Want to Go Solo? Some Advice to Help Cinch Success
An innovative annual meeting program teaches the newest members of the psychiatric profession how to launch a successful private practice.
by Jim Rosack
From Psychiatric News, 2001

Surprisingly, one of the biggest risks for failure in launching a successful private practice is the attitude that "if I'm good, then I'll succeed."

That was just the one of many valuable pieces of advice that William Callahan Jr., M.D. and Keith Young, M.D., shared in a two-part symposium at APA's 2001 annual meeting in Chicago.

Both presenters are successful early career psychiatrists (ECPs) themselves. Callahan is now in his sixth year of private practice and recently became president of the Orange County Psychiatric Society. Young is in his fifth year of private practice and is one of the APA's trustees at large.

The great need for members-in-training (MITs) to have solid information and advice on starting a private practice was evidenced by the fact that the symposium was presented to a standing-room-only crowd.

Attracting New Patients

While having a confident attitude when starting out is necessary, explained Callahan, "It's not sufficient." In addition to successfully treating patients, he advised, a psychiatrist needs to pay a significant amount of attention to attracting new patients into their young practice; otherwise, they will not succeed.

Marketing plays a key role in attracting new patients. Young added that there are several key concepts to marketing a new practice. New ECPs must define the patient population they wish to attract, define what is unique about themselves and their practices, and remember that all referrals are not created equal. Young explained that often new psychiatrists are referred the patients whom are the most difficult to treat and who may have little or no ability to pay. Therefore, diversity of referrals protects the freedom of new ECPs and their practice.

Nuts and Bolts

In addition to marketing, Callahan and Young covered, in detail, many of the "nuts and bolts" of setting up a new practice. Issues such as office space and location, basic small-business principles, streamlining a practice, and basic principles of financial management were explored.

Also covered were issues regarding coding and insurance billing. Practice risk management was covered with input from Professional Risk Management Services (PRMS), the administrator of APA's professional liability insurance program.

Callahan stressed that in determining your office location and setup, there are several key factors to consider. For patients who are not familiar with psychiatry, location is a primary concern, with surveys having shown that most people will travel only about six miles to see a doctor. For those familiar with the specialty, the three most important factors in choosing which doctor to see are gender, location, and what type of patients the psychiatrist sees, in that order.

It is important to remember also, added Young, that in many areas people have the impression that "the nicer the office, the better the doctor." This is especially true in larger, urban areas.

Wherever you choose to locate, make sure that your office is soundproof, not only to ensure that sessions are not interrupted by extraneous noises, but also as a point of patient confidentiality, advised Young. Most regular office buildings, said Callahan, aren't soundproofed, and that can get you in trouble. Many medical office buildings do have extra soundproofing already built in, but that makes their space more expensive to lease.

Both Callahan and Young stressed the importance of good small-business principles as keys to success. Generating income, for example, relies on setting appropriate professional fees. If you're too expensive, you run the risk of pricing yourself out of the market. If you are too cheap, some may think you're not good enough to charge what everyone else does. Arriving at an appropriate fee schedule can be challenging, however, because of antitrust regulations that forbid price fixing.

Ask for Help

Most ECPs need help from accountants or attorneys with legal documents like multiyear office leases and managed care contracts. But keep in mind, cautioned Young, that these experts are expensive. Young pointed out that ECPs can also get help from their district branch on these items. Often, more senior members will be willing to give you advice or look over a contract.

As an ECP starting a new practice, both Callahan and Young stressed the importance of understanding that you will be generating your own income, so you will need to pay all of your own taxes. Federal law requires taxes to be paid quarterly, including federal income tax, self-employment taxes (in lieu of Social Security taxes), and Medicare taxes. If not paid each quarter, the ECP can end up with substantial fees and penalties. Neglecting tax liability has hurt many new physicians, including both Callahan and Young.

"Most of all," Callahan told Psychiatric News, "you have to be flexible, innovative. And you have to learn to be visible. Psychiatrists are trained to do things one on one behind closed doors. It can be very effective therapy, but it's not very effective advertising."

Both Callahan and Young strongly advocated that members-in-training join and become active in their local district branches, using the resources that are available to them. They suggested that district branch involvement is an excellent way to become known in the local community.

In addition, doing service and academic work is effective advertising. Callahan said he does not have time for an official faculty appointment, but he does volunteer in the residency program at the University of California at Irvine. In addition, he is a volunteer in local community groups.

The print and broadcast media are excellent advertising vehicles. And, Young added, the cost is free if you become known as a resource for the media. "Then, as they portray you as the expert, patients just start showing up."

"If I had to narrow it down," Callahan later told Psychiatric News, "the most important factors for success would be high visibility, addressing how patients are going to get through your door, and avoid getting stale. Get therapy for yourself, make sure you have supervision, and keep learning and evolving."