The Choice is Yours: Location, Location, Location & Office Essentials

With a comprehensive business plan in place and funding secured, you are ready to tackle a dermatology entrepreneur’s biggest decision yet — choosing the location of your practice and outfitting it for success. Selecting the right space is critical, as an optimized location results in higher patient volumes, steady revenue, and potential for accelerated growth. Once you’ve zeroed in on a location, you’ll also need to prepare the space with the right devices, tools, supplies, and hardware to efficiently serve patients and expand your practice. The good news is that you’ve already laid a strong foundation for these decisions. By now, you’ve zeroed in on a target population and the types of clinical services you will provide — from general dermatology to cosmetic procedures. You also have anticipated revenue projections that you can use to assess the financial feasibility of potential spaces for your office and its subsequent outfitting. 

When it comes to selecting a practice location, geography is only one of many factors to consider. If you are established in a particular area and the market is desirable, you may want to build on existing patient and professional relationships and start a practice close to home. If you are open to moving to other locations or areas of the country, you will have to do a lot more research about areas of interest, demographics, cost of living, and market demands before choosing a location. Always keep in mind your target patient population and the clinical impact you intend to make while meeting your financial goals, as well as the importance of compliance with local zoning laws and necessary inspections.

Know the neighbors 

When considering an office location, it’s critical to understand the market you are targeting as established in your comprehensive business plan. Both industry trends and current market demographics play a role in honing in on an area’s ideal customer. Use local Chamber of Commerce and U.S.  Bureau Census Bureau Web sites to gain insights on an area’s population. Ensure age, gender, income level, and purchasing habits in a local market will match your plans for service delivery — ideally with a high concentration of the types of people you want to engage. 

Also check out neighborhood dermatology competition in your areas of interest. If a local community is saturated with established practices, you may have a hard time attracting customers. Gather research on review sites to see what patients are saying about local practices and determine where you can gain a competitive advantage. Ensure the area of interest provides ample opportunity to meet volume projections and potentially achieve growth.

Finally, consider the range of medical providers that are established in the area and in close proximity to the location. From referrals to partnerships to patient convenience, the presence of other clinicians and medical service providers may be beneficial for business continuity and growth.

Space considerations

When choosing a location, think about the type of space in which your practice will thrive. Would a neighborhood strip mall or center city location bring foot traffic to the business, or would a more traditional professional or corporate office building be a better fit for your vision? If you select a nontraditional or boutique space, consider the work that may be required to make the space operational and if your existing budget will cover it. Some spaces will need minor modifications for the reception area, exam rooms, administrative spaces, or waiting rooms, while others demand extensive renovations for a complete overhaul.

Medical office buildings can offer many advantages, including space that is already primed for dermatology service provision with nearby bathrooms, appropriate-sized exam rooms, and a front desk area. These buildings often make it possible for target patients to access an array of services in close proximity. Similarly, patients like having access to related medical providers such as other physicians, their pharmacy, or lab testing in the same area. Keep in mind, building providers can bring networking benefits and generate referrals to make the overall care experience seamless for patients. Remote or isolated office locations will not bring these benefits; they also may not accommodate practice growth.

"If there is a primary care provider group or urgent care in the building, this is an excellent referral base."

—Stephanie F., Ohio

Physical space needs vary greatly among start-up dermatology providers. For a micro-practice, small-scale office space may be sufficient. For entrepreneurs who are focused on volumes and/or adding additional providers, a spacious office for expansion is optimal. While it varies by specialty, generally 1,200 to 1,500 square feet is recommended for the first physician, with about 1,000 to 1,200 square feet for each additional physician.

Accessibility is an important consideration when evaluating locations that will provide a positive patient experience. Again, consider the target demographic and their ability or willingness to easily reach your location via freeway, side roads, and/or public transportation. A remote location or one in a traffic-filled area may deter patients. Ensure there is adequate free parking that is close to the building for both patients and your staff. An ADA-equipped practice with ramps and elevators is essential to accommodate patients with mobility challenges.

Weighing purchase or lease

Just as each practice’s target populations, volumes, and range of services are unique, each dermatology entrepreneur brings their own goals, resources, and mindset to the business. After evaluating your intentions for patient volumes and future expansion, as well as available financial resources, you will need to decide whether to buy or lease a property. With adequate resources, purchasing office space could be a solid investment. If you are new to practice ownership or just finishing your residency, investing in real estate right away may be a financial reach. Leases — and/or subleases from existing providers—are a viable opportunity to build a practice early in your career, as they allow flexibility of agreements and duration.

"If you're just starting off, it can be difficult to have more than one location. But to serve two patient bases at once, I subleased from another dermatologist once a week. So if you're not completely busy in one location, at first, you can build up in another location."

—Stephanie F., Ohio

Leases require much less money up front, which means less financial risk for the practice. As you see what is available in your area of interest, consider whether the space is mostly ready for business, or requires extensive renovations or even a complete build-out. If renovation needs are minor and/or cosmetic, short leases are reasonable. If you are working with a blank slate, terms of a longer lease will be more favorable, enabling an investment in extensive renovations. 

Deciding on leasing or buying depends largely on personal plans for growth and the desire to make extensive improvements. Many entrepreneurs prefer to put energy into building the business, not the space itself. Leasing allows you to do this, while providing the flexibility to move locations and/or expand into neighboring space.

"I could have bought property, but from a convenience and growth perspective, leasing allows you to leverage cash flow in other ways that will be beneficial. I recommend leasing first."

—Stephanie F., Ohio

Office resource decisions

Once you have zeroed in on an ideal location for your dermatology practice, it is time to make decisions about outfitting it for success. Choices about which equipment, software, medical supplies, and other technology you will use should be determined by your intended delivery of services and established financial plan. 

Software, hardware technology and medical equipment will be large investments. Take advantage of sales incentives or tax breaks whenever possible. Consider refurbished computer technology, when feasible, for tablets or desktops and other equipment that is required for office management. Similarly, buying refurbished medical supplies including exam tables and instruments is a cost-effective way to outfit the new location with necessary, high-quality materials. The American Academy of Dermatology (AAD) has a member buying program, and — along with state societies — may provide discounts on instruments and technology. There are also free or affordable versions of software for email hosting, videoconferencing services, and other basic operational needs. 

"I bought refurbished iPads instead of new ones. You can also save a ton of money on refurbished office supplies and exam equipment. Do some research on your city's refurbished medical exam equipment companies. You can really get some good deals and end up with equipment that looks brand new!"

—Stephanie F., Ohio

Similarly, purchasing and maintaining new dermatology equipment and devices may be costly for start-up providers. While financing can be a feasible solution, leasing, instead, is a solid option that allows you to offer specific services before determining volumes and revenue potential. Laser rental, for example, provides flexibility as you build the patient base and a demand for services. This option may be delivered at a flat fee, or a percentage of daily collections. 

Keep in mind you will be making office selections from an array of vendors and solutions. Negotiating relationships with numerous vendors over time can be expensive and time-consuming. Consider both the convenience and cost-effectiveness of partnering with one vendor who can meet your operational needs including dermatology EHR, practice management, patient portal, and check-in app in one seamless solution. This enables both practice and patient empowerment through one suite of user-friendly, integrated tools.

"If you are starting your own practice as a dermatologist...go with Ezderm because they make it so easy if you are not a 'business person.' The billing aspect is the scariest part, so handling that, my credentialing, and my EHR—that's the hard stuff! I could not have started my practice as successfully as I did without Ezderm."

—Patty P., Missouri

Not sure where to begin on decision-making? It can also be productive to meet with other dermatology providers in the area or region to get advice on local vendors, service providers, and general selections available in the market.

"Reach out to other dermatology entrepreneurs that you trust and see what they're doing. Get as many ideas as possible from your local community. I talked to six or seven dermatology practice owners in my area to pick their brain over a drink or dinner. Talk to them about some of these decisions... what worked, what didn't. In my area, nobody was territorial. Everybody was very happy to help out."

—Stephanie F., Ohio

Once your practice location is established and you’ve considered outfitting it with the appropriate dermatology-specific technologies and supplies, your startup is ready to address how it will market to local patients — and keep them!