Starting your own medical practice can be a daunting challenge. From creating the business plan to making administrative choices, you’re responsible for every decision along the way. It’s important to do your research to ensure you’re organized and prepared for the many tasks to come. For example, since the credentialing process can take up to six months, you should get started on that early. This 7-step guide will give you a clear roadmap to follow to help ensure a successful opening of your medical practice.
7 steps for starting a medical practice
1. Create a business plan
A business plan is a 3-to-5-year projection of your anticipated revenues, expenses, and debt. You’ll show it to lenders to help secure financing. It’s important to be as detailed as possible when creating your plan, both to assuage any potential doubts about your practice from the lender, as well as to help drill down into the nuts and bolts of what your practice truly needs to succeed. Your business plan will include:
- Executive summary: This will have the main details of your practice, including the name, location, and the services you’ll provide. It will also have your mission statement: why do you want to open your practice? What are your long-term goals
- Main objectives: Who are you treating? How large is your practice? Where will you be 5 years from now?
- Budget: Create a list of your projected expenses. Start with just the essentials you’ll need to get your practice started. You can also account for any additional purchases you plan to make once your practice gains traction. Remember to include everything from office supplies to your credit card processing costs. When estimating costs for items such as office equipment or furniture, exercise restraint–there’s no need to buy the most expensive artwork or office chairs when you’re just starting out. You should save on the non-essentials until you’re more established.
- Income projections and funding needs: Estimate your projected revenues and expenses for the first 3-5 years.
- SWOT: Research your market niche and create a list of your practice’s strengths, weaknesses, opportunities, and threats.
Remember: your expense projections can fluctuate over time. For example, your loan interest could decrease, or your medical supply costs could increase.
2. Secure financing
Once you’ve completed your business plan, the next step is to submit it, along with your loan request, to different banks and lenders. Check to see if any of them have a medical division. Doctors might have trouble raising money with regular bank loans due to their unique financial situation. Since many doctors have med school debt, they might be viewed as risky borrowers, even though their future income is high. Lenders who specialize in the medical field are familiar with this unusual financial dynamic.
Choose the financing option which offers the best terms, whether it be the lowest interest rate or the duration of the loan. If you have med school debt, now might also be a good time to look into refinancing your student loans.
3. Sort out paperwork and credentials
You’ll need to do a variety of paperwork and secure credentials in order to open your practice, including:
Licensing:
- Incorporating as a legal entity: You’ll need to incorporate your business as a legal entity. There are a number of business entity types to choose from that offer different tax benefits, legal liabilities, etc. Consult a lawyer/accountant to get help figuring out which one best fits your practice’s needs.
- Receiving a tax ID: You’ll need a tax ID or employer identification number (EIN) to operate your practice.
- Liability and medical malpractice insurance: Business liability and medical malpractice insurance are crucial to protect you as a doctor and business owner. And your lender will likely require you to demonstrate proof of coverage. You may also want to consider other types of insurance, such as workers’ compensation and disability.
- State licensing: You’ll need to apply for state licensing. Requirements vary by state.
- DEA registration: You’ll need to register with the DEA to prescribe medicine.
- Other types of paperwork: You may need to obtain other certifications depending on your practice and the services you provide. For example, in-office laboratories require certification from the Clinical Laboratory Improvement Amendments (CLIA) program.
Credentialing:
If you’re planning on accepting insurance, you need to get credentialed with each insurance company. This process can take up to 6 months, so it’s important to start the process early. Insurers will want to see your medical license, work history, proof of malpractice insurance (varies by state/specialty), and information regarding your medical education/residency. You’ll then need to negotiate contracts with your insurers regarding the terms of payment.
4. Find a location
Your next step is to select the location for your office. There are a number of factors here to consider, including local competition, parking availability, and operating out of a multi-use space versus a standalone clinic, to name just a few. If any renovations are required, you’ll have to incorporate that into your estimate of when you expect to open. Steps required for setting up your physical practice include:
- Choose a site
- Negotiate lease terms
- Sign lease
- Secure a Certificate of Occupancy
- Select signage and furniture
5. Buy equipment/ practice management software
Next, you’ll need to purchase office equipment and practice management software to help with important administrative needs such as scheduling and billing. Make sure to purchase:
- Office equipment: At a minimum, you’ll need a computer, photocopier, fax machine, phone, internet, and a desk and chair for reception.
- Practice management software: Your practice management software will be integral to the smooth functioning of your office. It’ll help with important items such as scheduling, billing (note that it’s also possible to outsource billing to an outside company), reporting, and insurance verification. It should also have a patient portal so your patients can securely access their information.
- Electronic health record (EHR) system: you’ll definitely need an EHR system to help organize your patient’s medical records. Make sure to check that your EHR system and your practice management system can integrate with one another.
- Other software solutions: Other possible software solutions include services like credit card processing and medical transcription.
