Starting a Birth Center Practice
Thinking of starting a birth center? Should I remodel an older building how I want it to save costs? Or should I rent a small space for a while until we save enough money for our final location? Each midwife’s business plan will help determine which option makes the most sense for you. It really depends on your start-up capital funding, long-term goals of practice, and services you will be offering.
I thought it would be helpful to a common breakdown analysis I do with consulting clients when deciding what is best for them. Common questions I ask that you can directly think about when planning your birth center:
What Services Will You Offer?
If you want to just do births and keep things simpler, it might make more sense to have a smaller space leased with inflatable pools for the waterbirth experience. What are your state regulations like? Some states don’t allow inflatable tubs and need a more concrete setup facility versus just a home turned into a birthing center.
Some states are better to build than try to remodel a building to very specific handicap-accessible dimensions of birth rooms and their bathrooms. Some states don’t even have any birth center regulations and midwives look more towards AABC (American Association of Birth Centers) and CABC (Commission for the Accreditation of Birth Centers) for birth center layout and standard support.
How much money to start this birth center practice?
When of the biggest questions I ask that will lead to most of the decisions for birth center purchase, build, or rent discussion is, “How much money do you have to start this practice?” Many midwives start out small using their own working capital to start the birth center. They can’t financially invest in a down payment to build a center or purchase established space that needs to be remodeled.
Those midwives tend to lease a small space for a prenatal room and have a birth room while starting out with the intention of purchasing their final location in 3-5 years once funds are available and birth volume increases. This is an option, but a harder path to pick. As the practice gets too busy too fast, there is pressure to find another location and pay more money than necessary for the remodeling costs.
Remodeling a building is cheaper than building the right space initially.
Long-term maintenance and structural layout challenges with expansion and birth room layouts tend to make remodeling more expensive. If you can get a bank loan, private investors, or business partners that will contribute more to financial start-up capital while you as the midwife contribute more sweat equity to the project, building a new facility is the nicer path to go.
I would like more midwives to think more about the direction of the lease to own a building. It is the perfect win-win situation for lower start-up fund birth center projects while still building up equity in a long-term building for use. Pick a location to lease that the current owner would like to sell in the future.
Motivated sellers definitely help to think creatively of lease-to-own options.
I personally did this with my birth center and it worked out perfectly. There was a chiropractor who had his prior location for sale for over 2 years a couple of blocks from a local hospital with Labor and Delivery services in my husband’s hometown.
He owned the building free and clear and was paying for overhead costs on the building while it was sitting vacant. I created a win-win situation proposal. I gave him his asking price for the building but with my TERMS on the purchase. I have done years of real estate investing and knew some great things to propose to make it a great deal long term.
I offered him his purchase price but would close on the building in 3 years versus now. We would lease the building first three years while the portion of rent was going towards the purchase price, do our birth center room remodeling, and provide a very minimal down payment for his commitment to the deal. It was a pretty easy conversation since this building had lost him money for the last 2yrs and a unique layout for a traditional business (perfect for what I wanted).
SBA loan for remodeling of two birth centers and start-up costs.
Paid our rent monthly and closed on the building in three years bringing no funds to closing since my rent was counting towards lowering the costs of the building purchase.
It was amazing to know this was our long-term location, with minimal start-up costs, and purchase building with no money required at closing! I tell you this story to inspire creativity and always look at win-win situations with people. This gentleman needed to sell his building and I wanted his space.
Whether you look at renting, building, or remodeling an existing building, take the time to look at surrounding neighborhoods, short and long-term goals for practice, initial funds available for starting a building, and the cost of existing buildings in your area. Right now, there are lots of commercial properties hurting for leasing tenants and selling their buildings.
I would bet in most towns, it would make more financial sense to negotiate great deals like the lease to own or purchase at a discounted rate commercial property that is zoned to allow a birth center facility. There is so much opportunity out there for you to start a birth center and don’t necessarily have to build your dream location!
Enroll in our teachable course on the Birth Center Basics to learn more