So, you want to go solo and start your own medical practice. The choices you make can determine how quickly you make money or go out of business. Solid planning is essential. A business plan is a must! If you don’t have time to create a full business plan, make an outline and hiresomeone to fill in the blanks. Starting a medical practice, like any business, requires that you have specific details and goals written out.
Below are some of the most important things to consider when you decide to open your own medical practice.
Do you need a consultant?
Starting a business can be a daunting task. Starting a medical practice can be even more complex. Hiring a consultant to walk you through the start-up process may be a sound investment, saving you time, reducing the risk of overlooking important details, and making the process less stressful for you.
A Medical Practice Consultant can help by focusing on the business side of the practice, including activities such as:
- Determining the legal structure
- Financial Analysis (will you need a loan and how much)
- Preparing a business plan
- Obtaining licenses, DEA number, and Tax ID
- Applying to become providers with Medicare and major insurance companies
- Applying for hospital privileges
- Obtaining proper insurance
- Purchasing equipment, hardware and software
- Establishing a fee schedule and billing process
- Hiring staff and other HR duties
- Preparing office policies and procedures
- Developing compliance plan for HIPAA, CMS, OSHA, and CLIA
- Developing a marketing plan
This is just a short list of things a consultant will help you with.
Consultants charge between $5000 and $10000 for start-up services. It may be worth every penny, depending on your time constraints and expertise. Research consultants and get recommendations before signing a contract. These costs can be worked in to your startup costs and ultimately save you both time and money.
Need forms to get started taking patients?
How much investment is really needed?
Starting a medical practice can be done on a tight budget of $15,000 or a more relaxed budget of $250,000, depending on y our needs and resources. Once your business plan is written, you will have an idea of the costs involved in starting up your dream medical practice. Then, you should compare the “dream” to your reality of budget resources. Going into debt is never good, so only take out loans if it is necessary.
There are several variables that will determine the amount needed for startup. Your business plan should outline all of them, plus more. The more detailed your business plan, the higher chance of success.
Type of Software Systems – There are several EMR software solutions to choose from, so it is a good idea to do some serious research before deciding which to use. Choosing one that works well with your type of practice and your business goals is important because switching EMR systems later can be costly and frustrating.
Costs can vary and may be a determining factor in your EMR choice. For a low-cost solution, consider subscribing to a cloud based system that charges you a monthly fee instead of a large purchasing fee. Get some recommendations from fellow physicians to make the best choice EMR system.
Practice Management system will help with scheduling and billing. A low-cost practice management system can run around $10,000. Higher priced ones are about $25,000. Test out many different solutions before making your choice.
Your Office – The location and size of your medical office should match your practice type and business goals. If you have recently left a group practice or hospital, make sure you follow the rules outlined in your agreement with them regarding the location of your office. A small office may be appropriate for your practice if you provide a specialist service and plan to remain a “solo” physician. You may choose a slightly larger office space if you are a primary care or walk-in clinic and if you may bring on partners in the near future.
Furniture can be very expensive, so budget appropriately and remember that you can upgrade once your practice gets off the ground. Computers and software are vital to your practice, so focus on getting high quality computers before the more expensive chairs and desks.
Staff and Outsourced Services – If you are lucky enough to have a good relationship with your previous staff, you may be able to bring them with you to your new practice. This can create a poor relationship between you and your previous employer, so be careful when “stealing” staff members from other providers.
Your business plan will outline the number of staff members needed to run your practice. You may want to consider a phased approach, beginning with a small staff and outsourced services, eventually bringing those services in-house.
A first phase for a beginning practice may include hiring only a receptionist/office manager to answer your phones, work with vendors, and greet patients when they arrive. Everything else can be outsourced or done by you, the physician. Your receptionist/office manager can work with the outsourced billing agency to make sure your claims are processed. You can perform all clinical duties, such as weight and blood pressure checks, until your patient-base grows enough to warrant hiring a Medical Assistant or LPN.
Specialized Equipment – You probably have a good idea of what type of medical practice you want to start up, but have you considered what types of services you will provide, as well? Some primary care offices and walk-in clinics offer basic x-rays and blood draws on-site. You may want to consider these services, if your budget allows.
Your business plan will outline the types of services you will offer in your office. To save on startup costs, you may want to consider outsourcing special services and phase them in later. If this is your plan, remember to allow extra space in your office for expansion in the future.
Don’t cheap out on insurance!
If you over spend on anything, it should be your insurance. Malpractice insurance is a must, including “nose and tail” coverage for services rendered while employed by your previous employer. You never know what will come out of the past and haunt you in the future.
Workers’ Compensation insurance, liability insurance, and personal property insurance are all equally important. Cover yourself and your assets in case of ANYTHING. Over insuring yourself and your practice can give you peace of mind and allow you to focus on providing good patient care.
Health insurance for yourself and employees is also important. You and your family may require COBRA after leaving your previous employer. This may cost approximately $8000 per year to keep your family covered. Research the cost of individual insurance before canceling your COBRA, you may be surprised at the cost and want to remain on COBRA as long as you can. You should also consider offering health insurance for your employees to attract quality people who are looking for long term employment.
Starting up your own medical practice is a huge undertaking, but can be very rewarding. You will be able to create an office workflow that works, have control over your billing and collections, be creative with the services you offer, and be your own boss. There are many important things to consider while making your business plan. Remember, if you fail to plan, you plan to fail. Make that business plan early, include every detail, and tweak it along the way.