There is not a lot of public information on what it costs to run a private medical specialist practice in Australia, but having specialised in setting up and managing private medical practices for the best part of ten years, I have a fair idea.

Before we get to what it costs, we need to look at what sort of private practice arrangement you are in. Are you a solo practitioner with your own rooms, part of a shared cost model, virtual practice, group practice or are you in an associate model?

A busy solo medical specialist with their own rooms will be paying around $350,000 per year, inclusive of rent, staffing, IT & communications and operating costs. If they own their own rooms and fit them out (in the city), they will be up for another $640,000 to repay the bank (based on 80m2 – $480,000 + $160,000). An extremely busy solo specialist may be paying as much as $500,000 per annum, if they don’t outsource any labour (eg: typing).

Shared cost models normally charge on a flat fee plus a % of fees, equating to around 30%-40% of fees generated, depending on the specialty and practice.

Virtual practice models will charge between 13%-20% of fees generated and you will need to pay around $240 per consulting session on top of this for rooms. Some providers will also charge a set-up cost and most have minimum fees. Other providers will charge on specific actions, like per surgery booking, per phone call, per patient.

Group Practice equity partners aim for practice costs to be around 25% of fees generated. Larger groups can often leverage other opportunities to generate passive profits from the practice, reducing the expenses further. Some groups charge large entry fees to join.

Associates are normally charged between 30%-50% of their fees collected to run their private practice. There is normally no cost of entry and internal or generic referrals may be available.

Different specialties will generate different revenues, with for example, a physician not normally able to generate the revenue a surgeon can, so there will be differences on expenses paid to revenue ratio, purely based on the craft group.

Some practitioners have gone for a hybrid model, where they pay a virtual provider to do all the back-end and then share the costs of the rooms and a meet & greet secretary, enabling them to access the low cost virtual secretarial service, but maintain the regular rooms and face at the front desk.

A review of practice costs should be undertaken regularly, as these can blow out significantly if not monitored and measured regularly against budgets and projections.

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