Ep55: Starting out in Private Practice

Ep55: Starting out in Private Practice
5 February 2020

Fellows of the RACP can claim CPD credits via MyCPD for listening to this episode and reading the resources below.

This podcast is about one of many pathways in medicine; private practice. It’s a pathway that presents many opportunities, but also personal and financial challenges. When doctors are  starting out in private practice, they typically do so within the safety net of an established practice, and perhaps only for part of the working week. In a simple model, they would be renting a room in exchange for an agreed portion of the consultation fees, to cover administration costs.

The next level of complexity is setting up shop for oneself, and this requires registering a company in order to employ other staff. Finally, one can partner in a group practice, which may bring efficiencies of scale, but potentially also personality clashes with other shareholders.

And behind all of this, there is the need to build awareness and trust in the community.  In this podcast we hear about the experience of a private rheumatologist of 25 years, as well as accounting and financial planning.


Dr Louis McGuigan FRACP (Consultant Rheumatologist, Miranda)
Paul Copeland (Director, William Buck Chartered Accountants)
Scott Montefiore (Managing Director Hillross Montefiore and Co.)

Written and produced by Mic Cavazzini. Tracks licenced from Epidemic Sound include ‘Bookies’ – Jones Meadow, ‘Hollow Head’ – Kenzo Almond, ‘Fear Being Unfelt’- Ingrid Witt, ‘Dusty Delta Day’ – Lennon Hutton, ‘After the Freak Show’ – Luella Gren. Image licenced from Getty Images.

Editorial feedback for this episode was kindly provided by members of the RACP’s Podcast Editorial Group; Ilana Ginges, Michael Herd, Li-Zsa Tan, Andrew Whyte, Joseph Lee, Jenae Valk


Audio appendix of interview outtakes
The Professional Medical Practice Podcast


MIC CAVAZZINI: Welcome to Pomegranate Health.  A podcast about the culture of medicine. I’m Mic Cavazzini, for the Royal Australasian College of Physicians.

Just a quick note before we start- the podcast editorial group is looking for new members in 2020. It’s a relaxed way to earn some CPD credits, while helping make this show more relevant and interesting. More information at our website, racp.edu.au/podcast. Applications close the 1st March.

Today’s story is about one of many possible pathways in medicine. Finishing specialist training is a landmark that few will forget. Some people relish the responsibility of a staff specialist position. Others seek out academic relationships and clinical research. And some listeners get the itch to write their own roster.

There are three broad scenarios in private practice we’ll discuss in in order of complexity. When you’re starting out in private you might want to do so within the safety net of an established practice. You would rent a room, essentially, for an agreed portion of your consultation fees.

The next level step would be to set up shop for yourself, this requires registering a company in order to employ other staff. Finally, you can partner in a group practice, which may bring efficiencies of scale as well as potential personality clashes with other shareholders.

We’ll get into some of the financial nitty gritty later, but let’s start with the experience of a rheumatologist who’s trodden almost every path in private practice. I came across Dr Lou McGuigan at an orientation event for new Fellows, where he first addressed the question, “How do you know if you’re ready to take the plunge?”

LOU MCGUIGAN:            My name is Louis McGuigan. I'm a rheumatologist. I started in my training at St George and Prince of Wales Hospitals then I became a staff specialist then I started in private practice in 1994. Built up quite a big partnership type practice but I'm back by myself now.

MIC CAVAZZINI:               At that presentation for the New Fellows, you talked about private practice as having a boring reputation or sometimes even a sleazy reputation.

LOU MCGUIGAN:            Yes.

MIC CAVAZZINI:               What do you mean by that?

LOU MCGUIGAN:            Well, when I was training the general reputation is was private practice is what you do when you can't get a real job so to speak. Well, that’s what it was 30 years ago. It’s not so much now because the real jobs have contracted quite a bit and it’s very difficult, often, to get a staff specialist job and academic jobs are very few and far between. But being in a hospital is very, very useful because you learn to look after really sick people and you learn what it’s like to get on with other members of a team.

The difference is that you're sort of constrained in what you can do and if you ever want to buy a piece of equipment or something like that you have to go through an administrative process. Now, that’s fair enough and that suits some people but it doesn’t suit others. I wanted to do my own style of practice.

The other thing I thought was I could work here for a long period of time and then be stuck at this level forever more. And I wanted to go out and see a lot more patients and test myself against the market so to speak to see whether I was good enough.

MIC CAVAZZINI:               And you told the New Fellows that it was natural to feel a bit daunted by stepping out of the public system. Take us through some of those questions you can ask yourself to know when you're ready to get over that imposter syndrome, perhaps.

LOU MCGUIGAN:            OK. Well, if you're at a stage when you're a registrar and you go and see a consult and you think, “This is really hard, I'm not quite sure what's going on here.” And then your boss comes along and they find it hard too and you think well, “If I find it hard, and they find it hard,” —you're ready. You're up to the stage where you're good enough to be a consultant. Nobody ever knows everything but you’ve got to be wise enough to know what you know and what you don’t know, when to ask for help and where to get it. Don’t be put off by saying, I'll never be able to run money, I'll never be able to work out to get staff. You can always learn the business.

Now, you may not want to step out by yourself to start with, you may want to step out into a group, you may want to do some locums et cetera. But once you go out there and you think I like this flexibility, I like the fact that I can run my own business, I like the fact that I can do my own style of medicine, then you know you're up to it.

MIC CAVAZZINI:               Tell us a bit about the diversity of practice styles.

LOU MCGUIGAN:            See, it used to be that people used to train in one hospital and they'd have a mentor but they'd become a clone of that person. I've always found it very, very useful to do locums for various people because you're seeing the structure of that person’s practice. And you're seeing a lot of different patients at that time. So the medicine can be good but you're also keying into that kind of business structure that that person has. And you might find it’s a disaster, they might have terrible staff. But sometimes when you see things done badly you think, my God, I'm never going to do that. So sometimes you learn a lot from bad people but you’ve got to be exposed to them.


MIC CAVAZZINI: As Lou McGuigan points out, doing locums is a great way to learn in different practice settings. A lot of listeners will have already done stints at a regional hospital somewhere, but Visiting Medical Officers are typically salaried employees of the health service. So there’s still an HR officer working out your tax and superannuation before you get paid.

But if you want to locum at a private hospital, or do a couple of days a week in private rooms somewhere, there are a few bureaucratic steps to take care of. First you want to make sure your medical indemnity insurance policy is appropriate. The premium might cost $9,000 a year for an internist, but can skyrocket to around $90 000 for an obstetrician or neurosurgeon.

Then, you need to register with Medicare as a consultant physician, as the billing rebate is considerably higher than it is for a non-consultant specialist. If you’re going to be doing any work in private hospitals, you also need to sign contracts with the various private health funds. We’ll get into some of the complications of medical billing in the next episode. Importantly, whether you’re in a private hospital or consultation rooms, you’re now doing piece work. To invoice an organisation for your consults you need a business number- an ABN or an NZBN depending which country you’re in.

Practitioners are often told they need to set up a company or incorporated entity to go into business. But if you’re just renting a room it’s usually much simpler to register with the tax office as a sole trader. That’s according to Paul Copeland, director at William Buck chartered accountants. He’s been working with medical specialists for some time and has presented more than a few seminars for RACP Fellows too.

PAUL COPELAND:            A lot of advice comes to doctors around setting up a company because the accountants will think that they can split their income or they can somehow access the company tax rate. Unfortunately that’s not entirely correct. The Tax Office have gone through and looked at structures like this for medical practitioners and have a whole series of laws called the Personal Services Income Tax laws which deal with income that’s been generated by individuals. And, essentially, what that boils down to saying is that you can't just set up a company or a trust and then isolate that income away from yourself.

Most doctors will be able to be calling themselves Personal Services Businesses but there's a bit chunk of legislation which is all about tax avoidance and it’s called Part IVA. And under Part IVA the Tax Office has clearly stated that even though you may be a personal services business you, as a doctor, still need to be remunerated commercially for what you're doing. And you can't distribute that income, generally speaking, amongst family members. So you’ve earned $400,000 in that year—if the salary that you would expect to have made would be $100,000 doing that work, then you need to take that income yourself.

But it’s more expensive to set up a company, it’s more accounting fees to set up a company, there's no major taxation benefits if at all and there's no asset protection benefits. So when you're starting out we always try and keep our doctors nice and simple, we tend to set the greater bulk of our doctors up just as sole traders. It’s quite easy to understand, you get an ABN, you register for GST and you're in business.

MIC CAVAZZINI:               OK, so you start invoicing for each service you perform, you might be working part time, and if you are working for another practice the consultation fees get divvied up between you and the practice. So can you explain the typical breakdown in revenue and in responsibility of a person working in a practice like that?

PAUL COPELAND:            Yep. So if you're a sole trader doctor and you're starting out and you're going to go work in, say, a group practice or even with another practitioner who’s just got their own rooms, the starting point would be to get an idea of what that relationship’s going to be. Are you renting rooms, are they providing you with additional services such as billing, such as secretaries, and have that documented down. We find that a lot of disputes that come from doctors is because they’ve gone and done a handshake deal or you said this and I agreed to that and nobody’s bothered to write it down and do it properly.

There is a lot of respect and a lot of tradition that goes with doctor relationships, we know that. And it can be seen as a little bit rude where a doctor asks a more senior doctor, I'd like this documented up please. But it’s just a professional relationship and it’s the right way to do it. That way everybody knows their responsibilities.

Everybody has slightly different arrangements, I'll provide this and you provide that. But, I guess, in most cases, they will collect your patient’s fees for you and that will go into a centralised bank account and they’ll remit that back to you on a periodic basis, whether it’s weekly or fortnightly. What they will then do is deduct their fee for their services from that cash that they’ve collected on your behalf. So say, for example, over a fortnight you’ve billed $10,000 and you're paying them at 30% fee, they’ll take that 30% out of the fees they collected on your behalf.

MIC CAVAZZINI:               Well, that’s a good point to introduce the idea of income tax. So, remember that when you're receiving a salaried income that’s taxed before it hits your bank account. Whereas you might be going into private practice and feeling pretty flush but, there's a little case study about how suddenly you can end up with $100,000 tax bill out of the blue.

PAUL COPELAND:            Yeah, that’s not uncommon and sometimes it can be even more. So in the first two years of private practice most doctors are going, this is awesome, I've got so much money, it’s all coming in the offset account, the house is nearly paid off. And then, as you alluded to a minute ago, they start to get these massive tax bills. Because, what happens is, so, say, if I was a doctor and I've gone and started my private practice and I've just started this year, so, say, I've started in January 2020. And say I've dropped off all of my other public work, as a starting off physician the income that you earn from January through to 30 June, 2020, which is when our financial year ends, we’ll have not been taxed by the Tax Office. Because even though you're reporting it in your Business Activity Statement, that area of the Tax Office doesn’t talk to another area of the Tax Office which deals with income tax. And your tax bill won't actually be due until you lodge a return which can be as far off as May 2021.

Now, at that point in time, you'll get a bill for that six months’ worth of income, that might be maybe a quarter of what you're going to earn over a normal full year of income. So the Tax Office, they will sit there and say on that $100,000 we want $45,000. The problem, from a doctor’s perspective though is, that’s almost another full financial year to the next, June 2021 where you’ve earned more income and, again, that is still untaxed.

You’ve now got a—call it a $200,000 bill. So, typically speaking, it’s that third year out where all the doctors go, “Oh my gosh, why am I doing this? I'm sending all my money off to the Tax Office.” Because, not only are they paying that horrendous tax bill which is the lump sum bill that comes from their second year out, they’ve also got Pay As You Go tax, the tax in their Business Activity Statements. And so the third year out an awful lot of your money goes in tax.

MIC CAVAZZINI: Avoiding grief at tax time takes a bit of organisation. One of the first questions people ask is “Should I be charging GST.” The simple answer is that if you’re only earning a few grand a year from private work, it might not be worth the extra paperwork. But once you reach $75 000 you are obliged by Australian law to register for GST or service tax. However, you can only charge GST if you’re working through a group practice or a hospital. If you’re providing services directly to a consumer and billing them yourself, that service is exempt of GST. Either way though, you’ll be paying 10% GST on all the costs of running your practice. To claim the GST back, you have to submit a Business Activity Statement every quarter to report all your business transactions.

You want to keep track of these anyway, as any business expenses can be claimed as deductions from your income tax. Just as some examples, there’s your indemnity insurance premium, conference registration fees, travel between consultations, and the rate you pay to the practice you’re working at. These costs become more explicit once you decide to set up shop for yourself. There’s the property fees, the IT support, medical equipment, and of course the staff salaries for receptionists or nurses.

Even if you’re the only practitioner in the practice, you now have to establish a company from which to pay staff and pay yourself. Now you’ll have a tax return to complete for the company as well as yourself- and to stay on top of it all it helps to have three separate bank accounts, says Scott Montefiore. He’s a managing director of Hillross Montefiore and Co financial services, and together with Paul Copeland has established a collective of business advisors they call the Professional Medical Practice.

SCOTT MONTEFIORE:     Yeah, that’s right. So what we generally suggest is three accounts across their personal and business affairs, I suppose is a simple way to explain it. So one is for business expenses, one is for tax and then once all of those expenses have been paid the other money that’s left over can be transferred into your general spending account. And ideally, if they're all offset accounts that’s going to be offsetting your non-tax deductible home loan account.

PAUL COPELAND:            A good step is and, from a practical point of view, is have one bank account where you're trying to capture both the revenue and the expenses going out. Costs such as your courses, conferences and seminars and so on, your insurances and you'll pay that from your business account. If you don’t actually put it through that account or you actually haven’t got a record of it, we don’t know you did it. Accountants aren’t mind readers and so therefore you could be missing out on tax deductions.

The next step is to go through and keep as many of the receipts as you possibly can. There's different programmes out there that allow you to photograph receipts and upload them to a cloud. Even putting a photograph of the receipt on your phone is a great way to do it and have a folder on your phone where you might save those photos into. So when it comes to a tax time you can just email the photos to your accountant and say here’s all my receipts. That’s fine.

SCOTT MONTEFIORE:     And just on that, Mick, so my wife is a doctor, she’s not a physician but she does private work. And we use two programmes, so Receipt Bank is one of those programmes that you can take a photo of and it will automatically store it for you. And the second is Xero. So Xero is one of those accounting softwares that will data feed all of your bank accounts in and it will also sync in with Receipt Bank. So it’s almost like one place that your bookkeeper can log into, you can log into and it’s quite easy to keep a track of how you're going.

One of the things that’s confusing for newly qualified consultants is, “How much money am I making? How do I tell how much money I'm making in this private work? I've got all these expenses, there's GST and BAS statements and things going around.” One of the benefits of using one of the softwares, MYOB or Xero, is that you can produce a report called a Profit and Loss Statement and it would give you an idea of how you're performing.

PAUL COPELAND:            A big thing as well that I just thought I'd mention here when we’re talking about expenses going through accounts, is that even as a sole trader if you're a doctor and you’ve got a spouse at home who assists you putting together your administration work. And he or she might not be working, you can pay them a commercial wage for that work that they do from their assisting you as well as up to $25,000 a year in superannuation for them. And there's no commerciality test on that payment. And you, as a doctor, can claim it as a tax deduction. Sometimes doctors are told by accountants that they need to set up a company to be able to do that or set up a trust to be able to do that. That’s not correct. You, as a sole trader, can employ, just like you could under a company structure or something else. And so that is a reasonably common thing.

SCOTT MONTEFIORE:     And, just to be clear on that, Mick, so if we talk about well, how does that benefit the doctor? Ordinarily that money would be going to them and have to be taxed to them personally at the top tax bracket.

MIC CAVAZZINI: Scott Montefiore and Paul Copeland told me a lot on the topic of personal finance for doctors that I wasn’t able to fit in here. In the notes for this story you’ll find a link to an audio appendix that covers some important topics like planning your super.

Briefly, you should remember there’s no HR department anymore thinking about your retirement for you. The sooner you start making healthy contributions to your superannuation fund, the more this will compound over your career. When combined with that reserve for income tax we talked about earlier, you should be putting around 50% of your personal income aside into that quarantined bank account.

You can hear more advice about personal finance and insurance, asset protection, as well as property investments and design at The Professional Medical Practice podcast series. For now, let’s go back to rheumatologist Lou McGuigan. He explains how some of the numbers stack up in business and how he tries to run a tight ship at his practice in Sydney’s south east.

LOU MCGUIGAN:            If you're running a very efficient private practice you're probably going to have 40% costs. If you're running an inefficient private practice when you first start you might be up to 55%. So that means in this practice, for example, I have to be earning about $210 per hour when I'm consulting to break even. That’s nothing for me. So, in fact, if you're bulk billing people and that’s all you're doing, you'll be losing $50 an hour. Can't be done. We probably bill at the rate of about $500 per hour. So $200 costs, that’s about 40%, so that’s how it works out.

And you’ve got to tell people exactly how much it’s going to cost before they come so that they know whether they can afford it or not. I think it’s unfair to dump a bill on people they're not expecting. And we have the policy here that if they say they can't afford it they’ve only got to ask. And we charge them either a pensioner rate which is halfway between the schedule fee and what we’d charge private people or, if they haven’t got any money, we just bulkbill them. Now, how often does that happen? Not much but they’ve only got to ask.

MIC CAVAZZINI:               You ended your presentation with 10 commandments, I'd compare them more to the maxims from “The Art of War” by Sun Tzu.

LOU MCGUIGAN:            Yeah, fair enough.

MIC CAVAZZINI: One of these was; “Don’t just work in the practice, spend four hours a week working on the practice.” So what's the distribution of your time between clinical work and business management?

LOU MCGUIGAN:            So when you first start out you'll need almost as much time not consulting as consulting. For example, if you're doing five hours a day consulting, you'll probably need four to five hours a day in organisation, writing letters et cetera. So initially it’s hard to do any more than about 25 hours consulting a week and that’s one thing.

The other thing, you probably need secretarial staff in the same proportion and don’t try and skimp there. The best staff you can get will save you a lot in the long run because the front desk of your office has to work. If that doesn’t work you can be the greatest physician the world’s ever seen and the patients either never get to you, the letters don’t get done et cetera. So the medicine is important but the front desk is also very important.

My wife was the smartest person about this. She told me that in 2006 that I should take a day off. Because I was doing the admin on Friday nights and I used to get here about 6 o’clock and I'd leave about 9:00 and then I'd come in on Sunday and pay all the bills and so forth. I work now four days a week. So what I do on the Friday is go to the bank, go to the accountant, pay everybody, do all the admin and stuff. So I do all the things that I can't do during the week. Now, if you put them off, after a while you're working at a dysfunctional practice so that works very well.

And we have an educational meeting on a Friday afternoon which is very helpful to me because when you're by yourself for a long period of time you get very arrogant because you think your way is the only way. You’ve got to constantly be exposed to other people’s ideas and thoughts through meetings so that you are aware of your limitations and how things are changing.

MIC CAVAZZINI:               And you mentioned before for each hour of consulting you’ve got this much admin but the only revenue is from ––

LOU MCGUIGAN:            That’s exactly right. The only revenue you get is when you're seeing a patient. Now there are other things, for example, gastroenterologists do procedures, cardiologists do procedures, oncologists get money for their infusions, et cetera. But, for the majority of us, the consultation time is where you make your money and you’ve got to do a lot of it to be profitable. So you might as well make it enjoyable and well organised.

By far the most efficient thing I've ever done – and I got this from a secretary – was to dictate while the patients were there. Because when you pick up your dictaphone and you do the letter there are no secrets. Secondly, the patients know the plan of management. Thirdly, you only have one letter to do at the end of the day. When you look at a pile of letters, you’ve seen 30 patients, you cannot remember anything about the first one no matter how good your memory is. So you’ve got to actually make it most efficient so it’s done then and there so you don’t have to have 15 things at the end of the day. And the other thing is, people are more than happy to pay if you dictate the letter while they're there because they realise a lot’s happened, they're impressed by that.

MIC CAVAZZINI:               So when you’ve recorded it on your dictaphone, do you then hand that over to the front desk when you come and get the next patient or how -

LOU MCGUIGAN:            Yes. Well, this is what we do, we download it here into our server and my secretary out the back gets it and often, by the end of the day, all the letters are done and they’ve gone. Nearly all those letters are back at the GP because, as physicians, we write letters. Our letters are our work. If they're not reading them or they're too confused or they're too brief then you're not doing anything significant.

MIC CAVAZZINI: So far we’ve talked about freelancing in rented rooms or running your own practice. The next step on the ladder to growing the business could be to go into partnership with some other practitioners. In Lou McGuigan’s experience, a group practice can provide better margins because you’re cost sharing property, staff and other resources. If it’s run smoothly there’s also less down time, but you can run into unexpected personality clashes with other partners.

What if one person has more appetite for financial risk? What if another puts more time into the business? And if you’re buying into an existing practice, how to put a dollar value on your share? Paul Copeland is used to seeing these kinds of stressors between business partners and provides advice on how to identify them in advance.

PAUL COPELAND:            The next step is, though, when you're actually invited to take some sort of ownership joining a group practice, in that situation then there's going to be some sort of company or trust where you'll be buying an interest in the actual group practice itself. The other entity will still remain you as a sole trader, as a doctor, who’s earning a personal services income.

So when you're buying any type of investment you look at what the return on that investment’s going to be. From a financial perspective it’s looking at the business structure of that group practice. The goal of that group practice should be to make a profit. Now, some group practices are not set up to make a profit, they're just simply set up as cost sharing arrangements. And this is the next bit that we talk about before you take the step, is to understand that you're actually almost getting married to these people.

And doctors will always be very polite and they’ll have clinical goals and clinical aspirations which can be very similar. But, once you're in business, you're dealing with staff, marketing, spending, debt, fitouts and so on, all these different other elements which doctors have never had any formal training with.

We always ask our doctors to do an alignment exercise because if the way that you, as an individual want to treat staff, want to deal with your patients, want the setup of the practice to be, it’s considerably different to someone else’s, that relationship’s not going to last a very long time before conflict starts to arise. And it’s making sure that there’s systems in place and a plan in place to deal with all of this sort of stuff.

MIC CAVAZZINI:               I wanted to get into some of those responsibilities. So rheumatologist, Lou McGuigan, reckons it’s much better to buy your own premises rather than rent because landlords love to take doctors for a ride. They know that they're conservative, that they can pay top dollar and they hate moving. Just thinking of the business itself and the building, should you be thinking about them, not just as a place to practice medicine, but as an investment in themselves, as a product in themselves?

PAUL COPELAND:            Yeah, Mic, what you're saying there is 100% right. When you're looking at any purchase you look to say, as a starting point, is this a good investment? Now, building wealth through property is a great way to build your wealth. However, some doctors have gone out and bought themselves, for example, a little shop within a group of shops in a shopping centre complex which has suited them because it’s close to home, it might be reasonably close to a hospital or something like that.

But, at some point, you'll have to sell that asset. Now, a shop within a group of shops is not necessarily the best investment and so the nice shiny rooms today, in 30 years’ time or 35 years’ time when we want to sell, might not necessarily be the shiny nice rooms. They might be the dodgy old building where all the old doctors are and it might not be the best thing for doctors to buy. So just keep that in mind as well.

MIC CAVAZZINI:               And, again, more generally, for those who don’t have a natural interest or natural aptitude in this, but are there some simple rules of thumb to gauge a practice’s financial health? Like a golden ratio of staff costs or property cost to consulting fees or number of staff to number of patients and that kind of thing.

PAUL COPELAND:            I don’t think there's a golden rule, especially for specialist practices because they are run so differently. When we do an investigation for a client we do a valuation on the practice, we look at all different areas of the practice. We look at the staff wages, we look at the rent and we look at the lease, the condition, the fit-out, the churn of staff, the churn of doctors and so on. There's about, probably, a four or five page checklist to give the doctor coming in an idea of where the strengths and weaknesses of this particular practice. Looking at the profitability then you sit there and say OK, considering all these factors, what is a reasonable value of the practice which then determines what you pay for it.
MIC CAVAZZINI: If you’re starting out in private practice you might be worried about how to get the word out about your services. Another member of the Professional Medical Practice network is Megan Walker from Market Savvy.

In an interview for that podcast she suggests that marketing is less about advertising than it is about the five star customer experience. A consumer’s illness and their visit to a doctor is an important event in their week if not their life, it becomes a story they tell friends and colleagues.

MEGAN WALKER (sampled):      People don’t know how to make healthcare decisions so they use heuristics. They're looking at how friendly the people are who work in the practice, are they nice to each other? Sometimes not. “Is the waiting room well run, is it clean, is there a 1994 National Geographic? Is it efficient, are patients kept informed? And jee, it wouldn’t have hurt if they had given me a cup of tea because I had to wait for an hour and 45 minutes and why don’t they ring people when they're running that late? I had other things to do.” So that story that they're telling is the patient experience and we can influence that story.

Then I think you should evaluate yourself through your visibility online, have a look at how you show up. Google, not only your practice name, but the key people in your organisation and see what appears. Would that encourage me to book, would I feel that there's trust with that person? Have a look at the booking process or ask someone to secret shop your practice. You know, we do a lot of that for organisation and they're so shocked that comes back things like the phone rings 14 times and then goes to message. And those little things, they might seem insignificant but a phone that’s not answered says we don’t care, we've given up, we’re too busy and we’re not interested in you.

MIC CAVAZZINI: After 25 years in private practice and 45 years in medicine, Lou McGuigan agrees that private practice is very much about customer service.

LOU MCGUIGAN:            Good medicine is good business sense and I think the two go very well together. If you get the business right, you can often do practice of the medicine better.  If people come in here and they're relaxed and the staff are nice to them, it’s easier to get the history. But if they can't find a park and they're old and they had to walk up 10 steps and the secretary’s being difficult to them and then they come in and you say, now tell me about your history and you're grumpy, it will take you twice as long to get the history.

MIC CAVAZZINI:               You’ve put a lot of thought into the building here and the layout. Can you speak about some of that?

LOU MCGUIGAN:            Yeah, sure. Well, I got this built by a wonderful builder in 2010 and this looks like a little house. But this little house has no steps, it only has ramps. It’s double glazed, it’s got big windows. The waiting room is big, it’s got big comfortable chairs because I look after arthritic patients and it’s got handles so they can get out of them. And the colours, it’s a light green colour, that’s a relaxing colour. It’s not bland, we have very light music in the background.

The other thing is we have six car spaces out the back and we just use them for patients. We park somewhere else which we have to pay for. I don’t mind doing that because $20 a day for me is not much but $20 for two hours for a pensioner is a lot of money. And it allows them to walk in here, comfortable and we always try to keep to time. If you keep to time they keep to time.

So, in fact, seeing patients here which is 50 metres up the road from where I was before, basically a converted shop, it takes probably five minutes less per patient. Five minutes less per patient when you're seeing 25 or 30 a day is two and a half hours. And two and a half hours is a lot of time to save or to have extra to consult. So, not only is it more comfortable for them, it makes a lot of business sense.

MIC CAVAZZINI:               And you said you have team lunch every day, is the team lunch you talk shop or is it -

LOU MCGUIGAN:            No, basically we just stop and have lunch together and we turn off the phones. And you might think, well, that’s grossly inefficient and so forth, but it’s not. Because team building is very important, you spend a lot of time training these people and when they're there you must back them up, train them and be supportive. We have a policy in our practice that if you're abusive to the staff you don’t come back. And if you stand up for your staff, the support you get from them in the long run is incredible.

MIC CAVAZZINI:               I have to say I was impressed when your secretary told me she’d been with you for 20 years.

LOU MCGUIGAN:            Yes, she’s a fantastic secretary. And, in fact, most of my people have been here a long time and we get on well, we have a lot of fun. We enjoy coming to work and the patients seem to pick that up. And people aren’t made to feel as if they're disturbing us. And I've told the staff when they first come here, we look after sick people, if you think they're really sick I'll organise to see them.

For example, one lady – and she was only a new secretary – and she said, “This lady rang and I'm a bit worried about her.”. And I said, “Why is that?”. And she said, “She was crying. She said she had a real lot of pain in her leg”. And I said, “She never cries. Send her up”. So she sent her up and here in the afternoon, she had necrotising fasciitis. She would have been dead the next day. And I made the diagnosis; she made the critical call to get her up. Because we had an appointment the next week but that would have been too late.

So you rely on your front desk a lot more than you think. If they’ve got a worry you’ve got a worry, fix it. The other thing that’s very important is you with the GPs. And when they ring we’ve got to help them out whether they're a referrer or not. They're in trouble, help them out, it’s the right thing to do, it usually takes a minute. So we had this rule here, doctor rings up, gets straight through.

MIC CAVAZZINI:               If you're in the middle of a consult you still pick up the phone?

LOU MCGUIGAN:            Put them through. And I had another lady, another GP rang me once and she said, “I'm worried about this boy, he’s got a big swollen knee.”. And I said, “Send him up”, because she never rings. The kid had septic arthritis and he had septic discitis in his back. Another day he would have been disaster. He did beautifully.

MIC CAVAZZINI:               And apart from that personal relationship, that helping a colleague, you're probably going to get more referrals.

LOU MCGUIGAN:            Absolutely, it’s just good business sense. And if you see people quickly and you write good letters you'll get the second patient then you'll get the third patient then you're established. If you want to talk about marketing, I try and market things through my letters and my service.

MIC CAVAZZINI:               If I'm a fresh new rheumatologist opening up shop a few blocks away and no one knows who I am, do I need to write to all the GPs in a 10km radius?

LOU MCGUIGAN:            Yeah. Well, you can do that or you can go and visit them and they assess you as to what you're like. We’ve had some GP nights in the last year or so and asked about a group of 20 GPs to come and we’ll discuss some cases. We did one on back pain, on the relationship between radiology and rheumatology, on the relationship between dermatology and rheumatology and we just presented some cases. And we did some very easy cases and very complicated cases so that if GPs feel interested in your specialty you'll get really good referrals.

The last 7 years or so I’ve been doing these rural clinics. And when I went up to Narrabri and Moree they'd never had a rheumatologist up there and a lot of people are on lots of steroids et cetera. Now I go up there, they're on the right dose of steroids. And it’s as if I've been treating these people and I've only ever met them once. And I did a lecture up in Narrabri recently, every GP came in the town.

MIC CAVAZZINI:               Another thing you said people appreciate is your availability.

LOU MCGUIGAN:            As I said to the young Fellows, availability, affability and ability in that order determine how well you do in private practice. You’ve got to work when others don’t want to work and we worked every day except Christmas Eve because we owe it to people to be around. Nobody else has been around, even the air conditioning people, when our air conditioning broke, aren’t around. And if you're a new specialist and you're around about this time you'll get work. And we’ve had some really sick people through this time and, if you're their doctor, somehow you’ve got to have some backup arranged.

And I've got another very good rheumatologist here and we make sure that one of us is here the whole time so if there's somebody acute she’s happy to see them, I'm happy to see her patients et cetera if there's a problem. And these days, with proper IT, you can check your results online and if there's a problem you can ring their doctor and tell them what to do.

For example, say if you’ve got somebody who’s on one of our drugs and they’ve got a platelet count of 26,000 and you let that go for three weeks and they have a cerebral haemorrhage, that’s a disaster and you'll wear that for the rest of your life. When the patients come here I am working for them. They don’t want to be an interesting patient, they want a result.

They want to be either fixed or told why they can't be fixed and get it explained in a way that they can understand it. Because you get a much better result and they won't go off and see somebody else who’s going to do a huge operation on them and they’ll be no better. I think it’s very important when you take a history you work out what the person’s life is like first rather than what their disease is like. Because if you don’t know that your treatments don’t fit into their life.

MIC CAVAZZINI:               Tell me about the story of the Macedonian lady.

LOU MCGUIGAN:            Yeah. Some years ago a patient died and she was a lovely old lady. She was in her early nineties I think and she had purpuric rash. And we were asked to see her because it could have been vasculitis and we said no, this is cholesterol emboli. And one thing led to another like vascular paths happened then she passed away. It was nobody’s mismanagement, just happened.

And when she passed away I wrote to her family saying I'm terribly sorry it had happened and she was a really lovely lady to look after. And I said that if there’s anything I could do for them to let me know and it was a privilege to look after her. So her son came to see me 20 years later I think it was and he had a bad knee. And I said, “I remember your mother very well, she was a lovely old lady.”. And he said, “Yes, doctor. And when she died you wrote me a letter.”. And he opened his wallet and pulled it out. He’d had that letter in his wallet for 20 years.

Because when you’ve lost somebody, to have somebody else who’s not connected with the family acknowledge their life and say how important they were is very rewarding for those people at that time. And some of the things you do are not particularly medical, they're just decent human things to do and I find that the most rewarding part. If you find that the most rewarding part of medicine you will like private practice. If, in fact, that’s the kind of thing you want to do in medicine, private practice is for you.

MIC CAVAZZINI: That was Dr Lou McGuigan ending this episode of Pomegranate Health. Thanks also to Paul Copeland and Scott Montefiore, you can hear more from them at the Professional Medical Practice podcast. Go to our website for a transcript and some interesting audio outtakes from these interviews. There’s also a link there for the podcast editorial group recruitment drive, which ends March the 1st. The web address is racp.edu.au/podcast and there’s. If you found this episode useful please write a review on iTunes or, leave a comment on the episode page. You can also send feedback to podcast@racp.edu.au. Thanks for listening, I’m Mic Cavazzini. 


Thank you for posting your comments

21 May 2024

Tim Warnock

Thank you, Lou. This is an excellent podcast for someone who is about to retire to help explain the rewards of private practice.

20 Aug 2022

Tao-Kwang Kevin Lee

Most insightful podcast I have heard for private practice specialists.

24 Jan 2022

Sarah Leeder

Great insights, thank you

15 Jul 2020

Sayeda Naher

Very interesting and useful

20 Feb 2020

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