Starting a Private Practice During Your Transitional Year Residency

Understanding Transitional Year and Its Role in Private Practice

A transitional year residency (TY program) is often viewed as an “in‑between” year—a bridge before entering advanced training in specialties like radiology, anesthesiology, dermatology, ophthalmology, or PM&R. But for a subset of residents, the transitional year can be a strategic launchpad for future independence, including the possibility of starting a private practice sooner than peers.

While you generally will not finish a full specialty in one year, the transitional year residency offers:

• Broad exposure to inpatient and outpatient medicine
• Elective time to shape your clinical portfolio
• Opportunities to explore systems-based practice and quality improvement
• Early networking with attendings who may be in private practice themselves

In nearly all cases, you will not open a medical practice and practice independently after only a TY. You’ll still need a completed categorical or advanced residency, board eligibility, and licensure. However, you can absolutely use this year to lay the groundwork—from business literacy to networking and strategic planning—for a future private practice.

This article focuses on how to use your transitional year intentionally if your long‑term goal includes opening a medical practice, and how to think about private practice vs employment while you’re still in training.

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Clarifying Your End Goal: What Kind of Practice Do You Want?

Before you can use a TY program effectively, you need a rough sketch of your destination. “Starting a private practice” is not one thing—it can take many forms.

1. Solo private practice

You own and operate your own clinic, perhaps with a small staff. Common for:

• Psychiatry
• Family medicine
• Internal medicine (especially concierge or direct primary care)
• Dermatology
• Some surgical subspecialties with office-based procedures

Key features:

• Highest autonomy and flexibility
• Highest financial and administrative responsibility
• You carry the business risk (but also reap most of the upside)

2. Small partnership or group practice

You join or co-found a practice with a handful of other physicians.

• Shared overhead and call schedule
• More negotiating power with payers
• Requires alignment of values and long-term goals

3. Large independent group or multi-specialty practice

You may be an employee or partner-track physician in a large independent group rather than hospital-employed.

• Business infrastructure already built
• May offer eventual equity or partnership
• Less control than solo, more than hospital employment

4. Hybrid models

• Clinical + administrative role: Partner in a group practice and also serve as medical director.
• Telemedicine-focused practice: Particularly relevant for psychiatry, primary care, and some subspecialties.
• Concierge or direct care models: Membership or cash-based practices reducing insurer dependence.

During your transitional year, you don’t need a final answer, but you do need direction. The practice model that appeals to you will influence:

• Which advanced specialty you choose
• Which mentors you seek
• Which business skills you prioritize
• Where you choose to train and ultimately practice

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Using Your Transitional Year Intentionally: Clinical and Strategic Steps

The transitional year often feels heavily clinical, with demanding inpatient rotations. Yet you can still be deliberate about future practice planning.

1. Choose rotations that map to your future specialty and practice style

If you already know your advanced field (e.g., dermatology, radiology, anesthesiology, PM&R), customize your electives and selective rotations accordingly:

• Future outpatient primary care or psychiatry:

  • Prioritize ambulatory internal medicine, family medicine, behavioral health, addiction medicine.
  • Ask for continuity clinic experiences where you follow the same patients over time.

• Future procedural/surgical specialties:

  • Pick rotations that develop perioperative skills, pain management, anesthesia, and pre-op/post-op care.
  • Outpatient procedure clinics if available (e.g., dermatologic procedures, minor surgery).

• Future hospitalist with a side private clinic:

  • Solidify inpatient medicine skills.
  • Also select at least one robust outpatient rotation to understand care transitions.

Even if you won’t be starting a private practice for years, being comfortable with outpatient flow, scheduling, and follow-up patterns will pay off when you design your own clinic.

2. Observe how different practices function

On every outpatient rotation, study the practice as a living business system, not just a clinical environment. Ask yourself:

• Is this private practice vs employment by a hospital or health system?
• How is the front desk structured? How many staff? What are their roles?
• How long are appointments? How many patients per day?
• How is documentation handled (scribes vs physician documentation)?
• How do they manage referrals, prior authorizations, and coordination with specialists?
• What EHR do they use, and how efficient is it?

When appropriate, ask your attending:

• Are they partners, employees, or owners?
• What do they like and dislike about this practice model?
• How did they decide between private practice and hospital employment?

These real-world examples, observed during your transitional year, are more valuable than any abstract business lecture.

3. Build foundational non-clinical skills

Even during a busy TY, you can make small, consistent investments in “practice management literacy.” Focus on:

• Basic accounting & finance concepts:

  • Revenue, expenses, profit, cash flow
  • Overhead: rent, staff, supplies, malpractice, EHR, equipment
  • Difference between salary and distributions/owner’s draws

• Health care economics & reimbursement:

  • Payer mix (Medicare, Medicaid, commercial, self-pay)
  • Fee-for-service vs value-based payment models
  • Prior authorization and coding basics (CPT, ICD-10 emphasis at a conceptual level)

• Legal and regulatory basics:

  • Licensure steps and timelines in your target state
  • DEA registration requirements
  • HIPAA and patient privacy principles

You do not need an MBA. Targeted learning is enough. Consider:

• Short, structured reading in evenings (e.g., one chapter per week of a practice management book).
• Free online resources from professional societies in your future specialty.
• Podcasts focused on physicians in private practice or physician finance.

4. Take ownership of systems-based projects

Many transitional year programs require a quality improvement (QI) or scholarly project. Steer yours toward something relevant to your future practice, such as:

• Reducing no-show rates in clinic via reminder systems
• Improving patient flow and cycle times
• Standardizing follow-up protocols for chronic diseases
• Implementing a team-based approach to chronic disease education

These experiences teach you to think like a systems designer—exactly the mindset you’ll need when opening a medical practice and building workflows from scratch.

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Private Practice vs Employment: Deciding What You’re Aiming For

One of the most important decisions you’ll make after training is whether to pursue private practice vs employment by a hospital, large system, or academic center. Your transitional year is a good time to start forming your own framework for this choice.

Advantages of employment

Many new graduates start with an employed role, even if they plan to eventually move into private practice:

• Stable salary and benefits from day one
• Existing infrastructure: billing, scheduling, IT, compliance
• No upfront business risk or loans
• Predictable schedule in many positions
• Easier to obtain mentorship in large organizations

For a new attending coming out of advanced training, employment can be a “soft landing” into independent practice.

Advantages of private practice

Private practice—solo or group—appeals for several reasons:

• Autonomy: Control over schedule length, visit types, and practice policies
• Income potential: Over time, owners can earn significantly more, especially if they build efficient systems or scale the practice
• Culture: Ability to shape the clinic environment, staff culture, and patient experience
• Innovation: Flexibility to add services (e.g., procedures, telehealth, wellness offerings) without multiple committee approvals

Trade-offs to consider

During your transitional year, reflect on:

• Risk tolerance: Are you comfortable with variable income and business risk?
• Lifestyle priorities: How much do you value scheduling autonomy vs guaranteed time off, especially early in your career?
• Leadership interests: Do you enjoy managing people, or would you prefer to focus only on patient care?
• Geographic goals: In some markets, independent private practices are robust; in others, hospital systems dominate.

You don’t need to decide today. But understanding the spectrum between fully employed and fully independent will help you make rational choices during and after residency.

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Laying the Business Foundation While You’re Still in Training

Even though you won’t formally be starting a private practice during a transitional year residency, you can begin setting up a roadmap so the process feels manageable when the time comes.

1. Learn the life cycle of opening a medical practice

At a high level, opening your own practice involves:

1. Clarifying your clinical niche

   • General outpatient vs subspecialty focus
   • Age group served, procedure mix, telehealth use

2. Market and location analysis

   • Patient demand and demographics
   • Competitor density (solo vs large groups vs hospital clinics)
   • Payer mix in the region (Medicare, Medicaid, commercial)

3. Business planning

   • Projected start-up costs (buildout, furniture, EHR, equipment, legal)
   • Our-of-pocket initial working capital (3–6 months of operating expenses)
   • Revenue projections based on expected patient volume and payer rates

4. Legal and structural setup

   • Choosing a business structure (PC, PLLC, LLC, S-Corp options depending on state and advisor guidance)
   • Drafting operating agreements (especially for group practices)
   • Obtaining tax ID, NPI, malpractice coverage

5. Contracts and payer relationships

   • Credentialing with insurers or deciding on cash-only/concierge
   • Negotiating lease agreements
   • Vendor contracts (labs, imaging centers, supply companies)

6. Operational design

   • Clinic layout, patient flow, check-in/check-out processes
   • Hiring and training staff; designing job descriptions
   • EHR selection and template building

7. Launch and growth

   • Marketing and referral-building
   • Monitoring metrics: no-shows, accounts receivable, patient satisfaction
   • Adjusting schedule templates and staffing as volume changes

During your TY, your aim is only to understand this roadmap at a conceptual level so it doesn’t feel overwhelming later.

2. Start building your advisory “bench”

Every successful practice has a small group of non-physician professionals who are crucial to success:

• Health care-focused CPA
• Attorney with experience in medical practices
• Financial planner familiar with physicians
• Practice management consultant (often part-time or short-term)

You don’t need to hire them during your transitional year, but you can:

• Ask current attendings who own practices whom they use
• Keep a private list of recommended professionals in your target city or state
• Talk to senior residents or fellows who are already job-hunting or starting practices

This early relationship-building shortens the start-up curve when you are ready to act.

3. Pay attention to your personal financial foundation

Starting a private practice often requires:

• Comfort with temporary income volatility
• A clean personal credit profile (if you need practice loans)
• Some savings to cushion lean early months

During your transitional year, you can:

• Create a basic resident budget to minimize unnecessary debt
• Avoid lifestyle inflation when income rises slightly as a senior trainee or moonlighter
• Learn about disability insurance and long-term financial planning

A solid personal financial base makes the eventual step into practice ownership less daunting.

4. Practice leadership in small ways

Owning a practice is as much about leading people as it is about medicine. As a TY resident:

• Volunteer to lead a small team quality project
• Mentor medical students on your service
• Learn how to give and receive feedback constructively
• Observe your chief residents and program leadership: What leadership styles are effective?

These low-risk leadership experiences translate directly to managing staff and shaping culture in your future practice.

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Maximizing Networking and Mentorship During Your TY Program

The relationships you build during a transitional year can shape the trajectory of your career long after residency ends.

1. Identify private practice mentors early

On each outpatient rotation, look for attendings who:

• Own or co-own their practice
• Speak openly (and realistically) about practice management
• Are willing to answer questions about business, not just medicine

Ask if you can schedule a brief meeting to talk specifically about:

• Their path from residency to private practice
• Mistakes they made early in ownership
• What they wish they had done during training to prepare

Document what you learn in a simple “practice prep” notebook or digital file.

2. Attend local medical society and specialty meetings

Even as a TY resident, you can:

• Join your county or state medical society
• Attend evening networking events (often with free or discounted resident registration)
• Introduce yourself to physicians in your target specialty and city

These connections can eventually turn into:

• Job offers
• Partnership tracks in established private practices
• Informal advisors when you negotiate contracts or consider opening your own clinic

3. Use electives strategically in your future practice region

If you know where you want to eventually practice:

• Consider arranging an elective month at that location during your transitional year (if allowed by your program).
• Spend time in both hospital and community settings.
• Ask about the local landscape for private practice vs employment in your specialty.

This regional insight is invaluable compared to generic career advice that may not account for local realities.

4. Leverage alumni networks

Ask your program leadership for:

• Recent alumni who went into private practice in your future specialty
• Graduates who opened practices within 5–10 years of finishing training

Reach out respectfully by email, framing your ask clearly:

“I’m a current transitional year resident at [Institution]. I’m interested in eventually starting a private practice after completing my advanced training in [specialty]. Would you be open to a 20-minute phone or Zoom conversation about your experience with practice ownership and any advice for someone at my stage?”

Many physicians are surprisingly willing to share their experiences when asked thoughtfully.

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Putting It All Together: A Sample Transitional Year Action Plan

To make this concrete, here’s how a future outpatient specialist (e.g., future dermatologist, psychiatrist, or internist) might structure a transitional year with private practice in mind.

Quarter 1 (Months 1–3)

• Focus: Adjusting to residency, building clinical foundation
• Actions:
  • Note which attendings are in private practice.
  • Start a simple “practice prep” notebook.
  • Read one short article per week on physician finance or practice management.

Quarter 2 (Months 4–6)

• Focus: Exposure and early planning
• Actions:
  • Choose at least one outpatient rotation with a private practice setting.
  • Ask one attending about their experience with private practice vs employment.
  • Attend a local medical society event if possible.

Quarter 3 (Months 7–9)

• Focus: Building skills and networks
• Actions:
  • Propose a QI project that touches on scheduling efficiency or patient flow.
  • Set up a 30–60 minute meeting with a private practice owner to discuss their start-up story.
  • Start reading a basic practice management or physician finance book.

Quarter 4 (Months 10–12)

• Focus: Consolidation and long-range strategy
• Actions:
  • Outline your preliminary “Ideal Practice Vision” (location, scope, model, schedule).
  • Identify at least two potential advisors (CPA/attorney) through referrals.
  • Create a 5–10 year career timeline (complete advanced residency → early attending job(s) → potential timing to open your own practice).

This level of intention during your transitional year doesn’t require huge time investment, but compounds over time to make you far more prepared when the moment to act arrives.

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FAQs: Transitional Year and Starting a Private Practice

1. Can I start a private practice right after a transitional year residency?
No. A transitional year is only one year of postgraduate training and does not qualify you for independent practice in most specialties. You generally must complete a full categorical or advanced residency, achieve board eligibility, and obtain an unrestricted license before you can open a medical practice and see patients independently.

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2. If my goal is private practice, should I even bother with a transitional year program?
Yes, if your planned specialty requires a TY (e.g., radiology, anesthesiology, dermatology, PM&R, ophthalmology). The transitional year residency can be a valuable time to build clinical breadth, understand different practice settings, and begin learning about business and systems-based care. While it won’t shorten the path to ownership, it can make you smarter and more strategic when you eventually pursue private practice.

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3. How can I learn business skills when my transitional year is already so busy?
You don’t need a full business curriculum. Focus on small, consistent steps:

• 15–20 minutes a few evenings per week for reading or listening to a podcast
• One or two intentional conversations per rotation with private practice attendings
• Choosing a QI project or elective that exposes you to clinic operations

Over a year, these small actions add up to a meaningful foundation in practice management.

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4. Should I go straight into private practice after residency, or work as an employee first?
Many physicians choose to start in an employed role—even if their long-term goal is ownership—because it offers stable income, reduced risk, and time to refine their clinical style. Others, especially in specialties with strong demand and robust reimbursement (e.g., some outpatient specialties), successfully open private practices soon after training. The best choice depends on your risk tolerance, debt load, market conditions, and support system. Use your transitional year and advanced residency years to gather data and mentorship so this decision is informed rather than reactive.

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By using your transitional year residency deliberately—selecting rotations, cultivating mentors, and building basic business literacy—you can position yourself for a smoother, more confident transition into private practice later. You may not be opening your clinic’s doors during TY, but you can absolutely be laying the foundation for a career defined by autonomy, purpose, and well-designed patient care.