Expanding Your Medical Practice: When to Hire a New Provider

As your medical practice grows, adding a new provider to your team can be a smart move. It allows you to see more patients, increase revenue and potentially put in place a long-term succession plan for your business.

That said, expanding your practice by hiring a new provider is a huge decision. It requires careful planning and consideration of several key factors, including patient demand, your financial position, your practice’s infrastructure, and the goals you have for the future of your practice.

Here’s how to evaluate your readiness to hire a new provider and some key factors to consider when the time comes.

Assessing Patient Demand

One clear sign that you need an additional provider is if you’re struggling to keep up with patient demand. Long wait times, inability to accept new patients, and difficulty taking time off due to heavy workloads are all crucial indicators that you need more capacity. If your patients have to wait months for an appointment because your schedule is packed, the demand is likely there.

For example, a busy primary care practice or dental office in a growing community may find itself turning away potential new patients because the existing providers simply cannot accommodate more appointments. This not only limits the practice’s growth potential but also inconveniences patients who may have to seek care elsewhere or delay necessary check-ups and treatments.

Failing to meet patient demand can lead to poor patient experiences, sub-standard levels of patient care and missed opportunities for growth. Excessive wait times contribute to patient dissatisfaction, and prolonged delays in receiving treatment might lead to adverse health outcomes or complications. Adding a new provider can improve access to care, reduce wait times, and ensure patients receive the prompt attention they deserve.

By alleviating the strain of high patient volumes, you can boost patient satisfaction and position your practice for sustainable growth. Patients are more likely to remain loyal and recommend your practice to others when they can consistently receive high-quality, timely care from medical professionals they can trust.

Evaluating Infrastructure Readiness

Another important factor to consider is the readiness level of your practice to support the increased patient volume that will come with hiring a new provider. Start by assessing whether your practice has the physical space and equipment to support an additional provider. Do you have enough exam rooms, waiting areas and necessary medical equipment? You might need to renovate or purchase new diagnostic tools or medical devices — increasing the expenses associated with hiring.

Let’s take a look at a hypothetical example: a cardiology practice looking to hire a new interventional cardiologist. The new cardiologist might require a dedicated catheterization lab equipped with advanced imaging systems and specialized surgical tools. They’d need space for a new cath lab, which could involve renovating an existing area or expanding the facility altogether. If all this is the case, the practice would need to budget for the purchase and installation of all that equipment, which could be a significant capital investment.

Staffing is another consideration. Will you need to hire more medical assistants, front desk staff or billers to handle the increased patient volume? Evaluate your current staffing levels and plan for any additional hiring and training needed. Failure to do this could result in your practice facing employee retention issues as your staff becomes overworked.

In the above cardiology practice example, the new interventional cardiologist might require support staff, such as cardiovascular technologists and nurses, to assist with procedures and patient care. The practice would need to assess its existing staffing levels and determine the appropriate number of new hires required to ensure efficient operations and maintain high standards of care.

Financial Implications

Bringing a new physician into your practice has significant financial implications that must be carefully evaluated. Before you start recruiting, you’ll need to carefully consider how you plan to compensate your new provider. There are several common models to consider:

• Salary Model: A fixed annual salary, regardless of the number of patients seen or services provided. This offers income stability but may lack productivity incentives.
• Productivity-Based Model: Tying compensation directly to the physician’s productivity (often measured by revenue or collections generated from patient visits and procedures). This incentivizes higher output but can lead to concerns about overutilization.
• Salary Plus Incentive Model: The physician receives a base salary combined with additional incentives or bonuses based on productivity metrics. This hybrid approach aims to balance income stability with performance motivation.

The compensation model you choose should align with your practice’s financial goals, culture and priorities.

For example, a salary model may be preferable for a new physician joining an established practice. Meanwhile, a productivity-based or incentive model could drive growth in a newer or expanding practice. Evaluate each model’s potential impact on factors like physician recruitment, retention, work-life balance and the overall financial health of your practice.

In addition to reviewing compensation, it may be helpful to conduct revenue projections to estimate the potential increase in patient volume and income associated with the new hire. A break-even analysis can help you determine the patient volume you would need to cover the provider’s compensation and associated costs.

With that said, while hiring incurs upfront costs, it can also lead to higher long-term profitability by increasing revenue while leveraging your existing overhead more efficiently. But the direct costs associated with hiring a new provider and paying their salary are only one part of the equation. You must also consider whether the new provider will have an ownership stake or profit interest in your practice.

Partnership and Succession Planning

For some practice owners, adding a provider is part of a long-term succession plan. If you intend to offer partnership opportunities, establish clear pathways and timelines up front.

Let’s say you are part of a well-established orthopedic surgery practice with multiple partners nearing retirement age. To ensure a smooth transition and continuity of care, you and your partners might decide to hire a new orthopedic surgeon with the intention of grooming them for partnership and eventual ownership.

The practice could implement a three-year period during which the new surgeon is evaluated. If they meet or exceed expectations, the practice may then offer a buy-in opportunity allowing the surgeon to become a partner by purchasing a stake in the practice over an agreed-upon timeframe (for example, five years).

This structured pathway not only incentivizes the new provider to excel but also provides a clear roadmap for them to eventually take on a leadership role and ownership responsibilities. It allows for a gradual transition, ensuring the practice’s legacy and patient relationships are preserved while minimizing risk and allowing a range of options for all parties.

If you intend to hire as part of a larger succession strategy, evaluate candidates based on their leadership potential and cultural fit in addition to their medical credentials. Look for individuals who share your practice’s values, have a strong work ethic and demonstrate the ability to build rapport with patients and staff alike.

By implementing a well-defined partnership and succession plan, practice owners can attract and retain top talent while ensuring the long-term viability and continuity of their business. It provides a framework for transferring ownership and leadership in a structured manner, minimizing disruptions to patient care and operations.

James Moore: Helping You Expand Your Practice with Confidence

Hiring a new provider can significantly impact your practice’s growth and success. But it’s not a decision you should take lightly: doing it well requires diligent preparation. You’ll need to evaluate patient demand, assess your resources, and consider the financial implications of the new hires — ideally, all before the hiring process begins.

An experienced healthcare financial advisor from James Moore can help you navigate this process, assessing your readiness and providing strategic advice to prepare the practice for your potential new provider.

Contact James Moore today to learn more about our accounting, business, and tax advisor services for healthcare providers.

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