Dr. Tea Nguyen (00:00.0)

Practicing medicine without insurance is possible. Imagine a private practice where you get to see your best patients every day providing medical services you truly enjoy, all without the hassle of insurance. My name is Dr. Tee Nguyen, and I'm a recovering specialist who was completely burned out from insurance-based medicine. I pivoted into direct care, where patients pay me directly for my medical services and have never looked back. If you're a private practice owner or planning to become one, 

Dr. Tea Nguyen (00:30.648)

who's looking to be free of the grind of insurance and your craving simplicity, efficiency, and connection with patients, you are in the right place. This podcast will help you map out your exit plan and uncover the mindset needed to thrive in today's economy. Welcome to the Direct Care Podcast for Specialists. 

Dr. Tea Nguyen (00:54.286)

Should you buy an existing medical practice or would you be better off starting from scratch? To give you some context, I know this is a question that a lot of doctors have, especially if you have had no prior business experience and maybe you were offered somebody's practice because they're retiring or they're leaving the community and this is a hot topic. So I'll give you my perspective and of course, what I like to tell everybody is life is a buffet. You pick and choose your dishes. 

Dr. Tea Nguyen (01:23.522)

And then you just learned to enjoy what you chose. Okay. And for me, I opened my practice seven years ago, but before I did, I was faced with the same question. I was given an opportunity to purchase a practice from an individual who had been successfully in business for many, many years. And he was retiring, ready to move out of town, out of the state. And so that was my first exposure to being offered to purchase an existing practice. So. 

Dr. Tea Nguyen (01:52.012)

If you've not been in this situation before, I can share with you the pros and we can explore the cons as well of buying and starting fresh this day and age in the current climate that we're in here in healthcare and in a world where things are just getting really expensive. So let's talk about how that can change the conversations for doctors who are moving into direct care. So traditionally, when you buy a practice, are 

Dr. Tea Nguyen (02:19.628)

really just buying their established patient panels. So you get that immediate revenue stream per se. And let me just remind you that this is the intellectual version, the intellectual answer that you can easily find on chat GPT if you just typed in, should I buy a medical practice or weigh the pros and cons. So I'm just going to reiterate what I'm seeing here online and put in my two cents so that you have better context as to what might work and what may not work for you. 

Dr. Tea Nguyen (02:49.378)

So again, the pros to buying a practice is that we're buying the patient panel. We're buying existing patients in a sense. They've already gone to this doctor for many years, but this doctor is going to retire and the person still needs the service. So the idea is that when you buy the patient's charts, you're buying their records, you're buying them to stay in the practice. Now, how true does this actually happen? 

Dr. Tea Nguyen (03:14.926)

Well, from experiences and other data that you can easily find online, you'll see that 100 % of the patients will not stay with a new doctor for one reason or another. It could be that they choose to just naturally transition out. They don't want to establish care with anybody new, or they just don't like the new doctor for a variety of reasons, or the new doctor changed things that the patient didn't like. 

Dr. Tea Nguyen (03:40.782)

There's 101 reasons why people don't stay. so realize that even though you have access to this existing patient panel, it doesn't mean that they'll stay with a new doctor. Even if the doctor chooses to phase out with the new practice, some doctors may choose to stick around for six months, two years, whatever their timeline is, to ensure that the new doctor is successful. That could happen, but there's no guarantee. 

Dr. Tea Nguyen (04:09.794)

You do, however, have the infrastructure. So you'll have existing staff, the existing location. You'll have whatever they're using, equipment, EMRs, insurance contracts, maybe if there's a need. There's always a chance that a practice may not have those insurance contracts. But if we're talking in the context of a direct care practice, let's say you want to purchase an existing practice. They take insurance. 

Dr. Tea Nguyen (04:36.686)

they are predominantly insurance run, but you want to take that practice simply to have access to the patients and tell them that you're not taking their insurance anymore. Will they actually stay and pay out of pocket? The answer to that is probably not unless you're offering a really sexy kind of cash-based service. Otherwise, they're just going to choose another insurance-based doctor and people will change relationships in order for them to use their insurance. That's going to be most people. 

Dr. Tea Nguyen (05:06.69)

Now, some people may choose to pay out of pocket with a new doctor, even though the new doctor doesn't take their insurance. How often does that happen? Well, less frequently. So the predictability of that revenue is not as easy compared to if you were to take insurance. So there's a big challenge to that. And so people think about buying an existing practice that was insurance dependent, trying to convert them to pay out of pocket as a new owner. 

Dr. Tea Nguyen (05:37.014)

only to realize that the type of practice that they started with selected for people who didn't want to pay out of pocket. I hope that makes sense. So if you have a practice designed for insurance, those people chose that practice because of insurance. But if that practice converts to a cash practice, those people who chose you for insurance will find another practice that takes their insurance. Now, the caveat to that or the leverage that you can have in that is if you create a practice 

Dr. Tea Nguyen (06:07.374)

that offers a non-covered service. So things like orthobiologic, this is injectables to help somebody avoid surgery. And that's also available in orthopedics. It is available in PM &R, pain management and the like. So a lot of people are building their practices around orthobiologics or injectables or options outside of insurance. And I think that is a really great way to go about this, is to bring patients in the door. 

Dr. Tea Nguyen (06:35.49)

because you take their insurance, but then offering them a cash service that you know that works, that you have a good handle around, and then sell them the packages in-house, that could be a great way to kind of use insurance as a way to bring them into your practice. Now, a lot of direct care practices don't do non-covered services. So how do you navigate around that? There are practices that are membership-based. We have neurology, nephrology, rheumatology, where you are offering services 

Dr. Tea Nguyen (07:05.194)

as a comprehensive plan that is not considered really non-covered services, but you're offering it access in a way where it's a membership and that is not covered by insurance. So preventive care, for example, is a little bit of a different model. so depending on what kind of specialty care practice that you choose to have, whether it's membership-based for services that are traditionally covered by insurance, like the consultations or office visits versus 

Dr. Tea Nguyen (07:34.072)

preventive care, is something that's not always covered by insurance, and orthobiologics, which is another type of practice that you can have where people pay out of pocket for, you're going to have to weigh in the idea of buying the existing insurance-based practice and see if it's truly worth those leads. Now, leads are people who could potentially become your patients. They're also called prospective patients. So having access to them, 

Dr. Tea Nguyen (08:02.094)

could be a good thing, but is it really worth the ticketed price that the owner is selling? That's for you to determine. That's if you have the access to that money, if you both feel like it's a good trade, you both looked at the pros and the cons of selling it at this price and you are accepting it at this price. And if you have the cash flow to buy it straight out of pocket like that, to buy that practice, that's a consideration. Or if you have to go to the bank to get it, that's another consideration because now you're 

Dr. Tea Nguyen (08:32.022)

increasing your financial liability because you will still owe that money regardless of whether or not you have patience or not. And so that's the risk that you would have to consider. Now the cons of buying an existing traditional practice is things like hidden liabilities. They may have debts that they have not disclosed. They may have old equipment that is barely hanging on and you have to refresh it anyway. 

Dr. Tea Nguyen (08:56.866)

They may have a certain type of staff culture that you may not be able to penetrate or change, or if you do change it, it may not work for them. And so you have to hire new staff anyway. There are equipment issues I just mentioned. Sometimes we inherit these equipment that may have worked for as long as they have, but things get updated. And if you want a certain type of aesthetics for your practice, you have to take that into consideration as to whether or not those things need to be updated. 

Dr. Tea Nguyen (09:26.646)

or not. There's also the patient expectations that I mentioned, you that's tied to those types of patients who saw that doctor using their insurance. And so that could be a situation. There could be outdated systems that you accidentally inherit or a misalignment of brands. That is a big issue that not a lot of us understand until we get into it. So branding your practice in a certain way, if it's not matched, 

Dr. Tea Nguyen (09:55.958)

If it doesn't match the practice that you're buying, you're basically just starting from scratch as well. And then what you're really buying or paying into is goodwill, trusting that whatever you're buying is going to come with the promises or the guarantees that the seller makes. And oftentimes that goodwill doesn't transfer. Sometimes it can. So that's the risk that you would have to consider. Now let's just think about starting a business from scratch. 

Dr. Tea Nguyen (10:24.064)

If you are starting a practice from scratch without insurance, you've already cut out the overhead expenses. Because when you run a practice with insurance, what are you paying into? Well, you're paying into the volume that it needs in order to be financially sustainable. So what does that look like? It looks like you have a bigger office space so that you can overbook, have multiple patients seen the same appointment slot, but you're running from room to room. 

Dr. Tea Nguyen (10:50.798)

You're also having to pay for an EMR that accommodates billing insurance. And those are usually more expensive because it's an added service. You're also paying for a biller who has to understand billing codes and those coding compliance issues. Of course, if you don't get paid, you have to pay for somebody or you yourself have to track where the error is. And usually it's an administrative error. It's like the wrong code or something or the wrong diagnosis or whatever it is. And so you're chasing money that's owed to you. 

Dr. Tea Nguyen (11:17.836)

whether it's you or you pay a biller to do that or you outsource it to somebody. Nonetheless, that adds into your overhead expenses. So now let's just for a moment think about what it actually costs to build your practice from scratch, which is basically what I ended up doing. I chose to walk away from an offer because I thought to myself, you know, if I have to update old furniture, if I have to talk to people about 

Dr. Tea Nguyen (11:42.83)

what I do and the brand has changed because I'm a different person from the person who was selling their practice, I might as well start from scratch. And also my bank didn't loan me the money to buy that practice because they said it simply was not worth it. And how do they calculate that? I don't know. So what I ended up doing was something that I never really thought I needed to do because I lived in a place that didn't have a lot of job opportunities. And so I was like, 

Dr. Tea Nguyen (12:11.47)

let's just do the thing. Let's just open the practice from scratch, pull up an Excel worksheet and look at what things cost to start. Ultimately, I mean, in this day and age, you can do this easily with ChatGBT. I didn't have this back in the day, but now that you have it, you can type in what does it cost to run a practice? And then it'll give you all of the equipment that you'll need and estimated costs. And you'll see, you can do a side-by-side comparison of what it's going to cost to purchase, what it's going to cost 

Dr. Tea Nguyen (12:40.568)

to start from scratch and you can decide what you want to do with your money. But I did end up starting from scratch. I rented out an office to accommodate a volume-based practice, meaning it was in 1100 square foot office space with three exam rooms and a couple of other rooms in there to accommodate the overflow of patients that I will be having with insurance that paid me very little. And of course, as you know, I had to leave that system because it was just very expensive. 

Dr. Tea Nguyen (13:10.894)

So do the price comparison of what it will cost you to start from scratch. Now, you can be completely conservative. And I've talked to a lot of direct care doctors who did not take out a business loan. They maybe had some savings. I had some savings that they started with and gradually built up their practice. So they made time for this organic growth. And with that allows you freedom to design your practice the way that you want to. You don't have to refurbish anything. You don't have to undo. 

Dr. Tea Nguyen (13:39.84)

a whole lot when you start from scratch. You can paint the walls and just get going. That also gives you the freedom to choose your location. So you are free to build your practice wherever you want. And how I chose it was just whatever office was available. Let me just tell you right off the bat, I did not take a whole lot of time to think about this because I didn't know better. So now that you have access to more tools and resources, you're to be able to choose a little bit more carefully and 

Dr. Tea Nguyen (14:09.848)

pick the places where there's higher traffic areas and allow your potential patients to see you and have access to you. When you build a practice from scratch, you also get to choose your staff. And that can sound really intimidating, but it could be a whole lot of fun too, because you get to pick your team and you get to decide what values you want to lead your practice with. You also get to choose your technology. You get to choose the EMR, you get to choose the payment processing systems, and you get to choose the workflows. 

Dr. Tea Nguyen (14:38.892)

And it's kind of like a canvas. You get to choose the paint, the colors, the design, and this is your living piece of art. You also don't have to deal with any old baggage that comes from old contracts, old relationships, whatever insurance headaches that came along, which also means it's much easier to start and launch your direct care practice without those legacy issues. So it's actually pretty easy. 

Dr. Tea Nguyen (15:07.512)

to start an insurance free practice. Cause you don't have to wait for insurance to approve you or not. You can just get up and go and start charging people whatever you need to charge. Of course, we have to talk about the cons to starting from scratch as well. Growing your business from scratch does start off a lot slower, especially if you moved into a new location or you don't have a reputation yet. So I was an associate at a practice for like a year or two. It wasn't very long. 

Dr. Tea Nguyen (15:34.658)

but I didn't have much of a reputation. So it's basically like starting from scratch anyway. So for me, the risk was a lot smaller because I wasn't in the old system for very long. So everything felt like I was building it from scratch. And so my growth curve was pretty slow, but not that slow. I lived in the same town that I practiced. And so I just got out there getting to meet people and getting to know people and letting them know that, hey, I'm open for business. The other cons of starting from scratch is the startup cost. 

Dr. Tea Nguyen (16:03.744)

It could be unpredictable if you don't know what you're measuring. things to account for. Number one is your rental space. If you have a telehealth practice, this might be irrelevant, but if you have a practice that requires people to see you in person, then you're going to have to have a rental space or if you want to buy into real estate, that could be a thing for you too. That's going to be the cost that's going to be top of mind. The other one is going to be paying yourself and your staff. So those are 

Dr. Tea Nguyen (16:31.746)

going to be the two most expensive things that you spend on and that you have to account for. Now the staff expenses, you can start to really learn because there's no coding to learn. There's no like trying to understand what's the proper modifier to get paid. You don't need any of that. You just need a way to get paid. It could be cash. It could be checked. It could be a credit card through Stripe, Square, Venmo, Zelle, whatever you decide. You can make this so easy. And the last con 

Dr. Tea Nguyen (16:59.072)

is going to be that it will take more sweat equity, which means it's gonna take you more time and energy to market, to brand, and to create systems, referral systems to get people in the door and to get them to stay to buy your stuff. So just a quick recap. The angle that I have as a direct care practice now is that if you buy an insurance-based practice and you think that you can convert those patients to pay out of pocket, 

Dr. Tea Nguyen (17:27.298)

That will not happen. Why? Because they selected for a practice that took their insurance and they will continue to select for the practice that takes their insurance, which means they're going to leave unless you offer a desirable non-covered service. So you'll have a small opportunity to educate them if they want something that you have, like a non-surgical pain relief aesthetic type of thing. You can educate them to say your insurance isn't going to pay for this anyway. 

Dr. Tea Nguyen (17:55.926)

And here is my price. So that's a small opportunity that can exist. There's also going to be misaligned expectations when you buy that insurance based practice, because you're inheriting that insurance era type of patient versus your new vision. So it's kind of hard to teach people how to not use their insurance. So instead, you're going to want to reach people who are used to paying out of pocket and already seeking alternative options to get better. 

Dr. Tea Nguyen (18:26.958)

So if you're trying to have a direct care practice, you're retrofitting what your vision is into an old model by purchasing an existing insurance-based practice. Now, if you choose to start your direct care practice from scratch, let me just remind you that hundreds of doctors have done this straight from scratch. Maybe they took out a small loan just to get started because they didn't have any backup funds or they didn't have that financial protection, which is what I did. I took a business loan out to get started. 

Dr. Tea Nguyen (18:56.086)

And I also took out some savings as well. So I had a little bit of both. It wasn't too crazy or anything, but it got me going. So starting from scratch allows you to create a practice just for you. And so you have that clear vision from day one. The growth is lower, but it becomes more sustainable long-term. Because once you get going, once you create the reputation that you do this thing very good, but that you also don't take insurance, 

Dr. Tea Nguyen (19:26.35)

people will hear about it. And so your marketing efforts gets less and less over time. You still have to market for as long as you have a business, but the effort does get better over time. Now, is there a hybrid possibility where you acquire a practice where you take some insurance, but then do cash for the rest? It's a rebrand. You know, when you're building a practice as a direct care practice where people pay out of pocket, it's a rebrand. 

Dr. Tea Nguyen (19:55.136)

and it's a new patient avatar. It's a new type of person you're servicing. So is it possible? Absolutely. Am I the person to help you with that? Probably not because I don't have a hybrid practice. I have a practice that is purely cash and I like it this way. I don't want to have another conversation around insurance if I don't have to. I just want to take care of the patient. But I'll share with you what I do see happen as a real possibility. 

Dr. Tea Nguyen (20:20.79)

So you can have insurance contracts with a select few. Don't pick the crappiest one. Pick the better ones that pay you like adequately enough, which can be the lead into your non-covered services. So if you have that kind of practice where you're offering something that isn't covered by insurance anyway, this is a no-brainer to keep some of the better insurances, or I should say the more tolerable ones for you as a way to bring them into the door and then you start teaching them. 

Dr. Tea Nguyen (20:50.252)

about the services you offer that isn't covered by insurance anyway. So now that you have all the information, how you decide how to move forward, the biggest question you would have to ask yourself is, what is your appetite for the risk of that debt? So if you take out a business loan, can you tolerate the possibility of unpredictable revenue for the next few months or not? Or would you rather grow this slowly and be able to have your finger on the pulse as to 

Dr. Tea Nguyen (21:19.202)

what money is coming in and what money is leaving in expenses. This is one of those things where you absolutely need to know the flow of your money. Because if you're overspending, you can control it. But if you don't know that you're overspending, there's no way to control it. You just keep spending and spending and you're wondering, why isn't there any money coming in? Why does it feel like it's never enough? So having a grasp on what your expenses are from month to month. 

Dr. Tea Nguyen (21:47.084)

and what is coming in is really important in the first two years of your practice until you get used to looking at numbers and in practicality, probably for the rest of your practice. But for many of us, this is a new skill because we've maybe never had to look at our money or our finances before in running a business. So for me, it felt much easier to start from scratch, starting from a clean slate and making the choices 

Dr. Tea Nguyen (22:15.66)

and living with the choices that I made instead of having to retrofit an existing brand and trying to fit into that brand or trying to change that brand. It didn't make sense for me. So just some closing thoughts about whether or not it's worth purchasing a practice or not. Full transparency, I did not proceed with buying a practice because I personally felt I had a different brand that I wanted to build and I didn't want to undo. 

Dr. Tea Nguyen (22:43.872)

anything that has already been created through the legacy of acquiring past patients. Now, I was really lucky because once that practice closed and I opened mine, those patients gradually found me anyway. And they would say that they used to see Dr. So-and-so and decided to come see me and pay out of pocket. So it kind of worked out for the better, I think. And I think every situation is obviously going to be very unique in where you're at. 

Dr. Tea Nguyen (23:11.97)

and I just was not able to capture that loan to purchase that practice. So that was kind of my number one challenge, but it ended up working out for the better because I was able to build my practice exactly how I wanted to build it. Now, could things have been a lot easier if I chose to have a mentor alongside me? Definitely, but I didn't have those resources, but you do. You're going to have so many more resources than I've ever had, and you're going to be able to make decisions that work for you. 

Dr. Tea Nguyen (23:41.462)

I am very curious to know because I don't get a lot of these conversations, but if you're somebody who purchased a practice and made it work for direct care, I would love to hear from you and I would love to have you on the podcast to share your insight. Because remember, my insight is just mine. It's just how I started my practice from scratch seven years ago and I just continued to build it. And taking ownership in building something that was made exactly for me is what I'm most proud of. 

Dr. Tea Nguyen (24:11.202)

I hope this gave you some food for thought. I'm not saying to do one thing or another. I am saying that there are pros and cons to both decisions. And at the end of the day, you have to be okay with the choices that you make and the lessons that you need to learn through those choices. And if you live with this model, you will never fail at business. That's all I have for today. I'll check in with you next week. Take care. If you enjoyed this episode, please give it a review and share it with a friend. 

Dr. Tea Nguyen (24:40.908)

so more doctors can learn about direct care. Let's keep the conversation going on LinkedIn so we can help more doctors escape insurance and thrive in private practice. Thanks for listening. I'll talk with you next time. Take care.