Renting vs buying rooms for your practice

In this episode of PodMD, owner and director of ⁠⁠Rooms With Style⁠⁠ (RWS) Caroline Chaplin will be discussing renting vs buying rooms for your practice, including the benefits of renting when starting out, renting vs buying when you are an established doctor, concerns with rental market fluctuations, the potential capital gains with buying and more.

This podcast is brought to you by Rooms With Style (RWS). RWS provides an extensive range of services for doctors in private practice. Their services are specifically designed to make your private practice more profitable, compliant and efficient. We are the experienced and trusted industry professionals.

  • Transcript
    Please note this is a machine generated transcription and may contain some errors.
    *As always, all in this PODMD podcast is intended for health professionals and the comments are of a general nature. Information given is not intended as specific medical advice pertaining to any given patient. If you have a clinical issue with one of your patients please seek appropriate advice from a colleague with expertise in the area.

    Today I’d like to welcome to the PodMD studio Caroline Chaplin.

    Caroline is the owner and director of RWS (Rooms with Style).

    RWS has assisted surgeons to set-up private practices across Australia for the last 20 years, providing a turnkey solution for busy doctors.

    Today, we’ll be discussing renting vs buying rooms for your practice.

    **We do hope you enjoy this podcast but please remember that the advice here is of a general nature and is not intended as specific advice about private practices.

    Caroline, thanks for talking with us on PodMD today.

    Caroline: Thank you for having me.

    Question 1
    So Caroline, when doctors are first starting out often they are unsure as to whether they should buy rooms or rent rooms. What is your advice in this space?

    Caroline: OK, that is a commonly asked question that I get from a lot of doctors and actually it comes from startup doctors, but also more established doctors that might then be moving into the second stage where they go out on their own after being in an associate ship, etcetera. In my experience and that’s been 20 years doing this, your referrers don’t know whether you rent or whether you’ve bought rooms. Typically when you’re at the start of your private practice. Cash flow is really, you know, a little scarce. So you need to spend money much more on developing your profile in the market and getting referrers to know that you’re there. So of course, patients can then be sent through to. You. So the two costs that are very expensive. I’ve mentioned these two costs before are rooms and staff. So you want to avoid heavy costs in that area when you’re a start up Doctor.

    Question 2
    But what if you are an established doctor, is it now the time that you should get your own rooms?

    Caroline: Well, you certainly can look at your own rooms if you’re an established Dr. but there’s still not an enormous need to. You might have put your funds into investing in residential property or or wherever. Else and therefore you’re just happy to continue to rent space at the end of the day, the referral and the patient’s not going to know if you rent space. The only time that you might feel a little bit compromised is if you’re sharing rooms and you don’t have your own staff at the front desk and whatever. But if it’s a facility and that facility, you’ve got to yourself. You’ve got your own staff appointed and so forth. Then it’s effectively your own practice and I don’t see any enormous benefit in having to buy rooms.

    Question 3
    What about the fact that the rental market can change and you might be having to move on from a rental property?

    Caroline: Property that, of course can happen, and in my experience doesn’t happen a lot, but can happen in the event where a doctor is transitioning to new rooms. My experience has shown me over and over again that provided the doctor educates the market well and several times about the move and also communicates that the move is now for the betterment of the referrer or the patient. For example, there’s a lot better parking for your patients. Yeah. Better amenities, more spacious rooms, etcetera. Then the GP or whomever your referrer might be accepts that and is quite comfortable with that transition.

    Question 4
    Could you explain more about the rental pricing and how that may fluctuate for a doctor?

    Caroline: Well before signing any rental agreement, you certainly have to think about how is the rent going to be increased. And to this end you need to engage a lawyer to make sure that there’s fair and reasonable increments that are already noted in the lease before you sign. I guess we need to think about interest rates too. So you know, then there’s market changes there and forces that are going to increase prices and that’s fine. We all accept that. But I don’t think that that puts one as a huge advantage over the other.

    Question 5
    What about the investment of having your own place and the potential capital growth that comes with it?

    Caroline: That’s true that there might be good capital growth by purchasing rooms, but if at the start it’s at the cost of, you know, a lot of stress and pressure to you because you really can’t afford them, and then now you can’t afford to market correctly and patients are not coming to see you, then I think that that will that will be a greater stress for you. So that if you can avoid buying the rooms at the start and you don’t need to then then that might be something that you can. Then you can consider later on. As part of your grand plan to have your rooms in your own location and so forth, another podcast that I’m doing is talking to you about should you buy a brand new suite in a commercial facility or should you buy an old house? So maybe check that one out as well.

    Concluding question
    What would your takehome messages be in relation to should I rent or should I buy?

    Caroline: My opinion at the start is to rent as long as it’s in a good location, the rent’s reasonable. No one’s going to know the difference. Spend your cash flow and building your practice, building your brand to the wider community, and also to your referral base. That matters a lot more. I see the finances of doctors and doctors who set themselves up correctly. This way end up turning over a lot more revenue later in their career than others. It’s not all about money. That’s definitely that’s definitely true, but setting up the way you want to and putting out your market message to your to your communities again, referrers and patience is of the utmost important

    Tell the community who you are or the community will decide for you. Case in point was a an ophthalmologist that once said. To me, I’m a paediatric ophthalmologist and I never wanted to see in, in, in, in their words with bloody kids. But the point is they didn’t tell the market who they were. So the market kept sending, sending the same patient types and and they weren’t saying anything back to the to this. So therefore the market. Was shaped in a certain way. Now that particular doctor had taken on the expense. Of of their. Own rooms and wasn’t marketing effectively, so again, case in point is that spend your time and effort. Developing your brand not only what you do but who you are in your practi

    Thank you for your time and the insights you have provided

    Caroline: Thank you

*As always, all in this PODMD podcast is intended for health professionals and the comments are of a general nature. Information given is not intended as specific medical advice pertaining to any given patient. If you have a clinical issue with one of your patients please seek appropriate advice from a colleague with expertise in the area.