Doctors Guide To Starting a Practice  

Part 4: Location and Premises

Picking the right location is a big deal when you’re starting a new practice. You’ll want to think about things like how convenient the area is for you and your connections, the type of patients you want to attract, and whether there’s enough space available. You’ll also need to decide whether you want to buy, lease, or even build your own space. Another thing to consider is whether you want to share the space with other professionals. Two important tips: Look for areas with less competition, and be confident in your ability to attract new patients!

The Benefits of Setting Up Practice in Less Competitive Areas

This advice works for both GPs and specialists. For example, a d chose to set up in a rural area instead of the city, and now he’s the leading dentist  there, seeing more patients and earning higher fees than his city peers. 

For GPs, with the nationwide shortage, it’s smarter to avoid crowded areas. Rural practices can be highly profitable, with some GPs earning over $500,000 annually thanks to lower competition and operating costs. Even less fashionable city suburbs, can be profitable, with lower costs and moderate bulk billing pressure. The outer suburbs offer families, less competition, and decent earnings.

Steer clear of pricey suburbs where tons of GPs are already practicing. The competition is tough, and it’s hard to make a name for yourself. A smarter move is to look just a few kilometers away, where the dynamics are a bit more open and you can stand out.

Trust Your Skills

You didn’t become a practitioner by chance—you’ve got the skills and the dedication to make it. Believe in yourself. If you provide great service, patients will notice, and your practice will quickly get busier. In fact, many practitioners look back at the quieter days after their first year with a bit of nostalgia, remembering when they weren’t constantly on the go.

There’s a shortage of GPs and plenty of patients, so attracting people isn’t the hard part—it’s finding patients who appreciate your expertise and are willing to pay for it. The bottom line is that most practitioners are busy, but often by choice.

If you’re thinking about setting up near an existing practice, be careful. It’s easy to get caught up in the excitement, but direct competition can be tricky. Instead, think about opening your practice within 5 kilometers away. There’s no need to share your plans with patients right away—let them rediscover you over time. By then, you’ll likely have enough new patients that it won’t matter if some choose not to follow you.

What to Consider When Choosing the Area for Your Practice

Once you've chosen the right suburb or area, there are other important things to think about:

• Who else practices in the area?
• What’s their experience, and what types of practices do they run?
• What services do they offer, and how busy are they?
• How long have they been established?
• Does it make sense to join them, or is it better to go solo?

Consider the patient-to-practitioner ratio and the fees you can charge. If nearby practices aren’t doing well, ask yourself why. If they’re struggling to attract patients, what makes you think it will be any different for you? Take caution and learn from their mistakes.

Also, think about whether the area fits your lifestyle. If it's far from home, ask yourself if it's somewhere you’d want to live long-term, especially for your family. Consider things like job opportunities for your partner, schools, and local amenities. Your family’s lifestyle matters just as much as your career.

For many, access to good schools, especially private secondary schools, is a big factor. If you're eyeing a rural area, make sure there are schools for your kids, especially for high school, and that they're within a reasonable commute.

Is a City or Main Road Location Worth the Extra Cost?

City practices tend to have fewer home visits and after-hours work, which many find appealing. However, they can miss out on building strong patient loyalty, which might impact practice incentive payments and other benefits. The 9-5 routine and convenience of public transport are definite perks, though.

That said, we’re not fans of practices located in large shopping centers. While you get plenty of foot traffic, shopping center leases usually favor the landlord, leaving doctors with little control over terms and facing high rent.

In our opinion, it’s often better to set up just across the road from a big shopping center. This way, patients can park for free, and you avoid the steep rent and parking fees that come with being inside the center.

Main road locations are often given more credit than they deserve. A place just around the corner can work just as well. Most practitioners don’t rely on passing traffic for clients, so there’s no need to pay extra for something you don’t really need. If the cost is similar, a main road spot might be worth considering, but if the price is too high, keep searching for a quieter, more affordable location nearby.

Premises

After deciding on a location, the next step is choosing the right premises. Key factors to consider include:

1. General Presentation: The aesthetic appeal of the building matters. A pleasant environment benefits you, your staff, and your patients. Attractive premises help with staff retention and patient comfort. A welcoming reception area, a friendly receptionist, and amenities like air conditioning, modern reading material, and a play area for kids (preferably soundproofed) make a difference.
   
2. Security: Ensure proper entry control, emergency alarms, and fireproof storage. Secure storage for patient files is essential.
   
3. Ambulance Access: Make sure the premises are accessible to ambulances when necessary.
   
4. Privacy and Soundproofing: Patients value privacy, and soundproofing in consulting rooms is important.
   
5. Natural Light: All consulting rooms should have adequate natural light for a pleasant working environment.
   
6. Office Space: Sufficient office space is a must for both you and your staff.
   
7. Lift Access: In expensive areas, ensure lift access to upper floors, which is now more affordable than it used to be.
   
8. Smart Wiring: Modern, efficient wiring systems are important for technology and future needs.

Should You Buy or Renting?

Deciding whether to buy or rent your practice space depends on your situation. Here’s a quick breakdown to help guide you.

Generally, buying (or building) is a good choice if the property fits your needs and isn’t too expensive. Commercial property usually offers strong returns, and owning can improve your practice’s financials and working environment. Some medical buildings can even be converted to residential use, which can be an added bonus. However, larger, purpose-built medical centers carry more risk.

Big medical centers are attractive to investors because they provide steady rental income, though they tend to have lower rental yields. This can mean good long-term value for owners, with both rental income and potential capital gains. Many practitioners have built wealth through property ownership.

On the other hand, renting might make more sense from a cash flow perspective. Renting allows access to more space with lower upfront costs, leaving you with more capital to grow your business. Plus, you can move at the end of the lease if your practice needs to change.

Renting does have drawbacks, like lack of long-term security, potential rent increases, and reliance on the landlord for maintenance. You also miss out on capital gains. However, you can invest in property separately from your practice to avoid tying up capital in an asset that might not perform well.

Ultimately, whether buying or renting is best for you depends on your unique situation. Take time to weigh the options carefully.

Want to learn more?

Please click on the links below to view our 4 part series on "Doctors Guide To Starting a Practice"

Part 1 : First Things First 
Part 2: To Buy or Not to Buy 
Part 3: How to Buy a Practice
Part 4: Location and Premises 

Chris Tolevsky has extensive experience in the medical and allied health fields, with in-depth knowledge of both general and specialist practices.  He provides expert guidance on tax strategies, and building and protecting wealth focusing on individual practitioners and their practices. If you’re interested in discussing how we can help you grow your business or professional practice or optimize your financial strategy, please feel free to reach out for a complimentary consultation by clicking on the box to the right of the screen.

Disclaimer: This article contains general information only . It is not designed to be a substitute for professional advice and does not take into account your individual circumstances, so please check with us before implementing this strategy to make sure it is suitable