Financing a Private Medical Practice at the Speed of Innovation
Bankers Healthcare Group
I'm a doctor, but I'm also an entrepreneur. I am happiest when I'm self-employed, and believe the best path to helping people is facilitated by financial and professional independence.
As an osteopath and wound-care specialist with an independent practice, I provide personal attention to my patients without the bureaucracy of a hospital or a larger healthcare group. I know how hospitals work. I spent most of my medical career in large institutions, and still work part-time at a hospital wound-care clinic.
I like the challenge of medicine and enjoy the results of my work. At the hospital wound-care clinic, my impact is immediate. A patient comes in, I clean up the wound, and I move on to the next person.
In my private wound-care practice, the payoff takes longer. Mr. or Mrs. Smith comes in, and I help them heal over several months. As an osteopath, I take an even longer-term approach. DOs—that's Doctors of Osteopathy—are family doctors who take a whole-person approach to treatment and care. We go to medical school like other doctors, but receive extra training in the musculoskeletal system. We also focus on prevention, and how lifestyle and environment affect our patients' health.
Running a private practice takes money and hard work. I know the value of both. I started medical school when I was 21. I took a break and did a lot of manual labor. I worked on boats out of Boston harbor and as a hydrologist in a coal mine. I went back to school and completed my residency at the age of 29, and have been practicing medicine since 1993.
Don't get me wrong—I earn a very comfortable living as a physician, but I also run a business. This requires me to invest in day-to-day operations, facilities and equipment, and my own continuing education. I am also responsible for growing my business. This means keeping an eye on present-day costs while planning for the future.
Dealing with Business Expenses the Smart Way
Recently, I was hit with a triple whammy of expenses. I needed to buy new billing software for the contractor who handles my accounts. I also had a significant tax bill because I am currently in the 43% bracket. Finally, I had some educational expenses.
Ultimately, I could have handled these expenses with the money I'm making. They would have strained my finances a little, but they were well within my means. Instead, I chose to take out a working capital loan from (BHG)—a financial services company for licensed medical professionals.
Consolidating Debt and Building Corporate Credit
BHG helps me keep things simple. With my business loan, I was able to consolidate my debt and pay off my major expenses right away. Now, I only have one payment to deal with instead of three. But there's a bigger reason for opting for a loan instead of paying for everything out of my pocket: I'm building my corporate credit.
Although I've been a doctor since the late 1990s, my private practice is only three years old. If I want to expand my activities and grow my business, I don't have the financial resources of a hospital or of a medical group with dozens or hundreds of doctors. This is why I need to build my corporate credit.
I don't have bad debt. In fact, my practice had no debt at all. This meant if I ever needed money to expand in the future, lenders would have no corporate credit history for my practice. They would have no way of assessing the risk of lending to me.
This works a lot like personal credit. When you get your first credit card, it has a very low credit limit. As you continue to use it, and prove to the bank that you can keep up with payments, your credit limit rises. You can then go out and get more credit cards, and eventually a mortgage to buy your first home.
A while back, I got a mailing from BHG. I held on to it because I figured I might need it one day. I can live without a loan right now, but what happens in three or four years if I don't have a corporate credit history?
I called up BHG and they got back to me right away. I set up a loan at the lower end of the scale. BHG provides commercial loans from as low as $20,000 and up to $500,000. The minimum loan period is two years. You can pay it all off in two years, or you can go for the maximum period, which is 10 years.
I wanted to pay off this loan as quickly as possible in order to establish myself as a reliable corporate borrower. BHG worked with me on a repayment schedule after I showed I could pay off $40,000 plus interest and fees faster than what they offered. This was great because then I could ask for the next $100,000 sooner. I could even borrow on the initial loan if I proved to be a good credit risk and needed more cash.
Funding that Works at Your Speed
Building up credit is only half of what makes BHG such an attractive proposition to an independent medical practice like mine. The other ingredient is speed.
If you've ever dealt with a bank, you know how long a business loan can take. We're talking a couple of months—45 days at the very least. You don't always have the luxury of time when you're running a medical practice. Can you imagine a group of doctors who are dealing with an emergency repair that isn't covered by their building insurance? They have to meet payroll, they have to pay for supplies, and they have to keep the roof from caving in on them. They can't wait for weeks while a bank approves a loan.
When I first called BHG, they got back to me right away. I talked to a team of people, and went through a quick but rigorous approval process. The loan was secured and the money was in my hands within three or four days. They even sent an agent to take pictures of me and verify my identity. That way, we were able to do everything else over the phone and online.
Within a matter of days, I was well on my way to establishing my corporate credit. I also had a bit of breathing room. My practice's immediate debt was settled and I was left with manageable payments. This meant staying on budget and not having to worry about a cash crunch in case of emergency.
Thanks to my loan from BHG, I can continue to build my practice without a hitch in my step. Here's a very plausible scenario for you: Two years down the line, I decide to buy a building. Let's say it's a three-story commercial property with 20 or 30 offices, and I want to use part of the first floor for my practice, and rent the rest out. I'd need $2 million to $3 million to pull it off, but I don't have that kind of money, neither does my practice.
To sweeten the deal, let's say the building is selling for half its market value. It's a bit of a dream, but what can I say? I'm a dreamer. There's only one catch. I have to close the sale in ten days. There's no way I could finance such a purchase with a conventional bank loan. But I could definitely do it with money from BHG.
Avoiding Financial Roadblocks in the Future
When you run a private medical practice—or any business for that matter—you need to move fast. Progress and innovation won't slow down to let you catch up. You have to upgrade your equipment, your facilities, and your skills all the time. If you don't, you will fail your patients and your customers, and someone else will take your place.
The biggest roadblock to staying current and growing your business is often money. All the skill and talent in the world won't help you if you don't have easy access to financing.
The first thing you can do to ensure a bright future for your business is to establish your corporate credit. If you prove yourself to be a low-risk borrower, financial institutions will front you the cash you need to move your business forward. But what's the point of having excellent credit if you can't get the money you need on time?
If you're a healthcare professional and you want to take your practice to the next level, you need a financial partner who moves at your speed. BHG moves at the speed of innovation.