Podiatry In A Down-Turned Economy

***Buying a Practice***
(a letter to the editor)

I'm finishing up third year of residency and looking forward to private practice. I didn't initially plan on buying a practice or starting from scratch, but I've been very curious as to whether or not that is much of a possibility with the current credit crisis. I've done a little initial research and the outlook is mixed depending upon who I talk to. Most financial institutions want specifics before they will even give you a vague answer.

by Jarrod Shapiro, DPM
Joined Mountain View Medical
& Surgical Associates of
Madras, Oregon July 2008

I'm interested in hearing other people's recent experiences, both from the perspective of young DPM's starting out and established DPM's looking to sell. I imagine this crisis may prompt some interesting business transactions to allow retiring DPM's to sell and young DPM's to buy. Thanks.

—Anonymous

This letter to the editor brings up some very significant questions about podiatry and the economy. We've all heard the news about our economy teetering on the edge of disaster. You'd have to be living in a very deep hole not to have heard about the government's 700 billion dollar bailout package in the midst of a heavily contested presidential race. We are all affected by these developments to some extent (hopefully to a small extent and for a very short time). So what does a poor economy mean for podiatrists? Should we be worried about these events? Does being in medicine protect us? Well, I'm no economist, so these are only one docs' opinions. Write in with your concerns and thoughts about the economy, and we'll start a discussion.

First a little bookkeeping: let's talk about the questions brought up in the letter above. Banks absolutely want specifics before they'll lend you money. Starting a medical practice is no different from any other business. Banks want to minimize their risk when lending you money. Just as in any starting business you should create a business plan. This makes good sense whether you're looking to finance the practice or pay with your own money. The business plan has a specific format, and you can find this online through a web search. I would recommend creating one in spite of where you gather your funds. A business plan helps you focus on the structure of your practice and plan accordingly. Most new businesses fail because of lack of planning. During this planning stage you'll need to consider borrowing enough capital to cover not only your practice expenses but personal expenses for at least the first six months (unless you have funding sources from somewhere else). Remember, it takes quite some time to go through the application process for insurances, Medicare, etc, and you're unlikely to see any money during that initial time period.

Personally, I'd wait until the credit crisis sorts itself out before I bought my own practice. I'm a bit risk averse when it comes to this type of thing. Is this not one of the reasons so many new physicians become associates before opening their own practices? With high personal financial debt and families to support, how can we afford to open a practice from scratch without at least a temporary safety net?

Now to the economy. Here's my version of the worst case scenario. The economy completely tanks and we have a second Great Depression. It probably won't happen, but we're talking worst cases here. Unless you're in an area with a lot of wound care and trauma patients (or perhaps a high retired patient demographic with palliative care), I don't see how the typical podiatric practice can prosper much less survive a true depression.

You might argue, "But podiatry is a medical specialty, and we'll always need doctors." That's true. But think about the current non-Depression situation. Which doctors do the unemployed currently see? ER physicians. Perhaps the occasional primary care doctor if they advertise special fee for service rates. In a true depression like we saw in the 1930's, patients are unlikely to look for a podiatrist unless they have a serious problem and they're the lucky ones to have a job and health insurance. Unemployment will decrease the number of young people that you see in your office, because most young people get their health insurance from their job.

Just think, how many people would be coming to you to fix their bunions, hammertoes, and PT dysfunction during the Great Depression? It wouldn't be a pretty picture. Keep in mind that podiatry in many cases is an "elective" specialty. Yes, we have trauma, and, yes, our services are essential, but minor foot pain will wait for treatment if your daily survival is at stake. Remember, during the Great Depression unemployment rates were above 25% nationally. That means a good number of your working, privately insured patients would become unemployed and uninsured. Would you go to a specialist for your plantar fasciitis if you did not have a job and were uninsured? I don't think so.

I don't mean to paint a negative picture, but it's an important consideration. Here are some recommendations from Proutworld an economics website:

Simplify your life – purchase only what you need. Get rid of used, unwanted goods.
Diversify your potential sources of income.
Put your priorities in order – remember what's most important in life.

Here are a few more suggestions. Don't panic. Don't drop out of school, residency, or fellowship. Continue to work and gain the education you've worked so hard for. Tough economic times will eventually pass, as they always do. However, don't put your head in the sand either. Consider ways to fortify yourself against poor economic times. As a precaution I've reviewed my personal bank accounts to be sure I have at least six months of "income" should the worst happen. I'm watching the news and staying informed. I will vote in the upcoming presidential election. If you're not registered to vote or you're not planning to vote then shame on you. For those of you graduating this coming year you might consider looking for jobs in larger academic institutions or hospital systems that would be more likely to weather an economic storm.

What are your thoughts and concerns? Are you worried about the economy and how it might affect podiatry or is this just another "blip" on the radar? Write in with your comments. Best wishes.

Jarrod Shapiro, DPM
PRESENT New Docs Editor
[email protected]

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GRAND SPONSOR This program is supported by an educational grant from STRATA DIAGNOSTICS MAJOR SPONSORS