Ultimate Guide to Starting a Private Practice

‍What is a private practice?

Although it may seem like a trivial question, before you dive into growing your private practice, you need to make sure you understand what a private practice is, and what it entails. Despite your desire to start a private practice, you may find that it’s not the most viable option for you and your preferences and needs, and you may be surprised to find out that alternative practices will better use your healthcare expertise.

Private practices are where healthcare professionals practice mostly alone, with staff used to support minor health and business processes. Naturally, every private practice conducts its business operations differently, but staff are often used sparingly in comparison to larger healthcare entities and organizations outside of private practice. For those who wish to play a larger managerial role in healthcare, and who want to own their own business, then private practices are beneficial. 

Pros vs Cons of Private Practices

Before you start, it is also highly advantageous to evaluate the benefits and drawbacks of starting private practices so you can know what to expect. Knowing the good, the bad, and the ugly can set you ahead above the competition, as it allows you to prepare for all potential scenarios when it comes to healthcare. Taking these factors into account can aid your decision-making when it comes to establishing a private practice, and whether you believe it to be worthwhile, given your expertise and current resources. 

Pros

• Greater autonomy - One of the best parts of having your own private practice, is the ability to make your own rules, and be your own boss. You aren’t responsible to anyone, and you can work towards running your business how you want. You’re able to set personal goals, and have the freedom to implement the changes you wish to see. 
• More flexibility - With your own private practice, you have greater flexibility in how you run your business operations. This means that you can choose to work from any location at your convenience, and you’re able to switch things up if found to be ineffective. You can set your own hours, meaning you can work at an optimal time that suits you. 
• Choose your clients - You can decide which clients you wish to see, and ones that you don’t. In addition to this, you can also decide on your area of specialty and whether your clients are suited to your services. In doing so, you can work towards assessing and treating the ideal number of patients for each working day. 
• Set your own policies - You can easily mold your work environment into one that best suits your healthcare goals and needs. No longer do you have to abide by senseless rules and policies, and instead, you can create ones that have meaning to you, and that help outline your operations. 
• Set your own rates - One of the great aspects of owning a private practice is that you can set your rates based on your experience and expertise, as well as your demand. You don’t have to negotiate for pay increases, as you’re in complete control. 
• Expand your knowledge - When starting a business, inevitably, you’re going to learn and develop various new skills, which is great! You can expand your knowledge beyond healthcare, and dive deeper into what it means to run your own business. You may find yourself in operations that you’ve never encountered before, which makes for an exciting journey. 
• Greater satisfaction - Running your own private practice can bring about much higher satisfaction in the workplace, as you’re setting the tone for how you work best, and thus, you can achieve greater results.  
• Increased pay - It’s no secret that those in private practice have the potential to earn much more than working in public healthcare, which is always a bonus. You allocate more funds to improving your resources, technology, and have disposable income leftover. 
• Easy to start - Many practitioners assume that private practices can be difficult to start, but the truth is, you don’t need prior experience or knowledge to get ahead. All you need is the willingness and hard work to accomplish your goals! 
• Meaningful patient relationships - With private practices, there is much greater freedom around how you approach patient interactions, which many come to appreciate. You can have closer professional relationships without any compromises. 

Cons

• Having to multitask - When you start a private practice, you can expect to be multitasking across a variety of different tasks. You’ll need to learn to manage finances, marketing, HR, as well as your usual clinical role. Naturally, this does become easier to balance with time, but when starting out, you should certainly expect to follow a bit of a juggling act.  
• Increased pressure - With your own private practice, you are the sole leader of your operations, and most of the responsibilities fall on you. You must have increased attention to detail to ensure that all processes are up to speed, and follow legal protocol. You must also have an awareness of evolving healthcare laws and policies to avoid costly violations, which can be a strenuous and tedious task. 
• Sole coverage of expenses - While you can receive financial support, you are still responsible for the associated expenses with starting a private practice. The strain on expenses should alleviate with the more clients you acquire, however, you are the main source for financial transfers and allocation which can be stressful. . 
• Intensive research required - Assuming that you don’t have business experience, you will need to spend time exploring resources, talking to mentors and advisors, and researching what goes into the success of your business. When starting out, you can expect to spend more time within this space than actually seeing and treating patients!
• Staying relevant - You need to work to make sure you’re marketing your business right, which is likely to be outside of your comfort zone. Staying relevant means constantly evaluating competitors and ensuring that you’re on the same level, and that your business doesn’t fade into the background. 
• Fewer peer evaluations - Because private practices often have smaller staff numbers, it’s more difficult for other employees to cross-reference your work, and conduct quality reviews. This means you may have a higher likelihood of making errors and mistakes. 
• Long insurance panel process - Insurance panels are immensely beneficial as they can provide a continuous stream of referrals and patients. However, the application process is often considerably lengthy and time-consuming, which makes for difficult processing and fewer patients. 
• Potential isolation - Sometimes working alone, or in a small team, can feel very isolating when coming from public healthcare. Extra care must be taken to ensure that you continue to build relationships within your workplace, and strengthen your community. 
• Greater risk - Naturally, there are a lot of risks involved with private practice. You may find that your financial and temporal investments don’t pay off, or that your income fluctuates often, which can be very unpredictable. 

Before You Start

After knowing the basics of private practices and what they can offer you, perhaps you’re now interested in starting your business. To guide you along this process, we’ve compiled some of the essentials you need to know before you start as a pre-check, and to make sure that you have the right resources and knowledge to be able to carry out business processes and make your private practice successful. 

Experience requirements

As mentioned, although you don’t need business experience to run a private practice, you do need the relevant experience specific to your healthcare specialty. This is evident, as your service revolves around your knowledge and expertise, which must provide value to your clients. You need to have the credentials to be able to assess patients, diagnose them, and treat their health issues with ease. You must be confident in your abilities, and have the experience to be able to manage patient conditions yourself. 

While there isn’t a specific guide as to how many years of experience are required for you to establish and run a private practice, the general rule of thumb is for healthcare professionals to have at least two years of clinical experience in full-time work, with completed qualifications. Naturally, this does differ within each healthcare specialty, with some areas needing more experience than others, in which case, you will need to conduct additional research. This is super important in ensuring patients that you have the expertise, and that you can efficiently handle a range of healthcare issues, as no one wants to use the services of someone who isn’t properly qualified. Generally, you should have years of clinical experience under your belt, as well as valid state licenses, and the relevant doctoral degrees to assess and evaluate client information. 

Legal requirements

When researching whether you’re eligible to start a private practice, you must consider the legal requirements that factor into its establishment. This is highly important, as failure to consider legal guidelines could result in costly violations that severely damage the reputation of your practice, and lead to a loss of your practice entirely. As a result, you need to take legal requirements seriously, and continuously evaluate them even when you have your private practice up and running. You must analyze the following factors to ensure you’re eligible to run your practice the way you want to. 

Business structures

Before you make any big business decisions, or even prior to assessing small details, you need to decide what structure your private practice will operate under. This is a necessary step prior to registering for a business license or permit, as it will affect a variety of legal outcomes and business decisions. For instance you may register under one of the following:

• Limited liability corporation (LLC) - One of the most popular structures, healthcare business owners don’t pay corporate taxes, and instead, assets and liabilities are separate from you as the private practice professional. This means there is a reduced liability risk in comparison to sole proprietorships. 
• Professional limited liability corporation (PLLC) - Similar to LLC, this is often used in some states where licensed healthcare professionals aren’t able to form an LLC. This structure still incurs taxes like LLC.
• S corp - This option is similar to LLC also, in that business profits and losses are separate from owners. 
  

If this seems overwhelming, don’t worry, there are many resources and financial consultants, as well as attorneys, that can guide you in this process. However, you do need to be aware that the decision of your business structure impacts the amount of taxes you pay. In the case of malpractice, this may also determine the level of protection in the case that you’re sued. 

Business licenses

You also need to consider the licenses that actually grant you the right to operate your practice. It’s important that you research this process as depending on your location, the requirements and eligibility of these licenses can differ considerably. You may also need a country license to operate, so it’s best that you check with local and state governments as to what is needed from you. 

Zoning codes

Zoning codes are highly significant as they govern various business details, including advertisements and signage rules. They are vital in regulating where you practice, and outline the limits within operations of your business practice. You should know the zoning code of your intended location, however, it’s always good practice to double-check and ensure you have the right to go ahead with your plans.

Insurance

To protect you from malpractice, in the case that you’re sued, it’s important that you have liability insurance. This requires research on your part, as the size of your business and the type of business can affect the insurance coverage options. Having insurance means legal fees can be covered under professional protection, and you also have businesses protection for potential accidents that may occur. You can also have personal income protection for unforeseen circumstances where any disabilities may result in a loss of income. 

Accessibility

You also must ensure before you start planning, that you comply with the Americans with Disabilities Act (ADA), as you must remove any barriers that could prevent disabled individuals from accessing your services. There must be equal access to healthcare for all, so it’s important to consider this under your legal activity.

HIPAA

HIPAA refers to the Health Insurance Portability and Accountability Act, and is the most widely used standard to govern security when it comes to healthcare. This is a legal requirement that needs to be paid specific attention to, and it’s important that you understand the basics of its ruling before you make any big decisions when it comes to your practice. 

The HIPAA rules govern the policies, procedures, and laws referring to healthcare, and sets a guideline for how businesses should handle private medical information, and maintain confidentiality. It ensures that all business data is protected from potential hacks and security breaches, which may result in violations that can be very costly. Anywhere between $100 to $1.5million, your business can be severely impacted if you fail to uphold security standards. As a result, it’s important that you implement HIPAA compliant security protocols within your practice, which may include the use of encrypted servers, firewall, and antivirus software, as well as remote cloud storage. There’s no one right way to comply with HIPAA standards, however, you need to ensure you’re up to date on the latest regulations, and that you actively incorporate preventative measures in your practice. For more information, please refer to the following resources:

• Guide to Privacy and Security of Electronic Health Information: This is a basic overview of HIPAA guidelines, with valuable risk assessment resources included
• State Attorneys General: This provides an in-depth overview of what HIPAA and HITECH entail.
• CMS HIPAA Basics for Providers: Details the role providers play in adhering to HIPAA compliance, with additional information on security breaches and non-compliance.

Financial requirements

Naturally, one of the most common questions when it comes to looking at building your own private practice, is how much the operations will cost you. While starting a private practice can certainly be done through reasonable budgets, we do acknowledge that there are many costs involved. Many practitioners aren’t aware of the hidden costs, and can be taken by surprise. Being aware of these and understanding expenses can allow you to effectively prepare, and make logical shortcuts where necessary to save money and time. 

Depending on the scale of your practice, the health specialty you’re under, and the requirements you need, annual costs for private practices can range anywhere from $1000 per year, to over $100,000, with no practice looking the same. These costs are likely to cover the following:

• Self-employment taxes - You need to pay annual income tax return rates, which is typically around 20% of your net income quarterly, with this differing depending on your location. 
• Health insurance - As briefly touched on, you’ll need health insurance to protect your practice from various claims, as well as any other issues that may arise that require compensation. 
• Liability insurance - Once again, you’ll need to fork out some money when it comes to this to ensure you have safeguards in the case of malpractice claims
• Rent and renters insurance - If you are leasing an office space or facility, you need to not only pay rent for the space, but you also need to protect the contents within your practice. This is especially important considering the cost of medical equipment. Though, keep in mind that these costs can be reduced if using telehealth services, where physical spaces and medical technology aren’t needed, with software platforms providing cheaper alternatives to healthcare solutions. 
• Equipment costs - Using medical equipment and technologies is perhaps one of the largest expenses with starting a private practice, and can be costly. 
• Marketing - You will need to implement marketing processes to promote your practice and attract patients to use your service, which can be costly depending on the scale of your business.
• Disability insurance - If you become ill or disabled in a way that prevents you from working, having disability insurance will allow you to have sufficient income to keep your practice afloat. 
• Practice management system - This is a necessity for keeping clinical documents and notes, as well as tracking clients and their appointments. Fortunately, these are some of the cheaper costs associated with private practices, which can be anywhere from a free cost to $100 per month. This alone is a big-time investment to find what works best for you, and if you want to know more information, check out our Ultimate Guide to Practice Management Software guide.
• Staff - If you choose to hire some staff, either fellow healthcare practitioners, or simply administrative staff to alleviate tedious business processes, this will also incur a cost. 
  

If all these requirements are making you feel overwhelmed, don’t worry! Many of these costs are flexible with the needs of your business, and to start off, your overhead costs won’t be too big. With the right research and investment decisions, the financial requirements are entirely doable. For more information, you can seek help from financial consultants, as well as various other resources out there. Simply knowing all these costs will put you in a good position to prepare for what is to come with your practice. 

Where can I receive financial help?

If you’re looking at these financial requirements and wondering how it will be possible to afford all the different insurance types, and how you will be able to run a private practice, it’s important to remember that there are various institutions and resources that can help! There are multiple avenues available for you to take advantage of, including the following:

1. Commercial bank loans
2. Leasing companies
3. Thrift institutions 
4. Commercial finance companies
5. Life insurance companies
6. Professional partnership loans
7. Small Business Administration loan
8. Crowdfunding

Establishing a Private Practice

Now that you are aware of some of the requirements involved in establishing a private practice, hopefully, you’ve researched the exact criteria relevant to you and your specialty, and are ready to embark on the planning and implementation process. There are many aspects that go into this process, and to ensure that you prioritize patient needs, and work towards a streamlined workflow that optimizes your resources, it's important that you take time evaluating your options.

Create a business plan 

A good business plan will serve as the backbone of your healthcare practice, and help you make educated decisions when it comes to allocating funds, and improving your resources. It is the map on which you base your operations around, and every successful practice must have every detail meticulously planned out. Not only this, but having a business plan is essential if you need to apply for a loan or grant to support your practice. Drafting up a plan will provide you with further direction in regards to your healthcare goals, and can help you make carefully evaluated decisions throughout the establishment process. A well-produced business plan should evolve as you learn more information and encounter more concerns and troubles, and therefore, it should include the following aspects.

Mission

You should have a mission statement to outline the purpose of your practice, with who you want to serve, and how you provide value and help your patients. Your mission statement should clearly outline your objectives, in a concise format that highlights the merit of your practice.

Goals

Within your business plan, you should include your goals for your practice, and where you want it to grow. You should list both short and long-term goals, such as having an ideal number of patients you wish to treat in a specific timeframe, or maybe writing one blog post a week. You should expect these goals to evolve over time as you achieve them and as your practice grows, however, writing them down can also help hold you accountable and set good benchmarks.  

Financial details

You should also include all the financial costs, as explored earlier, to help establish a budget, and ensure that you remain in alignment with it. This means including all insurance costs, marketing, staff, equipment, and space lease, as well as any other operating expenses. Once you factor in retirement savings and vacation time, you can calculate the minimum income required to support you. Working out your financial obligations can help towards setting fees, which is a vital component of planning your practice operations. When setting fees, you should also compare to other private healthcare professionals in your area and match appropriately. No patient will want to pay for a service that’s charging too high, and too low won’t be able to cover operation costs. 

You may also need the following information:

• Loan repayment plans if you take out a loan.
• Listed funding options to help you decide on how you can fund your costs. 
  

Marketing

Marketing is a critical component of any business, including ones in healthcare. You need to have strategic plans in place to be able to attract patients and promote the use of your service. This can also help support your financial budget, as you can evaluate the tools and services needed to execute marketing campaigns and techniques. Common examples include writing blog posts, building websites, and using mail systems with promotional material. More information on this will be explored throughout. 

Outline your business policies

Once you’ve created a solid plan for your private healthcare practice, you need to establish clear policies pertaining to the operations of your business to ensure that your patients know what is to be expected. You should be considering a variety of factors, to clarify any concerns or queries that patients may have when utilizing your services. These policies should be clearly worded to avoid confusion and misinterpretations, and they should be accessible to anyone who needs to review them. The easiest way to do this is by listing information online on your website, as that way your patients can look over relevant policies at any time. 

It’s important to note that you shouldn’t assume your patients have reviewed your policies, as after all, who reads the terms and conditions of every service they use? Regardless, you need to ensure that you have discussed relevant policies with your patients so they don’t feel blindsided, or that you’re being deceptive or deceitful. You need to build trust across your patients, and develop solid professional relationships with them, so make sure your policies are transparent. 

You should consider the following aspects:

• Payment - What types of payment will you accept? And how will these be accepted?
• Fees - How much does each appointment type cost?
• Discounts - Will you offer any discounts? If so, can you offer multiple session discounts, or sliding-scale fees?
• Cancellations - What is your practice’s policy regarding cancellations? Do you offer refunds?
• Referrals - When will a patient need to be referred to another healthcare provider?
• HIPAA and Security - How do you handle security breaches? What steps are you taking to protect patient medical information, and what are you doing to comply with HIPAA guidelines?
• Risk - What will you do if a patient is a danger to others or themselves?

Creating forms

A part of establishing healthcare practice policies, is assembling the relevant forms that patients can fill out, and ensuring that you have written consent and sourced information within your practice management systems. These work in conjunction with your policies to ensure that you’re upholding security regulations, and that you’re considering patient autonomy and privacy in your operations. Using forms can also streamline the workflow across your practice, and can be created through either paper or electronic formats. For private practices, we highly recommend electronic platforms. 

The forms that you’re likely to need within your private practice include:

• Intake forms that list basic patient information, such as their personal information that is relevant to their treatment. This includes their name, address, number, and emergency contacts. 
• Disclosure forms that outline all relevant policies and guidelines pertaining to health information within your practice
• Consent forms to ensure that you’re treating patients with their permission, especially in regards to treatment
• Referral forms in the case that you need to refer patients to other healthcare organizations for further assessment and/or treatment
• Insurance reimbursement forms so you can be appropriately reimbursed for your services
• Client information forms that cover more in-depth information concerning the patient and their medical history 

Choosing insurance providers

Once you have all your business policies and forms in order, you need to consider what insurance providers your health practice will offer patients. The most common way to supply insurance to your patients is by joining an insurance provider panel, which places you in a network that allows you to receive payments directly from insurers. This way, you can provide affordable health services to patients, with your services being accessible to anyone who needs them. Keep in mind that you’ll need to apply for each panel that you wish to join, and each application can take months to process, so you’ll need to get on board as soon as possible. 

Going with insurance provider panels is an excellent way to increase your client base, as it means more individuals can access more affordable healthcare. You can have access to a larger and more diverse patient scope, and you can also increase your profits to be used in development elsewhere within your business. Knowing your services are covered can also work to increase retainment rates within your practice, as patients are more likely to stay knowing that their healthcare is covered, which also contributes to greater credibility for your business. When evaluating insurance provider panels, there are multiple aspects that you should consider when selecting what panels to go with.

• What are the most popular panels in your location?
• What are the reimbursement rates for each panel?
• What requirements must you meet to receive reimbursement?
• If you don’t meet these requirements, how costly would it be for you to meet them?
• What is the reputation of these panels?
• What provider panels offer additional services to preferred providers?

It’s also important to note that when you join panels, you’ll be bound to charge what the payer agrees to pay, which can affect how much you charge self-pay clients. For instance, the contract with the insurance providers may outline that you cannot charge the third-party payer one higher fee and then self-pay clients a smaller fee for the same services. The third-party payer is also likely to demand a lower fee than the established community standard, so while you may treat more patients, you may be working for less. There are a variety of factors to consider, so take your time!

To hire, or not to hire?

As briefly mentioned, most private practices don’t employ many staff members, with most practitioners often working alone with the occasional administrative assistant. However, this doesn’t mean that you can’t have a full-fledged team working alongside you, but you must remember that each hire of a medical health professional is a high investment. Therefore, you should take careful consideration into what’s best for your business. Assessing the outcome that you want to achieve can help you decide whether hiring staff will add value and increase productivity and profit within your healthcare practice.

If your practice begins to turn down patients, then this is a good indication that you should hire more staff in order to serve them. You may find that your patients frequently express frustration with limited appointments available, or lack of availability in communication with practitioners, meaning that your practice is understaffed and should consider taking others on board. There should be enough time in the day to complete administrative tasks and treat patients, as well as to produce clinical documents and notes in order to have smooth business operations. 

Location, location, location 

You must also consider the location of your practice, and whether to treat patients in a physical space, or through online telehealth services. Both present their own advantages and disadvantages that you should consider before investing in one route over the other. 

Physical spaces are the traditional way of assessing and seeing patients, as you can easily attend to and foster strong connections with in-person treatment. Many treatments themselves are arguably more effective with in-person evaluations, as practitioners can analyze patient reactions with physical examinations, as opposed to a screen where low resolution may not be able to capture critical details. In fact, many treatments can only be conducted through in-person healthcare methods, making them the only viable option in certain cases. In terms of patient reception, many prefer to be seen in person as it allows for easier communication, and alleviates the stress associated with technology, and can increase the quality of care. Although, keep in mind that this is the much more expensive method as office spaces need to be leased or bought, and decorations are required to brighten the room. Security technologies will also need to be implemented to protect equipment. 

Virtual services are revolutionizing the healthcare workspace, as they provide a place for practitioners and patients to connect from wherever they are in the world. Patients can now access healthcare from the comfort of their homes, which makes virtual services a highly valuable service, and as a result, it is quickly becoming one of the preferred ways to receive healthcare. Especially within a COVID era, using virtual spaces means you can eliminate any health concerns through a foolproof social distancing method. For many treatments, using virtual services is just as effective as in-person, and using online video conferencing is by far the cheaper option. For more information concerning telehealth, feel free to check out our Telehealth’ guide.