New physicians can find success in private practice

A fourth-year medical student, asked if she planned to go into private practice, responded, “It can’t be done in this day and age.”

During my lectures to students from around the country who come to Hawaii for an elective in integrative medicine, I always ask how many plan to strike out on their own once they complete their training. Without exception, to date, no one thought it feasible.

Recently, among a group of 10 students from different medical schools, no one even knew of a classmate prepared to take the leap. Burdened with school loans, the overwhelming majority of new physicians simply look for jobs.

Years ago, when my wife and I decided to open our own multidisciplinary clinic, she made more than 30 calls before coming home one evening with a confident smile on her face.

“I think I found the right guy,” she said.

She was right.

Sean Tadaki, managing partner of Commercial Asset Advisors, specializes in finding office spaces that suit the unique needs of medical providers and organizations. While he also looks after the real estate needs of some of Hawaii’s largest health care institutions, he is impeccably attentive to solo providers trying to get a start.

His first piece of advice was to focus on space in the Kapiolani Boulevard-King Street corridor between Bishop Street and Kalakaua Avenue — the “medical conduit.” This area of town is easily accessible, offers good entry and exit, and has better parking than the central business district, Kaimuki or Waikiki. Pricing for office space in this area is competitive with ample inventory, much of which has ground-floor visibility. Also, unlike the central business district, in which some buildings do not allow medical use, the Kapiolani-King corridor tends to be more accommodating.

Over the years, Tadaki has observed several trends that reflect evolving cost pressures. These include smaller exam rooms and larger waiting rooms as some physicians strive to see more patients to make ends meet. Space for administrative functions is shrinking as more businesses outsource billing, bookkeeping and human resources. There is also a trend toward more in-clinic space for procedures and increased use of free-standing outpatient surgical centers where previously much more was done in the hospital. Ample parking remains a must.

Oahu has seen very little new development focused on medical use. Hale Pawa‘a at Beretania and Keeaumoku streets is the one exception in recent years. Construction was already well under way when the recession hit. Although the structure was completed, filling the building with tenants has been difficult.

There is now a widespread sense in Honolulu that we are beginning to ease out of the recession. The economy still faces substantial challenges, not the least of which is government debt at multiple levels.

Unemployment, while easing down, is still high, but the retail market, including the ground floor of medical buildings, is seeing early signs of stabilization. Overall occupancy is slightly positive and pricing has increased marginally in selected markets.

The medical office market is still flat to slightly negative with lease rates remaining flat. According to Tadaki, medical office rental markets will not see a dramatic increase over the next 12 to 18 months but there should positive movement in occupancy by the first quarter of 2013, with rental increases to follow.

Small businesses are the linchpin of the American economy. While large and publicly traded companies benefit from economies of scale and from capital for branding and development, they are inherently homogenous and therefore sluggish. Smaller businesses have the ability to adapt quickly and address clients’ needs in an individualized and specific manner.

The best health care combines efficient processes informed by science and technology together with the ability to treat the patient as a whole person in each encounter. Contrary to the impression of too many graduating medical students, it can be done.