Financing a new practice: the decisions that shape your practice

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Monday, 13 Jul 2026

Setting up or expanding a practice is a significant financial decision. Whether you are an early career professional scouting your first location or an established practice owner weighing a second site, funding and structuring choices about your premises and equipment, will shape your cash flow and practice flexibility for years to come. 

For those considering this next career step, the industry research is pleasing. Now could be the time to build a practice on solid financial foundations – but there is no single right approach. The best pathway depends on your career stage, growth plans, and cash flow.  

Understanding the decision framework  

Before committing to any premises or equipment financing, consider: 

How much capital can you comfortably contribute upfront? 

1. How long do you expect to stay in a particular location? 
2. How much operational flexibility do you want to retain? 

The right answer on one decision does not automatically dictate the right answer on another. For example, an ophthalmologist might sensibly lease a consulting room while purchasing a high-value OCT machine outright, or vice versa.  

The strongest decisions are not rushed. Enlist your accountant and financial adviser early and involve a solicitor before signing any lease or purchase agreement. 

Leasing versus buying your premises  

The flexibility of leasing 

For most early career professionals, leasing premises is the natural starting point. Leasing preserves capital, limits upfront commitment, and allows you to test a location before making a long-term commitment. If you are still growing or planning to relocate within five years, the transaction costs of buying and selling commercial property, including stamp duty, legal fees, and agent commissions, will likely outweigh the benefits of ownership.  

Leasing also provides flexibility to scale up or down as your patient load evolves, and to take advantage of better leasing opportunities if they arise. Negotiating a rent-free period or a fitout contribution from a landlord is more common when entering a new space and can reduce your initial outlay.  

However, the trade-offs are significant. Lease terms in the medical sector tend to be long: healthcare providers commonly sign leases between five and seven years, with some up to 15 years². Rent escalation clauses, outgoings, and limited ability to make structural changes to the premises are all worth considering. Medical fitouts are a significant cost, approximately ranging from AU$1,500 to upwards of $4,000 per square metre, with specialist facilities exceeding that range³ – so understanding who owns that investment at the end of the lease matters.  

The case for buying  

Purchasing your premises may be suitable when your practice has reached a stable, committed stage. Once your practice’s revenue has stabilised and you are planning to stay for seven or more years, buying may build equity compared to leasing. Over a ten-year horizon, the difference in net position may be substantial, depending on location and capital growth. Ownership also gives you security of tenure and the ability to make long-term decisions about your clinical environment without a landlord's approval.  

The commitment, however, is significant. Commercial lending for a medical owner-occupier involves detailed assessment of practice revenue, operating history, and serviceability. Deposit requirements, stamp duty, and ongoing maintenance costs add to the upfront burden. One industry source suggests that lenders may prefer commercial mortgage repayments to sit below 35–40% of gross practice revenue ⁴, although this varies significantly by lender and borrower circumstances  

Questions to consider:  

• How confident am I in this location for the next seven or more years?  
• Can I service a commercial mortgage without constraining my practice's growth investment?  
• Have I obtained independent legal and financial advice on the purchase structure?  

Leasing versus buying your equipment  

The true cost of equipment ownership  

It is important to understand that the purchase price of equipment is not the full cost of ownership. Installation, software licences, staff training, ongoing servicing agreements, and eventual upgrades all contribute to the total. Factoring these into your financial modelling, and discussing them with your accountant, will provide you with a more accurate picture of what a capital purchase commits you to.  

When leasing equipment makes sense  

Equipment leasing can be particularly attractive at earlier career stages, or for high-value items that are subject to rapid technological change. The core benefit is cash flow: instead of a large upfront payment, you spread the cost over time and preserve working capital for staffing, marketing, and other operational needs. 

Leasing also allows you to access the latest diagnostic technology without taking on the full depreciation risk of ownership. This matters in a field where advances in technology are moving quickly.  

The limitations are equally important to understand. At the end of a lease term, you may have limited rights over the equipment, face balloon payments to take ownership, or need to re-lease at updated rates. Some leases restrict how equipment can be used or modified. Review the end-of-lease terms carefully and seek expert advice on how the lease will be treated for tax purposes. The tax implications of a finance lease versus an operating lease are meaningfully different, and this is a question for your accountant.  

When buying equipment makes sense  

For core, stable technology that you will use daily over many years, outright purchase may deliver better long-term value. Ownership also gives you full control over the asset: you can modify, upgrade, or sell it as your clinical needs evolve.  

A useful financial principle when assessing equipment ROI is the contribution margin. Considering this before committing to a major equipment purchase helps ensure the asset will serve your practice's financial health, not just its clinical aspirations.  

Common pitfalls to avoid:  

• Purchasing expensive equipment before your patient volume justifies the utilisation rate  
• Underestimating the total cost of ownership, including installation, software, training and servicing  
• Signing a long equipment lease without fully understanding the end-of-lease obligations  
• Making major capital commitments without stress-testing the impact on your working capital  

Conclusion  

Financing a new or expanding your practice involves complex decisions that interact with each other. Leasing premises provides flexibility and preserves capital but locks you into long-term commitments with escalation risk. Buying premises builds equity and provides security but demands confidence in your location and strong practice revenues. Equipment decisions follow a similar logic, with technology change rates and utilisation adding further complexity. None of these decisions should be made in isolation, and none should be rushed.  

Australia's growing demand for healthcare services presents a compelling backdrop for practice investment. The practitioners best positioned to benefit will be those who have taken the time to think carefully about structure, sought the right professional advice, and built a financing framework that supports their long-term practice vision.  

Author Bio 

Dianne Stewart is the Head of Commercial Lending – Victoria at Avant Finance. She brings over 30 years of specialist expertise partnering with medical professionals to build and grow successful practices. With a deep understanding of the unique challenges healthcare professionals face, Dianne guides practitioners through the complexities of practice start-ups, financial structuring, and long-term business strategy.