Mistake #11 — Underestimating the Finances Required
Money often costs too much.
— Ralph Waldo Emerson
After you write a business plan for starting your urgent care center, I suggest you arrange access to financial assets that will allow you to invest double the amount (i.e., sustain double the losses) that you had projected in your initial business plan. When it comes to starting an urgent care center almost everyone is more financially optimistic in prospect than in retrospect. Financial setbacks in starting an urgent care are very common. You cannot predict what surprising financial surprises will come up, but you should expect financial surprises. I have seen urgent care centers suffer the following financial setbacks:
- A major local healthcare payer refused to credential physicians until the urgent care center had been open at least six months
- Another center found that major payers were controlled by hospital financial interests and would not allow the urgent care center physicians to become participating providers
- When one urgent care center planned an opening, a large hospital healthcare system opened another urgent care center just across the street three months before the urgent care center was scheduled to open. Growth in patient visits grew at about half the projected rate, and consequently billings and collections were far below financial projections
- One urgent care center found that the billing company they had engaged for contracting, credentialing and billing had no expertise or strong interest in urgent care billing. Four months after opening, very little contracting or billing had been completed
- An urgent care center engaged a management company to manage all finances. After being open for eight months the urgent care center learned that no bills had been paid. They had to endure disconnections of electric, phone and gas. They had a rude awakening when they found their actual financial losses were several hundred-thousand more dollars than they had calculated
- One small group of urgent care entrepreneurs discovered they were out of money and would not be able to meet payroll. They had used the equity in their homes to secure the loans to start the urgent care center; and just six months into the startup, they were faced with the prospect of outright bankruptcy
If you have arranged for access to financial assets that will allow you to survive a cash shortfall, you are far more likely to survive the financial challenges of the first few years.