders for the prize. They end up spending more time, and often more money, than that roll of exam-table paper really warrants.

Also beware of conducting lengthy searches for the lowest price on pens and other cheap, disposable office supplies. Although it’s true that everything is negotiable - even some catalogue prices - and that incidental supplies are a great area in which to trim the fat from your operating costs, you have to factor in the amount of time you spend on such things. If the potential cost savings is less than the value of the time you spend in the negotiation or search, you lose.

Sometimes it makes more sense to buy all supplies in a category (paper goods, test kits) from a single source. You’ll hopefully increase both your leverage and convenience, and possibly save on shipping. Also, recognize the time costs involved with managing relationships with a stable of different vendors, and aim to balance price with convenience.

Cady hit upon a simple, sound plan. In the beginning, she says, “The three doctors brainstormed a list of everything we thought we’d need, then used the startup practice supply lists provided by the AMA and AAFP to come up with what we needed. We tried not to over- or under-buy, and did pretty well.” Today, she’s happy to report, “We have an experienced MA now who does the ordering each month, and she stays on top of things.”

Ultimately, “What you want to do is optimize the space for the rate at which you can see patients … making sure that the flow works throughout the space,” says Harshman. “It’s really primary to the business model. There is no key equipment or device - it’s really about organization of space.”

Laurie Hyland Robertson, BA, is a senior editor with Physicians Practice. She has been in the medical publishing field for 10 years, working editorially on both clinical and business-oriented healthcare topics. She can be reached at LCHRobertson@physicianspractice.com.

This article originally appeared in the May 2008 issue of Physicians Practice.