Establishing an internal medicine practice: A model to determine economic feasibility

To make informed career decisions, physicians must acquire a basic knowledge in medical management and health care economics as they evaluate the potential survival and growth of a primary care practice. Health care providers considering a specific community and local leaders and hospital administrators attempting to recruit internal medicine physicians need a method by which they can evaluate a community’s potential for supporting a first or additional primary care physician. To develop this method, we conducted a detailed survey of nonmetropolitan internal medicine generalists and primary care physicians. Data collected from internal medicine physicians and their administrative staff reflected the volume of ambulatory and hospital visits and the direct and indirect costs of the practice over the previous 24 months. Using the fixed and operating cost data, as well as number of patient visits and patient care revenue, we designed a model to project the economic feasibility of establishing an internal medicine practice in a specific community. This model can be used to project the number of adult primary care visits a community can generate for a prospective physician, as well as to estimate the direct and indirect costs, annualized capital costs, gross revenue, and, net income of the practice.