Wondering how much money it really takes to launch your nurse practitioner private practice? Well, it depends…
I know, I don’t care for vague answers myself. But let me explain and ask YOU a question.
The Price Of A House
How much does it cost to buy a house?
Chances are you’d say: “Hard to say.” There are just too many variables for a simple answer.
Now, what’s the connection to starting a nurse practitioner private practice? Hang on, you’ll see in a minute…
But first, let’s look at a small sample of variables affecting the price of a house:
- Location: is the house in the city or the country
- What’s the neighborhood like
- How big is the house
- What are the amenities and customizations
- What’s the condition of the property: new construction or 30 years old
- How much will it cost you to borrow money (lending rate)
- Do you choose a 5-, 15-, or 20-year mortgage
- What’s your credit rating (it affects the cost of borrowing)
- How much of a down payment will you make
As you can see, many variables affect the price of a house.
But most importantly, you must have a good idea of what you want before you start looking for a house. Right…?
Do you want …
- A condo or a single family, three bedroom house?
- Are you looking for new construction or an older neighborhood?
- Are you looking for a single or multi-level house?
- Do you want a large, small, or no yard?
I doubt you’d find a single real estate agent willing to take you on a search for just any kind of property. No; the agent wants to know what type of house you’re looking for.
Why You Must Have Clarity!
And that’s how it is with starting a nurse practitioner private practice. First of all, there are too many variables to give a simple answer and… you MUST have clarity about what it is you want.
Your clarity is the foundation for everything else. Before you can answer the question “How much does it cost?” you must know what kind of practice you want to create.
Once you know what you want, you’ll be able to calculate how much it will cost to start your nurse practitioner practice. And then, you can decide if you’re willing to move forward or not.
How Much Will It Cost?
So now, let’s talk about the stuff you really want to know: how much money will it cost to start your nurse practitioner practice.
Since I don’t know what kind of practice you’ll be starting, I can’t provide you with exact numbers or detail. However, what I can do is give you a framework you can use to answer this question.
Here it goes… start by setting up three buckets.
Why three buckets?
Because you’ll have three types of costs when starting your practice; they are tangible, intangible, and opportunity costs.
Here’s what I mean…
They consist of actual money you have to spend to get started. Some examples are:
- Office space
- Rental and utility deposits, phones, etc.
- A computer system, software, internet, etc.
- Office furnishings
- Clinic/medical equipment & supplies
- Legal costs, insurances, etc.
- Salaries for startup period
Some NPs mistakenly believe it takes thousands of dollars to start their nurse practitioner private practice.
But again, it all depends on what you want to do.
- If you’re planning to start a mobile practice, you need wheels for the business, some supplies, some technology (laptop, printer, software, phone), and you’re in business.
- If you’re planning to start an LTC/ALF practice, you need the same as above, minus the wheels.
- And if you’re planning to start a primary care practice, you need office space, technology for your office, office furniture, exam room equipment and supplies. The bottom line… you need to spend much more money to get started than with other practices.
But it doesn’t have to break the bank.
Unless… you insist on moving into 5000 sq ft of upscale office space in a trendy neighborhood, furnished with the best of everything! If that’s you, be prepared to pay a pretty penny!
But if not, you can start your nurse practitioner private practice for a small amount of money, as long as you:
- Start small with the idea of growing over time
- Find reasonably priced office space (yes, this takes effort!)
- Look for quality used office and exam room furnishings
- Shop around for all insurance and professional services
- Increase your revenue and control your expenses
- Watch your expenses like a hawk!
While you don’t have to dip into your bank account to pay them, they are still costs and should be part of the equation.
Ask yourself what your intangible costs might be:
- Would you be giving up time with friends and family
- Would you have less time for yourself
- Would you need to work longer hours
- Would you need to give up evenings and weekends
Everything in life has an opportunity cost…
But in case you’re not familiar with the concept, here’s a definition:
“The cost or value of what you give up to pursue one opportunity over another. Opportunity cost can be measured in tangibles and intangibles.”
Let me give you an example.
Let assume you currently have a job paying you $100K/year, with a generous benefits package. If you start a practice (full time), you’ll be giving up your job to work in your office.
Your tangible opportunity cost (what you’ll give up) would be:
- Your current salary
- Your current benefits, such as retirement, malpractice, paid vacation, etc.
Your intangible opportunity costs (what you’ll give up) might include:
- Seniority you would lose
- Your status as a member of the organization
- Support and friendship from co-workers you might lose
So here you have it. That’s how you determine the cost of starting your nurse practitioner practice. Some costs are easy to quantify, while it’s difficult to put a price tag on others.
But here’s the bottom line: if you know what you want, you can easily determine how much money you’ll have to spend to get started.
Create two lists for yourself:
- One is for items you must have to start your practice
- The other is for items you would like to have, but are not essential to get started
Next, go out and start pricing the items on your lists. Once you’ve collected the data, you’ll know how much you need to get started.
And let me remind you to include all intangible and opportunity costs into the equation. After all, it’s not just money you’d be spending; it’s much more than that.
Once you know your true start-up cost, you’re in a strong position to determine if you want to move forward with starting your practice, or not.
Let us know what you think by leaving your comment below!
By Johanna Hofmann, MBA, LAc; regular contributor to the NPBusiness blog and author of “Smart Business Planning for Clinicians.“