Starting your own medical practice can be exciting. And yet it also comes with many challenges. Unfortunately, starting a new medical practice from the ground up is complicated, so it’s important to have a detailed plan in place in order to keep the process running smoothly.
Has it been your dream to open a private medical practice? That’s great! After all, you’ve worked hard to get through medical school and put yourself in a position to work for yourself. Just be aware that the years of hard work are only just beginning.
Let’s take a look at many of the things you’re going to need to do before you can open the doors of your own practice and start seeing patients.
Secure Financing for Your Private Practice
Show me the money!
That’s right, get ready to spend some serious cash. Building a private medical practice from scratch is going to be an incredibly expensive endeavor. As with launching any other type of small business, you’re going to need a business plan, good legal counsel, and plenty of startup capital.
This often requires a small-business loan, or some other form of outside capital, to cover the startup costs. Keep in mind that this expense can be especially painful if you are already saddled with a substantial amount of medical school debt.
You can expect to face a number of considerable expenses during the startup phase, including:
- Real estate
- Construction equipment
- office equipment
- medical equipment
These costs can add up quickly. So unless you’ve managed to save up a significant amount of money, you’ll need to consider a substantial loan to get your practice off the ground.
Secure the Necessary Credentials
Opening a private practice isn’t simply matter of finding an office building and filling it with medical equipment. You must also go through a process called “credentialing”. This must be done in order for your medical practice to be able to accept government or private health insurance from patients.
The credentials process can take months. During this time insurers will generally ask about your medical education and residency, and they will need to see that you are properly licensed and have acquired malpractice insurance.
Keep in mind that not every state requires malpractice insurance, but having it is important for protecting your personal assets in case you are sued by a patient.
Choosing a Legal Structure for Your Practice
Because your medical practice is a small business, you will also need to select a legal business structure to operate under. This is the structure that will determine how you pay taxes, how you handle debt and losses, and to what extent you will be personally liable for lawsuits.
Most medical practitioners form S corporations, which requires them to only pay taxes on their personal income from the business. Whereas with a C corporation, the business is taxed at both the entity level and on their personal income from the business.
You would definitely be wise to hire a good health care attorney to draft the legal documents.
Next, you’ll need to apply for an employee identification number on the IRS website. The IRS uses this number to identify your business for tax purposes. You will also need to register the business for state and local taxes.
If you’re interested in opening a private practice of your own, find out more information here.
You will need to be licensed before the practice can open its door for business. This requires following all relevant regulations at the federal, state, and local levels.
Some of these basic requirements for physicians include:
State licensing from the medical board in the state where you intend to practice.
National provider identifier. This is required for all medical providers. You can apply for this number on the National Plan and Provider Enumeration System website.
DEA registration. In order to be able to prescribe medications, you will need a DEA number issued by the U.S. Drug Enforcement Administration. This can be applied for on their website.
You will also need to follow any other specific rules pertaining to the type of medicine you intend to practice.
Billing and Payment Services and Equipment
Many medical practices outsource billing to third-party services. This a smart idea. But you’ll still need a management system for overseeing the billing process within your office. Submitting insurance claims is time-consuming, but your office staff will be responsible for dealing with rejected and denied claims and collecting unpaid money due to the practice.
Your practice will also need a credit card processor for patients not making payments through Medicare or insurance companies, as well as medical transcription software for use by in-house staff.
Hire an Office Manager
The simple reality of opening a private practice is that you can’t do everything yourself. Ideally, you will spend your day with patients while your office staff handles the day to day operations of keeping everything up and running.
That’s why it’s essential to hire a qualified office manager with plenty of experience in the medical field. This is a lot of responsibility, so you’ll need to find someone who has a combination of business acumen and proper people skills for dealing with a variety of issues that will arise in a busy office environment.
An experienced office manager will be able to keep the business side of the practice running smoothly while the practitioners do the job they went into medicine to do. The office manager should be skilled at resolving insurance issues, scheduling staff, and managing a budget.
Believe it or not, a good office manager is hard to find and is one of the most important parts of a well-organized medication practice.
The Many Parts of a Private Medical Practice
There’s nothing simple about starting a private medical practice. Just as with any type of small business, there are a million moving parts that have to be properly taken care of.
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