Opening your new own practice
Whilst opening up your own healthcare practice is undoubtedly an exciting venture, there will be inevitable challenges that you experience along the way. As the healthcare industry continues to grow, expecting to reach a value of $5.5 billion USD by 2025, private practices are increasingly merging into large medical enterprises. However, whilst these hospitals will eliminate the need to pay for startup and overhead costs, there are still significant benefits of operating a smaller private practice. Smaller businesses generate a wider distribution of profits and perhaps, more importantly, will give you a significantly larger amount of autonomy in practicing healthcare. Despite the various factors you need to take into consideration when opening your practice, there are certain tools that can help ensure success for your business. One of the most effective ways to guarantee your practice is reaching its goals within both the administrative and clinical areas is by implementing practice management software. The best practice management software will allow you to streamline multiple processes that are otherwise highly time-consuming, saving your business countless hours, resources, and energy!
Checklist for setting up a new medical practice
Step 1: Creating a pro forma
A pro forma is a reduced version of a business plan that outlines the specific financial details required for your business to be successful. You want your pro forma to detail expenses, debt, and expected revenue so that investors are convinced of your legitimacy. Although they can differ slightly, a pro forma typically entails the expected revenue beginning from the start of the first year to the end of the third year.
Decide on your vision for your new medical practice
Every business needs to begin with a vision. It is likely you already have an idea in your mind about what you want your practice to look like, and it is necessary to put this in writing. Having large goals are good, but make sure your vision is realistic and achievable.
Draft your business plan
A business plan is absolutely essential if you are wanting to open a practice. It is often difficult for medical professionals to be granted loans from traditional banks, given the often massive debt they have after studying, and a thorough business plan is the only way investors will seriously consider your practice. Besides financial objectives, your business plan needs to provide answers to the following three questions:
- What does your business do?
- Who are your target patients?
- Why should your target patients choose you?
Decide on the type of medical practice
Even if you know what specialization/s you want to offer, you still need to decide which of the following five types of private practice will best suit your business needs:
- Solo practice: The largest advantage of opening a solo practice is the ability to have complete control over how the business operates. On the other hand, you are also responsible for all tasks and will most likely have greater startup costs and longer work hours.
- Group practice: Unlike solo practice, opening a group practice will mean you share both control and responsibility with the other medical professionals. Whilst this means you won’t be able to make decisions on your own, it will also likely reduce startup costs and work hours.
- Hospital-owned: Working within a hospital-owned business will eliminate many of the risks that come with opening your own practice. On the other hand, you will be an employee and therefore subjected to employee constraints, including a fixed schedule and minimal responsibility.
- Federally qualified health centers: Federally qualified health centers have similar advantages and disadvantages to working in a hospital-owned business. Given resource allocations, you might experience some caps on working capital, which could impact reimbursement and payment.
- Academic health center: Once again, opening an academic health center will have similar consequences to working for a hospital-owned business. However, it will differ from federally qualified health centers as you won’t experience many caps on working capital.
Consider doing some market research
Just like starting any type of business, opening a healthcare practice entails doing research on the current market. What type of consumers are you trying to attract? What is the current competition like? Is the industry expanding? Is now a good time to start a private practice? Answering these questions will give you a greater sense of what the best options for a new business are.
Make a marketing plan
The only way your business will be successful is if you are attracting clients, and the best way to do this is through marketing. Allocate some of your budgets to marketing schemes, and brainstorm ways you can widen your clientele.
Make a financial plan
Making a thorough plan of your finances will not only help you get a loan but will be indicative of when you can expect to make a profit. Some businesses choose to hire a financial planner, which is a particularly useful idea if you are not overly familiar with the costs involved in starting a business. Essentially, your financial plan needs to include details regarding:
- Revenue
- Costs (Direct and indirect costs)
- Fixed Assets
- Tax
- Financing requirements
Step 2: Purchasing equipment and staffing your practice
Electronic health record system
Implementing an EHR system into your business is the best way to ensure that your clinical documentation is accurate and accessible. Not only do EHRs streamline and store clinical documents, but they are required to qualify for federal funding. Fortunately, there is an abundance of high-quality EHR systems to choose from that will help your business optimize its efficiency and organization.
Medical billing service
As I’m sure you know, medical billing can be a time-consuming and often frustrating process for healthcare professionals. Implementing medical billing services into your practice will streamline this process whilst guaranteeing a reduction in the number of claim rejections and denials.
Medical transcription software
There are different ways you can organize medical transcription at your practice; by using voice recognition systems, an internal staff member, or an outsourced medical transcription business. Any of these ways are acceptable, but it is important that you select the option that will guarantee timeliness and accuracy.
Practice management system
Practice management systems are the most essential tool for successfully operating a private practice. They organize all of your administrative tasks and save physicians countless amounts of time and resources. The best practice management software will be fully integrated with EHR, medical billing, medical transcription, and appointment scheduling systems. Choosing the right system for your practice will lead to a higher functioning business.
Step 3: Preparing to open
There are certain administrative steps you will need to take prior to opening your practice. Given that some of these processes can take quite a long time, it is recommended that you complete them at the same time as steps one and two.
Incorporating as a legal entity and obtaining a tax ID
There are various options for you to choose from when you incorporate as a legal entity, depending on your business structure and the benefits you are looking for. The most important thing is to incorporate as soon as possible, so you can protect your personal assets in the case of a lawsuit.
Credentialing physicians with payers
Credentialing physicians so they can submit claims to payers can be a lengthy process, typically taking up to 3 months. The process of getting credentials involves providing information regarding each healthcare provider’s insurance, working history, and general attestations.
Establishing policies, procedures, and compliance documentation
Managing the policies and procedures of a private practice can be complex, particularly given how frequently healthcare regulations change. Nevertheless, this is one of the most important aspects of successfully operating a business, as all healthcare providers will be informed about expectations regarding medical procedures, billing, clinical documentation, and interactions with clients.
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