Become Independent: 7 Essentials For Starting Your Own Medical Practice
Starting your medical practice is an exciting endeavor, but can also be challenging and complex. To achieve success, you need to have a solid plan that will keep things moving. Apart from securing financing, choosing equipment and assembling a team, you need to figure out all the dependent parts that relate your practice to other organizations. Here are the most essential considerations as put together by expert advisors and consultants, as well as healthcare providers who have gone through the process successfully.
Why starting-up at all?
The healthcare industry is experiencing a rapid consolidation as a result of rising upfront expenses, inherent operational risks, as well as the difficulty of starting your own practice. A recent review has discovered that 43% of the market is controlled by for-profit insurers, while 60% of community hospitals depend on enterprise health systems. Such a trend is expected to continue for at least five years. The influence of large healthcare systems and established hospitals over healthcare providers has concentrated the industry in the hands of fewer decision-makers, so for many providers, joining these huge healthcare enterprises becomes the only realistic model. But it doesn’t have to be. Small private practices bring more competition and more even distribution of profits. Startup providers also have more autonomy to draw their own business strategies, such as bringing healthcare to local areas that appear underserved.
Business plan and financing
While no one expects you to present a fully-expanded business plan, you need a pro forma, which is a lighter version with realistic revenue and debt projections. Your pro forma needs to account for your anticipated revenues, expenses, and debts. Since banks are interested in making wise investments, they can tell you which projections are realistic and which aren’t. A well-made pro forma projects financial plans at least three, and sometimes five years ahead. Getting financing through a regular bank loan might be challenging, as many healthcare providers are burdened with a negative net worth as a result of debt for medical education. This is why a rational and realistic pro forma is critical in this phase. You need to present cash flow and debt projections on a monthly or at least quarterly basis. In addition, healthcare is always experiencing a huge lag in cash flow, as your healthcare services alone aren’t very profitable without insurance companies and the government.
Obtain your credentials
Credentialing is a process that allows you to accept government or private health insurance from patients. It can take several months, while insurers inquire about your medical education and residency. They are also interested if you’re properly licensed as well as whether you have malpractice insurance. Although not required in all legislations, malpractice insurance helps protect your personal assets from patient lawsuits. Your branch of medicine and your local demographics can help you choose your health insurance program. Decide which insurance providers to partner with and negotiate an individual contract with each one of them.
Choose your legal structure
As a startup owner, you should choose a legal business structure, which affects how you pay taxes and to what measure you’re liable for losses, debt, and lawsuits. Many private healthcare practitioners choose to form S corporations where taxes go only on their personal income from the business. With C corporations, not only the personal income, but the business as a whole is taxed at the entity level. Hire a healthcare attorney to give you advice and help you draft legal documents such as articles of incorporation and organization, or a partnership agreement, depending on the structure you choose. Once you choose your legal structure, you should apply for an employee identification number (EIN), which identifies your business for taxes at the federal government.
Obtain medical equipment and hardware
When it comes to furnishing your doctor’s office it’s a good idea to go frugal, as you can easily go overboard with spending and fall into the cold overhead ocean. Try reaching out to retiring healthcare providers or overstocked hospitals to see what pieces of medical equipment you can get at sub-prices. For the basics, you’ll need an exam table, stethoscope, otoscope, blood pressure monitors, and if you’re a specialist, an ultrasound scan. An office that doubles as an examination room needs quality medical lighting solutions that guarantee high hygiene standards as well as reliability and longevity of installed fixtures. On the business part, you need computers, phones, and a credit card machine, all as well as utilities, landlines, and the internet.
Consider an EHR system
The electronic health record system (EHR) is a universal tool for medical practitioners, which allows them to digitize records and streamline communications. Both of these capabilities are of high priority for a modern private healthcare enterprise. One comprehensive EHR can become your one-stop hub for the patients’ records and histories, data exchange with other providers, laboratory and prescription orders, as well as tracking your revenue cycle. A great EHR system also allows you to qualify for federal incentive payments. A part of your EHR system, the practice management system keeps track of your business information and manages operations. Its primary use, though, is to conduct and monitor your billing and revenue cycle. Your staff will use a practice management system to send claims to payers and bill patients, as the relevant information is shared between the software and the central EHR system.
Assess security risks
Patient privacy and security issues should be a primary concern for a medical provider struggling to establish staff workflows. To comply with the Health Insurance Portability and Accountability Act (HIPAA) and the Medicare Access and CHIP Reauthorization Act (MACRA), you’ll need to perform a security risk assessment. This should include an overview of the protected health information (PHI) that you operate with, listed physical and digital locations where you store and maintain PHI, an assessment of current security measures, an overview of potential vulnerabilities and threats to PHI, and a likelihood assessment for each threat.
Using this checklist of essentials, you’ll hopefully be able to open a great medical practice that you’ll enjoy working in. While the odds might seem unfavorable at first glance, the freedom, once you’re your own boss, makes the effort worthwhile.