Working in the healthcare field is always an invigorating combination of rewarding and challenging. When you add the entrepreneurial factor and open your medical practice, those rewards and challenges multiply significantly.
There’s a lot to know before you jump in and open a clinic on your own, though. It takes more than medical know-how. You must have business savvy, a team of knowledgeable people available to help you when you aren’t sure what to do next, and trustworthy employees.
You might be ready to open an independent medical practice if you have all those foundational necessities. Before you jump in and get started, read through these considerations and decide from there whether or not this is the right step for you.
1. You Need a Plan
All successful businesses begin with a plan. It’s the blueprint that will guide you from ideas into reality.
Importantly, if you’re going to rely on funding from outside sources to open your practice, you’ll be required to have a business plan. This document should focus on your financial goals, discussing things like your projected income, balance sheets, and cash flow. How will you obtain financing? Where will that money go once you have it?
A business plan also discusses your ideas for marketing, the demographics that make up your target market, any strategies you have to attract them, and your mission statement. Putting all of this information down in one organized document helps you get familiar with what you should expect as you build and grow your business so you can prepare for any potential obstacles.
2. You’ll Need to Register Your Business
Many entrepreneurs can get away with running their business as a sole proprietorship, but as a healthcare provider, you’ll need to register as a PLLC (professional limited liability company).
PLLCs are similar to LLCs, except they’re only offered to professions like doctors and attorneys. This official business designation protects your practice from the financial damage from a malpractice lawsuit.
Once you have your name and PLLC designation, you will need to apply for an Employer Identification Number (EIN) to hire and pay your workers. This number will also be crucial to setting up bank accounts, filing insurance claims, and completing tax forms.
3. Dig Into Your Finances
No matter how prepared you think you are, opening a medical practice will be more expensive than expected. The business plan will give you an overview of where your money needs to go. Still, equipment, construction, and employee salaries will be higher than your original budget.
Decide if you want to take out loans to cover these expenses or you want to save up to handle them upfront. That will give you an idea of how long you’ll need to plan before you can open your practice.
Keep a buffer in your budget so you have the extra funds on hand as things come up. For instance, you may find an out-of-town nurse or physician assistant you want to hire, but they need help with moving expenses. You could offer a sign-on bonus as part of their contract — if you have the money to do that. (Learn more about sign-on bonuses and other important contract clauses in this article by Physicians Thrive.)
A strategic business move is to ensure you have enough to cover at least six months’ worth of expenses in your bank account before you open your doors. Even if you’re busy right away, getting billing and credentialing set up as a new provider can take months before it’s in the insurer’s system so they can pay you.
4. You’ll Need to Be Credentialed
Speaking of credentialing, have you started the process yet?
Unless you plan on being cash-only, which will likely cost you lots of patients who want someone who bills their insurance, you’ll need to get credentialed with the main carriers. If you’ve always worked under another organization, you may have fallen under their credentialing umbrella and never had to do this part on your own. Those credentials are location-specific and won’t transfer to your new office.
The Catch-22 is that you can’t start credentialing until you have a location and a practice. But until you’re credentialed with an insurance company, you can’t treat patients with that coverage.
Start with the main carriers, like Medicare and Blue Cross/Blue Shield. Medicare usually takes around 30 days if all your paperwork is in order. Private carriers can be quick or take months, depending on if they’re accepting new physicians.
In general, it can take anywhere from three to nine months before you start seeing steady patient loads and receiving payments from insurance companies. In the meantime, you’ll need that extra money you tucked away into your bank account to cover your expenses.
Unlike a typical business, opening a medical practice will require extensive long-term planning before you can officially start seeing patients. When you’ve filed your PLLC and are set to start the time-consuming work of credentialing while covering your bills with other sources, you’re ready to open a private office yourself.