Is an outpatient imaging center the ticket for you?

September 28, 2004

I have been approached by a friend to join him in starting a new outpatient imaging center. I just made partner in my current hospital-based group and this would unfortunately necessitate my leaving to do this, but I think a lot of the local docs would send cases to me. I have been thinking about this opportunity a lot lately because it sounds very attractive, but I just don't know what to do. What do you think?

Dear Eric:

I have been approached by a friend to join him in starting a new outpatient imaging center. I just made partner in my current hospital-based group and this would unfortunately necessitate my leaving to do this, but I think a lot of the local docs would send cases to me. I have been thinking about this opportunity a lot lately because it sounds very attractive, but I just don't know what to do. What do you think?

Signed

Conflicted

Dear Conflicted:

There are two major questions that you have to answer before making such a choice: Will the business be a success, and are you an entrepreneur?

First, keep in mind that 80% of new businesses fail in the first two years, and this is most commonly due to lack of sufficient capital to last through those years. So you need to know beforehand if both of you have enough money set aside to pay not only your business expenses, even without any patients, but also your personal expenses like mortgages, car payments, vacations, and - in the worst circumstances - FOOD. Believe me, a new center with a sign that says "Will scan for food" doesn't instill much confidence.

The referral patterns of many physicians are based on relationships that have been developed over many years. While you think you already have a built-in referral base, you can't really count on that. In fact, you might be in violation of your current employment contract if there is a noncompete clause that encompasses the location of your proposed center. On the other hand, if your center is outside of noncompete area, you may have excluded most of the referring clinicians you were counting on for business because the distance is too great to travel for patients.

The other critical issue you have to answer is whether you have the psychological makeup to be an entrepreneur. There is clearly a personality type suited to this type of venture. Can you go to bed at night and sleep peacefully knowing that a repo man is lurking outside trying to make off with your Porsche? If not, you may be happier in a large established group where such concerns will not arise. If, however, you chafe under the restrictions imposed by such large groups and frequently find yourself daydreaming about starting your own business, you may have the necessary traits to be successful.

Take this little quiz: answer yes or no to the following statements.

1. The idea of dodging creditors is appealing to me.

2. I have mastered the ability to kite checks.

3. I have numerous empty credit cards right now.

4. Being awakened at 2 a.m. because the magnet is venting all of its helium sounds like fun.

5. Dealing with crises on a daily basis is mentally stimulating.

6. I can grovel with the best of them.

Give yourself 100 points for every yes answer and 1 for every no. If your score is more than 6, you have the skills required of an entrepreneur.

If you think you would be better off in a large group, take this quiz. The same rules apply.

1. I must have eight weeks of vacation a year.

2. I must have a paycheck.

3. Diffusion of responsibility is a good thing.

4. I love having only a small say in things.

5. I don't want to worry about things.

6. I find endless group meetings soothing.

If you scored more than 6, you would be happier in a large group.

The great thing about the world is that some people that love starting new businesses and can handle the stress and, at times, failures without becoming suicidal. Meanwhile, other people are most happy in large groups and would never be able to run their own business because they just don't want the responsibility and hassles.

You need to look deep inside yourself and decide which type of person you are. Many people dream of quitting their jobs not because they want to start their own business, but because they are just unhappy with their current job or the current leadership and feel that at least with their own business they could call all the shots. Is it possible that this opportunity seems so appealing right now because you are unhappy with some elements of your current group? If so, it may be far less risky and disruptive to your family life to try to fix things from within rather than start a business from scratch. If, on the other hand, you have dreamed all of your life of starting a business and have only felt constrained by the expense, then this might be just what the doctor ordered. To lessen the risk, you might want to look for some financial backers who are willing to share some of the financial risks with you and your partner before making the leap.

Certainly, an outpatient imaging center can prove to be much more attractive than a hospital-based practice. Banker's hours with no call or weekends can indeed be very seductive. While hospital-based groups have the assurance of a steady flow of patients, those groups can just as easily lose the contract and find themselves out on the street.

I would propose a final possibility for your consideration. Why not try to take on the role of entrepreneur within your own group and become the partner in charge of setting up the group's first outpatient imaging center? The financial resources are there, as are the referrals, but with far less risk. The only thing you have to been concerned about is the hospital's response, but with the current market, no hospital can really afford to play a game of chicken with its radiology group by threatening the contract simply over the issue of an outpatient imaging center. You also increase your group's options in future negotiations with the hospital should you have an outpatient imaging center to fall back on.

You need to decide if you have the financial resources and psychological makeup for such a transition. If not, you can at least try to enlist your group to support your proposed project. You also need to figure out if this is really what you want to do or just a symptom of your frustration with your current group. You might want to figure out what is making you unhappy and work on solving that problem first. Then reevaluate your situation.

You might also want to consult with a career consultant to better explore your desires and options.

Best wishes,

Eric Trefelner, M.D.

DR. TREFELNER is a radiologist and cofounder of NightShift Radiology. He invites comments by e-mail at eric@nightshiftradiology.com or fax at 650/728-7206.