Opening a New Location

Success is a funny thing. While the goal of any practitioner is to expand and grow, you know what they say: “Mo' money, mo' problems.”

We've been through this process with quite a few clients, most recently with a client growing from their single location, multi-practitioner office in Miami to a second location 45 minutes north in Ft. Lauderdale. The issues that come with expansion are good problems to have, because in the long run the payoff will be well worth the initial headache. Nevertheless, there's an initial headache.

considerations before you expand

Credentialing your practitioners takes time. If you have a surgical center, in some states your physician must have privileges within 25 or 30 minutes of an accredited hospital. However, it's likely that your original Office A is far enough away from Office B that you may need to take on a whole separate set of practitioner privileges. Be sure to get your paperwork in place well before you expect to see patients. Credentialing committees at your local hospitals meet on a monthly or quarterly basis, and you may miss the deadline and have to wait until the next meeting to get approved. This can and will slow down your process.

You may need a whole new set of patients.While your original practice may be bursting at the seams, your current patient base may or may not flow over into an additional location. If the new location is more than 20-25 minutes away, consider that current patients may not want to commute in order to obtain a more convenient appointment time. (Of course, you could be pleasantly surprised! Still, it's always better to plan ahead.)

Consider a whole new patient demographic.You may have found a niche with tattoo removal in a generally middle class area originally, but have a new opportunity in an area with a higher income bracket that's seeking an entirely different type of procedure. Either way, you'll need to learn the nuances that come with your new location. How you answer the phone may be different, especially if there's a new language issue. The services in high demand might vary. Take stock of the patient demographics for each office before you jump to conclusions about how to relate to them.

Brand your practice in a new area. You may be well-known in your current town, but that notoriety may not carry over to your second spot. Plan on spending more money to market to a new patient base for the second location, including a different set of city-oriented glossy print media, a new chamber of commerce, new community collaborations, and even a potential new set of TV, radio and print news channels, depending on the city you're in. Some practices choose to create entirely new websites if a second location is far enough away from its original office to make best use of local SEO. Use tracking numbers for all of your marketing efforts for both locations so you're able to see what's working and what's not. Marketing dollars that aren't bringing in patients aren't well spent.

Corporate Structure. Is the new location a separate entity, or under the same corporate structure as your initial business entity? For example, PA (professional association), PC (professional corporation) Sub-S (Subchapter-S) corporation or (P)LLC (professional-limited liability corporation), are all types of corporations designed with different tax and legal liabilities in mind. These are initially set up with the Department of State in the state where you incorporate and the IRS, (Internal Revenue Service); the tax consequences are determined by the IRS. Always seek the advice of your accountant and legal advisors to determine the proper corporate setup.

Patient software and EMR/EHR systems issues may arise. Some systems are either server or cloud based, some systems have a closed API, which means that they do not necessarily interface with other practice software, and still other systems charge extra for service and software for an additional location, etc. Be sure to determine if additional licenses are required for aestheticians and/or mid-level providers, such as PAs or NPs. Set up a time to discuss these items with your software vendor, asking about all of the details that come with adding an additional location. Be sure to find out if the two locations can share patient records, as well as if you can schedule an appointment from Office A to Office B.

Create an entirely new budget (and vendor accounts) for the new location.Everything from how you combine (or separate) vendor accounts, bank accounts, and more will have to be answered. Each vendor does things differently, so check with all of your vendors to see if you need new representatives for consumables, sales and training. Meet with your banker. Set a time to review budgets and accounting codes with your financial team. Be sure you're tracking individual expenses and revenue so you can measure the success and growth of each individual office.

Outfit your new office for your current needs. If the office wasn't already set up as a medical practice, you'll likely have quite a bit of construction to consider. We always recommend working with an experienced professional to help you think about the things that quite honestly, you just won't think about. Be certain to properly negotiate your new lease if you are renting, inclusive of who is responsible for what. This may include CAM (common area maintenance), general maintenance and repairs, taxes, etc. It is not uncommon to negotiate a dollar amount for a buildout and construction to fit the needs of your new office. This, of course, must be pre-negotiated and entered into the new lease agreement.

Exciting Times

Opening a new location is indeed an exciting time! While it can be overwhelming, knowing what to look for ahead of time makes the entire process easier. Seeking the advice of professionals and medical practice consultants is a worthwhile investment that can save you a lot of money and potential legal and accounting nightmares in the long run.

Jay A. Shorr BA, MBM-C, CAC I-VII is the founder and managing partner of The Best Medical Business Solutions, assisting medical practices with the operational, financial and administrative health of their business. He is also a professional motivational speaker, an advisor to the Certified Aesthetic Consultant program and a certified medical business manager from Florida Atlantic University.

Mara Shorr serves as the Vice President of Marketing and Business Development for The Best Medical Business Solutions, a Florida-based company helping aesthetic and cosmetic medical practices and spas across the country with the financial, operational and administrative health of their business. She is a Level II-VII Certified Aesthetic Consultant, as well as a national speaker and writer, utilizing knowledge and experience to help clients achieve their potential.

They can be reached at info@thebestmbs.com.