Choosing to set up a health practitioner office results in opportunities as well as challenges. Health spending is expected to grow 5.4% through 2031 and account for about 20% of the U.S. economy by then but there are some trends that will affect the business of healthcare, including the need for increased information security, greater reliance on AI and the need to address healthcare disparities.
Some existing medical practices may respond to the challenges they face by seeking business loans for health practitioner offices. Lenders may also approve health practitioner business loans to doctors, dentists and other healthcare professionals to help fund their first practice. Here are answers to a few common questions practitioners might have.
What are health practitioner office loans? These loans are designed to provide funding for medical professionals either starting their own practice or seeking to operate and grow their existing business. They’re used by general and family physicians as well as specialists in areas like dermatology, pediatrics, plastic surgery and podiatry. Healthcare, after all, is a business. The good news for physicians is that it’s often easier for them to obtain loans than it might be for professionals in other industries—since they tend to have higher incomes and generate consistent revenues.
Why are medical practices looking for business loans? There are plusses and minuses for health practitioners who choose to open their own practices. On the plus side, they’re their own bosses, they have the chance to develop long-term relationships with patients and they have significant financial potential. But on the downside, they shoulder all the risks, need at least $100,000 just to open their doors and face operating expenses that can eclipse $11 million a year depending on the practice size. Common ways business loans for healthcare practitioners are used include:
- Advertising to acquire new patients
- Mergers and/or acquisitions
- New diagnostic equipment purchases
- Salary and benefits packages funding for new hires/partners
- Ambulatory vehicle purchases
- Updated administrative equipment purchases
- Community outreach event funding
What types of business loans work best for healthcare practitioners? There are a variety of business loans available for healthcare practitioners since each situation is unique and there’s no one-size-fits-all solution. Five of the most common loans for medical practices are:
- Medical practice business loans—A business loan that’s been designed to account for the unique needs of doctors and their financial backgrounds.
- Equipment financing—A loan designed specifically to buy expensive equipment for the practice, with the equipment typically serving as collateral.
- Term loans—A short- or long-term loan offering a lump sum of capital upfront that can be used at the practice for any reason.
- SBA loans—A small business loan for established practices where the Small Business Administration guarantees a portion of it.
- Business lines of credit—A revolving line, so instead of receiving a lump sum the practice draws against its credit limit when funds are needed, much like having a business credit card.
The Bottom Line
While those who go through the rigors of medical school likely do so because they’re interested in helping people as physicians, they’re also aware of the potential to earn high incomes as healthcare practitioners. When they choose to open their own practice, however, they may find it necessary to secure a business loan either to get started or to maintain operations and grow. With so many options available for business loans for health practitioner offices, there’s no reason not to investigate the options.
Clear Skies Capital has helped many physicians determine the business loan that’s best for their health practitioner office and get the financing they need in a timely fashion. Contact us today at 800-230-9822 to discuss your practice’s needs.