Step-by-Step Guide to Opening a Private Medical Practice
Opening a private medical practice is exciting- but it’s also complicated and can be a bit of a challenge. For your practice to be successful, you must have a clear, detailed plan to start with to ensure that things move on schedule. Below, we’ll provide you with a step-by-step guide for opening your private medical practice- from obtaining the funds to welcoming your patients.
5 Steps to Start a Medical Practice
There is no standard for opening a medical practice. You may want to consider hiring a professional consultant with experience in establishing medical practices and who is familiar with the challenges. Since laws and regulations differ from one state to the next, they will be able to advise you on things such as medical malpractice insurance and workers’ comp.
Consultants understand the variables and can help you plan. You may be able to find a space that is already set up for a medical practice or you may need to hire a contractor to set things up. However, certain things must be on every checklist no matter what the situation. Those things are as follows:
The actual amount you need to open your private practice depends on your situation. In general, though, you’ll need at least $100,000 to cover your startup costs including equipment purchases. You may also consider obtaining a $100,000 line of credit to cover payroll and other expenses until you have a stable revenue stream. If you’re like most people, you probably don’t have this much money just lying around- so you’ll need a loan.
Create Pro Forma
To determine your financing, you’ll want to create a pro forma. This is a lighter version of a business plan. You’ll want to include realistic medical clinic expenses and anticipated debt and revenue. Bankers can determine if your projections are realistic or not, so you’ll want to make sure you can back up your numbers. You’ll need to project at least 3 years out and some lenders want you to go 5 years out.
The pro forma tells the story of your revenue for years 1 through 3 (or 5). You’ll want to include set-up costs, lease costs per square foot, medical supplies, office supplies, electronic health record system expenses, and anything else. You’re creating a crystal ball of what your practice will look like, and you’ll need to explain how those numbers came to be.
Here are a few tips:
- Find the specialists
- Shop around
- Use conservative numbers
- Use your waiting period wisely
Purchase Equipment/Hire Staff
Once you have a loan and line of credit, you can begin purchasing your equipment and hiring staff. You will need to do a lot of research for this process, but with some planning and the right info, you’ll be able to set yourself up for success. You will want to consider the following:
- Electronic health record systems
- Practice management systems
- Medical billing services
- Medical transcription software
- Background check services
- Credit card processors
- Ancillary services
- Office Manager
Prepare to Open
Before you can open your practice, there are several logistical steps you’ll need to complete along with the preceding actions. Make sure you allow yourself enough time to become a legal entity, establish policies/procedures, and obtain insurance before opening. You will want to do the following:
- Incorporate as a legal entity
- Obtain a tax ID
- Credentialing with payers
- Establishing policies/procedures
- Establishing compliance documentation
- Purchasing insurance
Open Practice and Evaluate the Performance
Once you’ve reached this point, you can congratulate yourself. You’ve put in a lot of effort and haven’t seen any results. However, once you open your doors, and welcome your first patients, it will be worthwhile.
Once you’ve established your medical practice and things are running smoothly, you’ll want to put accountability measures in place. While you may have hired an office manager, how do you know they are doing what they are supposed to? Hire a consultant with experience in medical practices and have them check in periodically and report back to you.
Ready to Get Started?
If you are still interested in opening a private medical practice, contact Gipson Commercial Solutions. We can help you get the ball rolling.