So you thought earning your medical degree was difficult, huh? Try starting your own private medical practice!
The truth is that entrepreneurial endeavors of any kind take a huge amount of focus, motivation and insider knowledge. It’s easy to see why some people get discouraged, and why others simply bow out altogether.
But that’s not to say it isn’t worth the risk. In fact, opening your own medical practice can be highly rewarding, letting you use all your hard-earned knowledge and skills without answering to a boss or higher power.
It’s a tricky process, though, so if you need a “how to start a medical practice checklist,” then we have a great one for you here today!
1. Decide Where You Will Practice
When deciding where you’re going to start your new medical practice, you may be tempted to choose the area where you currently reside. After all, you already live there and you’re settled, so why not?
But, it’s important that you consider the pros and cons of practicing in your city, state, county, etc. versus other areas. For example, if you are a dentist, you may want to evaluate the number of dental practices in your city.
Maybe your city is already oversaturated with dental offices (translation: the competition of starting a brand new one may not be worth it).
Search for these practices on your own and compare them with nearby areas. You could be living right next door to another city that’s practically begging for your particular service.
Alternatively, it’s also important to do some research regarding average pay for your specialty.
Salary aggregate websites, such as Payscale, Glassdoor, etc. can be great starting points to figure this out.
As a side note, it’s also important to compare and contrast the average living expenses and startup costs of various regions. Just because you’d get better pay in a different state (for example) doesn’t mean that it will naturally balance out.
In the end, this is an important decision to make, but it’s still ultimately a very personal one.
2. Start a Business Plan
You should always have a solid business plan in mind (whether you’re a medical practice startup or a mom-and-pop bakery).
Your business plan should keep a number of goals in mind, including:
Be sure to have this all down in writing and be as specific as possible. Your business plan will help you greatly down the road, especially when it comes to funding (more on that in a second).
Create your business plan with a timeline in mind, as well. Set yourself with dates on when to achieve specific milestones. This timeline will help you stay motivated and on track.
The U.S. Small Business Association has some great guides and examples for creating a business plan.
3. Get Funded
New medical practices don’t start out of thin air. As with anything, you will need the proper funding to get started.
Unless your pockets are already lined, you’re probably going to have to get a small business loan or additional outside help. You can streamline this by doing your research beforehand and projecting your required startup cost.
You will need to consider every aspect so here are some important ones:
- Cost of real estate
- Cost of building
- Cost of computers
- Cost of staffing
- Cost of medical software
- Cost of medical equipment
- Cost of legal representation
- Cost of insurance
- Cost of advertising and marketing
- Cost of furniture
- Cost of miscellaneous office and disposable items
It can add up for sure, but it’s the reality of doing business. (This is also another reason why some try to buy a medical practice that is already established.)
Sometimes, especially when a physician is retiring, a nice option is to discuss buying them out. The biggest benefit is that you’re starting with a medical practice that is already established and with (presumably) all of the startup funding covered.
4. Get Licensed
Next up on the medical practice checklist is another objective that might be pretty obvious to most. You need your state medical license if you’re practicing in the United States.
Obviously, by now you should know where you’re practicing. But, just because you learned what you need and have earned multiple degrees, it doesn’t mean you can just practice anywhere.
It’s a requirement that you apply for a license to practice in your state, and things can get a little bit confusing because requirements can change from state to state.
Ultimately, you will want to look up your state’s licensing board and contact them directly. You can ask for their requirements (or find them online) and start the application process that way.
While state requirements can vary, there is a push to unify them as much as possible. In general, you can count on needing a number of things:
- Your resume or CV
- Proof of your education and/or training
- Proof of current or past licenses
The process isn’t always the quickest, although it depends on a number of variables. It’s best that you courteously follow-up on your application after it has been submitted to keep things moving along.
Be sure to contact your previous employers and educational institutions about your intentions. That way, they know what to expect if they’re contacted about you and it may help them stay on top of things.
The timeline of this process can vary immensely but count on 30 days – at the very least – to be safe.
5. Get Regulated
Your state medical licensure is important for practicing, but you’re not quite done with the licenses and regulations. Some others you will need to pursue, follow, or acquire include:
- Provider Enrollment
- DEA License
- State Narcotic License
- Hospital Privilege Application
Healthcare providers are required since 1996 to receive an identifying number through provider enrollment. This is for the purpose of Medicare, Medicaid and private insurance to keep track of health providers for insurance purposes.
You may need to register with the U.S. Drug Enforcement Agency to receive your DEA license in order to prescribe medication.
You may also have to apply for a narcotic license to prescribe medication in your state, but it could depend on where you practice. It’s best to contact your state’s government for more information about this requirement.
Finally, you will need to apply for hospital privileges. These “privileges” are what allow you to perform care and procedures (such as surgery) with the hospital, as well as admitting patients.
Even if you are licensed in your state, you may not be able to operate within the hospitals if you don’t do this first. The process varies from state to state and may be governed by different bodies.
This entire process of licenses and regulations can take a considerable amount of time. At the very least you need to plan on a three- to six-month period, so be sure to start this process well before you plan on opening your medical practice.
6. Choose a Legal Business Structure
As a new medical practice and a business, you will need to choose a business structure for tax and liability purposes. This is very important and will affect the following:
- How much you pay in taxes
- Your personal liability to the business
- How much and in what ways you can raise money for the business
There are a few key types of business structures, too, including:
- Sole proprietorship: complete control, but you are personally liable for the business
- Partnership: two or more people share in profits and losses and are personally liable for the business
- Corporation: removes personal liability from the individual, but requires more money and record keeping
- Limited Liability Company (LLC): a hybrid of partnerships and corporations
There may be a good reason for you to choose one structure over another, but it may help to talk to an accounting professional to determine this.
You will then need to contact the IRS to receive a federal tax identification number (TIN) or employer identification number (EIN). This helps with communication between the federal government, employers, and employees for tax purposes.
7. Get Insured
No matter how good you are, medical services is a risky business. You’re almost always performing intrusive work on people’s bodies, making this one of the most important industries to have insurance.
Medical malpractice insurance is a very important one, but there may be others, including:
- Workers compensation insurance
- Medical office policy insurance
- Health and dental insurance
- Data breach and privacy insurance
There are even insurance plans to cover you for billing errors if your medical billing structure isn’t as precise as it could be.
Some of these types of insurance are required and others are optional. It will be crucial that you consult with an insurance agent who can help you navigate this.
They will be able to guide you to which are required, which are optional but encouraged and how much coverage you need.
8. Set Up a Fee Schedule
In the end, you are a business offering a service to people. It may be a very serious and critical service, but it is a service nonetheless!
In the same way, you needed to research the demand and saturation of your medical specialty in your area, you should also research fee schedules. Feel free to ask your colleagues directly for copies of their fee schedule, which should give you an idea.
This will tell you what specific services cost in your area, and you should try your best to match these figures as much as possible.
Perhaps you’re a dentist and claim to offer the quickest or gentlest dental services in your area. If so, you may want to make sure that aspect of your practice is key to your business’s goals, mission, etc.
If you offer specific value to your customers, make sure it is abundantly clear to them in order to justify the price.
9. Handle Your Medical Billing
Financially speaking, visiting a doctor is a complex and complicated system.
Most people who receive medical care need to pay for it through insurance providers. This turns a normal one-on-one interaction into a three(or more)-party interaction that requires a lot of communication.
Medical billers and coders specialize in this entire process – from beginning to end – so that you don’t have to. Outsourcing medical billing benefits you in a number of ways by:
- Reducing billing errors
- Saving time and money
- Freeing up yourself and your staff
- Relieving stress
This is one key area for a medical practice startup that’s worth investing outside of your company. Some of these outsourcing options even offer added benefits, such as credentialing services that can help you with your startup checklist even more!
10. Setup Location and Office Space
Finally, we can talk about the actual space for your private medical practice.
It’s funny to think that your practice location isn’t the first item to consider, but obviously, you have a lot of other items on your opening a medical practice checklist to go through before you start looking at spaces.
You need to determine your needs by asking yourself the following questions:
- How much overall square space do you need?
- How many private rooms will you need?
- What sort of specific infrastructure does your medical practice require?
From there, you can scout out locations and analyze how well they meet your practice’s needs. Once you’ve found the closest match, you can negotiate the lease and place a bid when you’re satisfied.
Once all that is done, be sure to furnish and organize your practice as cleanly and personally as possible. (This is more important than you might think.)
Indoor and outdoor decor and aesthetics can play a key role in patient experience and satisfaction.
Follow the How to Start a Medical Practice Checklist
The medical field is huge, and sometimes, the private practice business can be challenging, difficult and competitive. That doesn’t mean it’s not worth pursuing, though!
The reward of starting your own practice and helping serve your own neighborhood in real and tangible ways can’t be understated. You just need to follow this checklist, and hopefully, this gave you a great place to start.
If you’d like to speak with us more about medical billing services, feel free to contact us right away!