Use your patients as collateral

Great idea! Start out as an independent contractor and get to a certain level of patients per month. Then use this income as a base of income for “collateral” when you get your full practice loan.

Case in point: Doctor worked as IC for almost 2 years, built up a base of collections of around $8000 a month. That’s almost $100,000! And she did it working 20 hours a week. She can use that amount to show the bank how much she can bring in as income. Should be very helpful for her to put on her cash flow to show her profitability. It also should make working capital needs very low.

This assumes, of course, that you have set up your practice as a true independent contractor, paying rent and being able to take your patients with you when you leave.

In another situation, a new doctor was talking to a second new doctor about an IC situation. The second doctor (Sally) was renting space in the office of the first doctor (Gail). In this case, I suggested that Sally pay rent based on her percentage use of the space, the time of a front office person, and the use of x-ray facilities and a billing person. This will help Gail recover some of her costs, and when Sally is ready to go out on her own in a year or so, Gail can expand into that space.

Note again that these situations are set up on the assumption that the IC is subletting space and paying rent. Try it - it can help you if you’re just starting out or you want another doctor to share space with.

We’re working on the Principle of Abundance here - there are plenty of patients to go around.

For more information on this subject, get Planning for Practice Success.

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