Starting a private medical practice takes time, effort and considerable preparation. Developing a comprehensive business plan and establishing an operating budget are the first steps, but there are dozens of other objectives to achieve before the doors of your new practice can open. Following a new practice checklist can help keep your operational goals stay on track and guide your decision-making process to ensure you’re prepared for your private practice journey.
Starting a Medical Practice
Business Plan
The foundation of any successful medical practice is a robust business plan. A well-crafted business plan not only guides your practice’s development but is also crucial when seeking financing, if applicable. Your business plan should include:
- Executive Summary: A concise overview of your practice, its mission, and vision.
- Market Analysis: An assessment of the local healthcare market including competitors, patient demographics and demand for services.
- Services Offered: Detailed descriptions of the medical services you will provide.
- Marketing Strategy: Plans for attracting and retaining patients.
- Financial Projections: Include revenue forecasts, break-even analyses and profitability projections.
- Operational Plan: Outlining day-to-day operations, including staffing, technology and workflow processes.
- Real Estate: Finding a location to lease or purchase.
Pro Forma Projection
A pro forma is essential for making well-informed decisions about expanding services, hiring staff or opening a new service line or location through financial statement projections. Similarly to your business plan, a pro forma accounts for the market, competitors, patient volume and other aspects prior to starting your practice. The pro forma statement is meant to forecast your earnings and patient volumes, in order to develop a financial statement.
Operating Budget
The type of information or questions you may consider:
- Decide on location and negotiate terms if leasing
- Are you licensed in your state for the services you plan to offer at your practice?
- What are your expected hours of operation?
- How will you determine staff compensation and benefits
- Does another billing provider, such as a nurse practitioner or physician’s assistant, need to be included in the proforma?
- How long will it take for you, your service line and your clinic to be fully operational??
- Electronic Health Record selection.
- Billing Service (in-house or outsourced)
If you have trouble answering any of these questions, more preparation may be necessary before moving on to the next steps. With a business plan in place, the next step is to create an operating budget. Your budget should account for:
- Startup Costs: Expenses such as leasing office space, purchasing equipment and initial marketing efforts.
- Ongoing Expenses: Staff salaries, utilities, medical supplies, insurance (malpractice, liability, employee) and maintenance.
- Contingency Funds: An emergency reserve to handle unexpected expenses.
Once you understand your financial needs, explore various financing options if applicable. These may include:
- Traditional Bank Loans: Often the first choice for many practitioners.
- Small Business Administration (SBA) Loans: Offers favorable terms and lower interest rates.
- Private Investors: Individuals or groups willing to invest in your practice.
- Personal Savings: Using personal funds to finance the startup phase.
Take this time to also create business accounts for your new practice. It may be tempting to rely on your personal accounts to establish your services, but tangling your personal and business finances can lead to adverse effects. If you have used your own personal accounts for your practice, pay those funds back from your business account as soon as possible, noting every transaction.
Establishing Your New Medical Practice
Select Your Location and Furnishing
Choosing the right location is crucial for the success of your practice. Consider factors such as proximity to hospitals, ease of access for patients, patient volume and local competition. Once you’ve selected a location, focus on the following:
- Office Layout: Design a patient-friendly layout that ensures a smooth workflow.
- Furnishing: Invest in comfortable and durable furniture for waiting areas, examination rooms and offices.
- Medical Equipment: Purchase essential medical devices, ensuring they meet industry standards and regulations.
Manage Licensing – Business and Professional
Obtaining and maintaining the necessary licenses is a critical step in establishing your practice. This includes:
- Business License: Required to legally operate your practice.
- Professional Licenses: Ensure all medical professionals have valid and current licenses to practice.
- Controlled Substance Registration: If you plan to prescribe medication, secure the appropriate registrations.
Provider enrollment and credentialing are also important aspects to consider as you establish your practice to ensure your ability to enroll in health plans and bill patients.
Make Technology Acquisitions
In today’s digital age, technology plays a vital role in the efficiency and effectiveness of a medical practice. Essential technology acquisitions include:
- Electronic Medical Records (EMR) Systems: Streamline patient record-keeping and improve care coordination.
- Practice Management Software: Automate scheduling, billing and other administrative tasks.
- Telehealth Capabilities: Expand your reach and offer remote consultations.
- Cybersecurity Measures: Protect patient data and ensure compliance with HIPAA regulations. Outsourcing provider data management could provide additional overhead cost-savings while providing additional protection.
You’ll also need to consider email, telephones, a payroll system, a billing system, applications like Microsoft Word, Excel and Teams for internal messaging.
Oversee Human Resources
Building a competent and dedicated team is fundamental to your practice’s success. Key HR tasks include:
- Hiring Staff: Recruit skilled professionals, including medical assistants, nurses, administrative staff and physicians if applicable.
- Staff Training: Provide comprehensive training on your practice’s policies, procedures and technology.
- Employee Benefits: Offer benefits such as health and dental insurance, retirement benefits and more to access top talent.
- Compliance Training: Ensure all staff are trained in relevant laws and regulations, including HIPAA and OSHA requirements.
Meet OSHA Requirements
The Occupational Safety and Health Administration (OSHA) sets standards to ensure safe working conditions. To comply with OSHA requirements, develop the following:
- Safety Policies: Develop and implement safety policies and procedures.
- Training Programs: Conduct regular training sessions on workplace safety and emergency procedures.
- Hazardous Materials: Properly handle and dispose of hazardous materials.
- Recordkeeping: Maintain accurate records of workplace injuries and incidents.
Obtain Insurance
To open your practice, you’ll need several different types of insurance to protect you and your business. Consider the following types of insurance:
- Malpractice Insurance: Protects against claims of medical negligence. The cost of this insurance will depend on your specialty. Some specialties, Gynecology for instance, experience higher rates.
- General Liability Insurance: Covers accidents and injuries that occur on your premises.
- Property Insurance: Protects your office and equipment from damage or theft.
- Workers’ Compensation Insurance: Provides coverage for employee injuries sustained on the job.
- Health Insurance: Offers health benefits for your employees.
By following a structured approach and using a checklist as a guide, you can navigate the complexities of launching your practice and set the stage for long-term success. Remember, meticulous planning and execution are key to building a thriving medical practice that delivers exceptional care to your patients.
Anders Health Care advisors work with providers and new medical practices on meeting compliance standards and securing your financial goals. For more information on how our advisors can work with you, and the associated costs, request a meeting below.
