When you’re a new healthcare provider, the financial implications of taking on a loan in addition to student loan debt can feel out of reach. After all, the average education debt of medical school graduates in 2024 was $205,000, according to the American Association of Medical Colleges (AAMC).1
Yet one of the ways to invest in your future as a physician is to leverage certain types of low-interest debt to pursue your professional goals. Medical practice loans are a loan option designed with you in mind. These loans help healthcare providers like you start, grow, or buy into a practice. Here are six ways you can use a medical practice loan as a new graduate.
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Buy into an existing practice
As you embark on your first few years as a healthcare provider, operating as part of a team of physicians might feel more comfortable than going solo. You can benefit from mentorship, established processes, and an existing patient base in a multi-provider practice. But to become part of a practice, you’ll often need to buy in, which can cost several hundred thousand dollars depending on your location and specialty.
A medical practice loan can help you cover a practice buy-in, which may sometimes include an investment in commercial real estate. As you contemplate buying in, it may make sense to work with a business attorney who can help you assess the practice's value and review the contract’s fine print to ensure it has favorable terms for you now and in the future.
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Acquire a practice
If you want to be in private practice alone instead of with partners but aren’t thrilled with the idea of starting from scratch, you might choose to acquire an existing practice instead. Buying an established business has numerous benefits, including brand recognition, trained staff, and potential profitability from day one.
A medical practice loan can help you cover the cost of buying the practice, as well as other enhancements to make the business your own after the sale is complete. Keep in mind that acquiring a practice can be unpredictable since it relies on existing physicians retiring or otherwise moving on. For this reason, it may make sense to forge a relationship with an older physician who plans on retiring and work with an attorney to set up a favorable contract that allows you to complete the acquisition over a few years.
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Relocate to a new office space
If your professional or life circumstances have changed since you started a practice, you might not be completely happy with the current location or accommodations. A medical practice loan can help you move to a space that better meets your needs.
For example, you might need to move the practice to a smaller office that better reflects the number of patients you plan to treat or find a building that’s closer to where you live to cut down your commute. Relocating to a new office also gives you the opportunity to expand your market to treat new patients.
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Enhance the patient experience
As a younger physician, you’re likely more attuned to the digital experience many patients now expect. If your practice hasn’t completely embraced technology, a medical practice loan can help bring it up to speed.
There are plenty of upgrades to consider, like implementing new software systems that allow patients to schedule appointments online, complete and sign digital documents before their first appointment, and keep track of their medical history and test results. Similarly, you might decide to offer a few telehealth appointments each day to draw in a different type of patient, and you’ll need to ensure you have the right computer and camera technology to make it a seamless experience.
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Buy new or replace outdated equipment
Medicine is an industry that stays on the bleeding edge of technological advancements. And many leaps forward in technology require new equipment. Even in your first few years of practice, you might find that your existing equipment needs an upgrade or complete replacement.
A medical practice loan can help you make larger equipment purchases and then pay them off over time as you recoup the cost by charging insurers and patients for the use of the tools. With so many medical devices and equipment available, consider prioritizing equipment according to what’s necessary to keep up with patient demands and keep your practice compliant with regulations.
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Purchase real estate
Investing in real estate is considered one of the best ways to earn “passive” income. But for a new graduate, buying commercial real estate to set up an office is a dual win. Not only can you leverage the space to set up your burgeoning practice, but you may also be able to rent other areas to help cover some costs.
A medical practice loan can help you make the purchase, though some insurers may have you apply for a more traditional mortgage that better serves real estate needs.
The bottom line
Medical school debt can be challenging to manage, but it doesn’t have to stop you from using other types of debt to further your professional goals. A medical practice loan can help you meet various goals, from buying into a practice to creating an incredible patient experience or even investing in commercial real estate. Before taking out any loan, it makes sense to consult with a business attorney or financial professional who can help you understand the long-term implications.
