The creation of your new office should start with a financial analysis of your practice and your finances. This includes your current gross income, and the best forecast of the gross income that you can achieve with the move. Also consider your assets and ability to incur debt.
Moving to office space which is more physically attractive and at a better location allows the doctor to attract new patients, retain full fee patients, and improve staff morale and productivity. These benefits are in addition to the traditional increase in volume through expanding treatment areas, improving patient flow, and implementing new technology. Accordingly, the return on investment for a new office facility is usually very attractive.
The move will require costs for interior construction and equipment, plus if you choose to own, building and land. It also will require an investment of your time.
Some advice from John McGill, MBA, JD, CPA, of The McGill & Hill Group of Charlotte, NC:
“As a general rule of thumb, doctors should not spend more than 70% of gross collections from that office location on land and building. For example, a practice grossing $1,000,000 at a given location, should not spend more than $700,000 on the cost of the land and building (excluding equipment) for a new building at that location. Furthermore, annual rent should not exceed 6% of collections for that location, in order to maintain profitability at the industry average.”