Before you buy (or lease): What Indian doctors need to know about opening a medical clinic

Key Point: When you are planning to open a new clinic, experts say that it’s important to assess where you’re at in your career and to make a decision about leasing, buying, or other options in the context of your overarching financial goals.

Timing is everything, especially for doctors starting a new medical practice. Whether you are opening your first clinic following residency, launching your own practice after working as a physician employee, or relocating to a new area, it pays to look before you leap.

In deciding whether it would be best to buy or lease your clinic space, experts say that it’s important to assess where you’re at in your career, how long you plan to remain in the area where you’re starting your business, and to review your personal and professional debt and financial goals.


“…Along with loan repayments, we also want them to follow an investment plan to meet their goals of creating education corpuses for their children and a retirement corpus for themselves.”
-Yogin Sabnis, CFP, managing director at VSK Financial Consultancy Services Pvt. Ltd., Mumbai, India


Reduce personal debt

If you are intent on purchasing real estate, you should focus on reducing other liabilities such as your home mortgage or other personal debt before securing a loan for clinic space, said Yogin Sabnis, CFP, managing director at VSK Financial Consultancy Services Pvt. Ltd. (http://www.vskindia.com/), Mumbai, India, which offers financial planning and asset advisory services.

In addition, before committing to a clinic mortgage (or even a lease), you should review your short-term and long-term financial goals and create a roadmap to achieve them.

“This is because along with loan repayments, we also want them to follow an investment plan to meet their goals of creating education corpuses for their children and a retirement corpus for themselves,” Sabnis said.

Some younger physicians are able to purchase real estate early in their careers because they continue to live in their parents’ home when they start practicing, Sabnis said. This allows them to save more of their income while accumulating less debt.

Supply and demand

Physicians who launch a medical practice in an urban area may be shocked by the high cost of both leasing and buying real estate.

While many physicians would prefer the investment of buying real estate to open their clinic, it may not always be feasible.

Aniruddha Malpani, MD, medical director of the Malpani Infertility Clinic in Mumbai, India, was fortunate when he started out that his parents also were physicians—so he moved his practice into their facility.

“From a financial ROI point of view, buying real estate in a city like Mumbai to start a clinic is not very cost effective,” he said.

Consider leasing in a polyclinic

Malpani recommends that physicians who are staring out consider nontraditional options such as launching their practice in a “polyclinic.” A polyclinic is an office with multiple rooms shared by several doctors who practice in a particular time slot. For example, one doctor may occupy a cabin/consultation room for 2 hours. Then another physician, typically in a complementary (rather than an overlapping) specialty, will see his or her patients for the next 2 hours in the same space.

“This is very common in large cities like Mumbai where space is so expensive,” Malpani said.

A polyclinic arrangement creates an informal group practice arrangement. Advantages of this structure also include faster and more convenient specialist consultations, which[s2If !is_user_logged_in()]…

[/s2If][s2If is_user_logged_in()] improves patient care. Physicians share administrative staff or a receptionist, which helps reduce operational costs.


“It’s very tempting to cut corners to save money when you are starting your practice. However, this often turns out to be a penny-wise, pound-foolish approach.”
-Aniruddha Malpani, MD, medical director of the Malpani Infertility Clinic in Mumbai, India


Seek a professional

Whether you decide to buy or lease clinic space, find a professional real estate firm to help with the search, Malpani advises. The added expense will be worth the investment.

“Most doctors will look for space through friends, patients, and relatives who call themselves real estate brokers,” he said. “It’s very tempting to cut corners to save money when you are starting your practice. However, this often turns out to be a penny-wise, pound-foolish approach.”

If you decide to pursue a leasing arrangement, real estate professionals may have relationships with ethical building owners who will honor contract terms. Although there are regulations for lease transactions, addressing a grievance with a property owner still can be a long, drawn out process, Sabnis warns.

“The landlords are fickle-minded and many times, when they know that the tenant is doing well professionally, are not averse to arbitrarily increasing the rent,” he said. “Their attitude is accept the new terms or go.”

Consider tax implications

If you plan to open a clinic in a residential complex, the local residents’ permission needs to be obtained. The management committee that governs the housing society may be reluctant to give this permission because the local municipality would treat the building as a commercial premises and increase taxes, Sabnis said. These taxes are charged to the homeowners’ societies, and therefore the cost is shared by all of the residents.

Moreover, if the management committee changes, the new governing body may reverse the permission that you received, and your clinic would have to relocate.

For the long-term, Malpani and Sabnis agree that buying real estate, although more expensive, if often in the best interest of your clinic. If you’re just starting out and have limited funds, keep costs low and save as much of your income as you can to secure an affordable loan from a reputable lender in a few years.

“Often, the clinic represents an investment in land, which many doctors feel is secure and tangible even though it may not be financially cost effective,” Malpani said. “It gives them a lot of peace of mind that their clinic is in their own name.”

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5 Comments

  1. Gaurav
    Posted Jul 2012 at 12:45 pm | Permalink

    Really enjoying the articles on Mdcurrent,
    Keep up the good work !

  2. Posted Jul 2012 at 2:33 pm | Permalink

    Thanks so much, Dr. Gupta! We greatly appreciate your feedback and welcome any and all physician reader comments regarding current articles and articles that you would like to see in the future. We are thrilled to now be including your pediatric blog on our Blogroll in the Community section of mdCurrent-India.

    Best wishes,
    -Tara Stultz
    Executive Editorial Director/Chief Content Officer
    Intervention Point, publishers of mdCurrent-India

  3. sunil teja
    Posted Mar 2014 at 5:26 am | Permalink

    Thanks for covering the financial aspect of healthcare..

  4. srikanth nayak
    Posted Aug 2014 at 2:52 pm | Permalink

    Helpfull…. Looking forward for more articles

  5. NEPOLEON RAJAMANI
    Posted Jan 2015 at 10:05 am | Permalink

    Really some basic idea before start a clinic is needed. This will be very useful for youngsters.

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