OPENING A NEW CLINIC: TO BUY OR TO RENT??

In this world, a correct timing is everything, and doctors starting a new medical practice are no exception. Whether one is are opening his first clinic following graduation, launching one’s own practice after working as an employee in a hospital, or relocating to a new area, it pays to look before one leaps.

To decide whether it would be best to buy or rent one’s clinic space, it is important to assess where one is at the particular moment in his career, how long one plans to remain in the area where he is starting his practice, and to review one’s personal and professional debt and financial goals.

If one is planning to purchase property to start a clinic, one should focus on reducing other liabilities such as other personal debt before securing a loan for the clinic. In addition, before committing to a rent agreement, one should review his short-term and long-term financial goals and create a roadmap to achieve them. This is because along with loan repayments, there needs to be a plan in place to meet one’s goals of creating education funds for their children and a retirement fund for themselves. Some younger doctors are able to purchase property early in their careers because they continue to live in their parents’ home when they start practising, allowing them to save more of their income while accumulating less debt.

Doctors who launch a medical practice in a metropolitan city may be shocked by the high cost of both buying as well as getting a property on rent. While many doctors would prefer the investment of buying property to open their clinic, it may not always be feasible, as from a financial point of view, buying property to open a clinic right at the start of one’s career is not very cost effective. A few doctors might also be fortunate enough to have their either or both parents as doctors. So they can also move their practice into the existing facility.

Doctors might also consider an unorthodox option, such as launching their practice in a “polyclinic.” A polyclinic is an office with multiple rooms shared by several doctors, practicing in a particular time slot. One doctor may occupy a consultation room for a few hours. Then another doctor, specializing in some other area would see his patients in the next time slot. This also allows for a doctor to visit a number of places, thus increasing his own practice as well. This is emerging as a trend in most of the metropolitan cities, where acquiring space for oneself is so expensive.

A polyclinic arrangement creates an informal group practice arrangement. Advantages of this structure also include faster and more convenient specialist consultations, which improves patient care. Doctors also share staff and receptionist, which helps reduce operational costs.

Most doctors look for space to buy or rent through friends, patients, and relatives. It is very tempting to cut corners to save money when one is starting his practice. However, this often turns out to be a penny-wise, pound-foolish approach. Whether one decides to buy or rent clinic space, it is always better to find a professional real estate firm to help with the search. The added expense would always be worth the investment.

Landlords are, more often than not, fickle-minded and many times, when they know that the tenant is doing well professionally, are not averse to arbitrarily increasing the rent, with an attitude “accept the new terms or go”. Although there are regulations for lease transactions, addressing a grievance with a property owner still can be a long, drawn out process. If one decides to pursue a leasing arrangement, real estate professionals have relationships with building owners who would tend to honor contract terms.

If one plans to open a clinic in a residential complex, permission of the local residents needs to be obtained. The management committee that governs the housing society may be reluctant to give this permission because the local municipality would then treat the building as a commercial premises and increase the taxes. These taxes are charged directly to the societies, and therefore the cost has to be shared by all of the residents. Moreover, if the management committee changes, the new governing body may reverse the permission that one had received, and one would have to relocate the clinic.

For the long-term, buying property for the clinic, although more expensive, is often in the best interest of one’s clinic. If one is just starting out and has limited funds, he should keep his costs low and save as much of his income as one can to secure an affordable loan from a reputable lender in a few years.

Often, owning one’s own clinic represents an investment in land, which many doctors feel is secure and tangible even though it may not be financially cost effective in the early stages. It also gives them a lot of peace of mind that the clinic is in their own name.