There is a moment in every physician's journey into independent practice where you realize that your medical degree, your residency training, and your board certification have prepared you for approximately zero percent of what you're about to do. For me, that moment came when I sat down with a small business attorney and she asked me what entity structure I wanted for my practice. I stared at her like she'd asked me to explain quantum chromodynamics in Mandarin.
This month has been a crash course in business formation, and I want to share what I've learned because I know there are other physicians out there contemplating this leap who are just as unprepared as I was.
First, the entity structure. After consulting with both an attorney and our accountant (James wears many hats, but he insisted we get an outside opinion for the legal pieces), I formed a single-member LLC in our state. The LLC provides personal liability protection, and the single-member structure keeps things simple for now. Total cost for formation, including the attorney's fees for drafting the operating agreement and filing the articles of organization: $1,800. I also registered a DBA (doing business as) for the practice name I've chosen: Verdant Family Medicine. The name took me three weeks to decide on. I wanted something that felt warm and alive, not clinical and corporate. James suggested "Sarah Chen MD LLC" and I told him that while I appreciated his pragmatism, I wanted something with a little more soul.
Next came the business bank account, which required the EIN (employer identification number) from the IRS, the articles of organization, and the operating agreement. I went with a local credit union that doesn't charge monthly fees for business checking accounts under a certain balance. The banker who helped me set it up asked what kind of business I was starting, and when I explained DPC, she spent twenty minutes asking me questions about it and then asked if she could sign up when I opened. First potential patient, acquired in a bank lobby. I'll take wins where I can get them.
The financial projections have been the most time-consuming and anxiety-inducing part of this process. James and I have spent every weekend in March hunched over spreadsheets, and I want to share our numbers because I think transparency about the financial realities of starting a DPC practice is valuable.
Our startup budget breaks down roughly as follows. Lease deposit and first month's rent: $6,500 (I haven't found a space yet, but I'm estimating based on what I've seen in our target area). Buildout and furnishing: $35,000 (this is a rough estimate that I suspect will prove optimistic). Medical equipment and supplies: $15,000. Technology (EMR, computers, phone system, website): $5,000. Legal and accounting setup: $3,500. Insurance (malpractice, general liability, property): $8,000 for the first year. Marketing and branding: $3,000. Working capital reserve for the first twelve months: $60,000. Total estimated startup cost: approximately $137,000.
We have $95,000 in savings earmarked for this, and we're planning to take a small business loan for the remaining $42,000. I spent two weeks researching SBA loans and ultimately applied through our credit union. The interest rate is not wonderful, but it's manageable, and having that buffer gives me the confidence to move forward without the constant terror of running out of money in month six.
For ongoing monthly expenses, our projections look like this. Rent: $3,200 (hoping for lower, planning for this). Medical assistant salary and benefits: $4,200. Malpractice insurance: $667 (paid monthly). EMR and technology: $400. Supplies and labs: $800. Loan repayment: $450. Miscellaneous: $500. My own salary: initially $0, then gradually increasing as the panel grows. Total monthly overhead before my compensation: approximately $10,200.
At my planned membership pricing of $85 per month per adult ($50 for children, $65 for young adults 18-25), I need approximately 120 patients just to cover overhead. To pay myself a modest salary comparable to what I'd make in a employed position, I need about 350 patients. My target panel size is 450, which would give me gross revenue of roughly $38,000 per month, allowing for a comfortable salary and some reinvestment in the practice.
I also built a month-by-month enrollment projection based on conversations with other DPC physicians. I'm assuming 15 new patients in month one (friends, family, word of mouth), growing by about 10-15 patients per month after that, with some natural attrition. Under this model, I hit breakeven at about month eight and reach my target panel around month eighteen. Those first eight months of negative cash flow are what the working capital reserve is for.
Beyond the numbers, I've been doing a lot of the less glamorous work of business formation this month. I applied for a National Provider Identifier (already had one, but needed to update it). I registered with the state medical board as a new practice location. I started researching malpractice insurance options and discovered that DPC practices often qualify for lower premiums because of lower patient volumes and longer visit times. I set up a business email, started working on a basic website, and began drafting my patient membership agreement with the attorney.
The emotional experience of all this has been a strange mixture of empowerment and impostor syndrome. I am genuinely enjoying the entrepreneurial aspects of this process, the problem-solving, the planning, the sense of building something from scratch. But there are moments, usually around 2 AM, when I lie awake and think about the fact that I'm about to walk away from a guaranteed salary with benefits to start a small business in an economy that eats small businesses for breakfast. Then I remember the parking lot crying and the fifteen-minute visits and the twenty-four hundred patients I couldn't possibly take proper care of, and the fear recedes. Not entirely. But enough.
Next month I'll be starting the hunt for clinic space, which I'm told is its own special adventure. Stay tuned.