
How to start a medical practice
There is no universal formula for starting a medical practice. It might be worth your while to hire a professional
consultant who has started medical practices before, is aware of the pitfalls and challenges, and can advise you on
medical malpractice insurance and workers’ compensation. After all, the specific details of starting up vary by
specialty, and some laws and regulations differ by state
A professional consultant will understand the variables and help you plan accordingly. Some new practices might
need to hire contractors to outfit their new offices, while others might find a turnkey location. Overall, however,
many common items must be on your checklist when building a practice from the ground up. Here’s how to start a
private medical practice, step by step.
1. Obtain funding
With so much to do, you might be asking yourself where to begin. In a word – financing.
The actual dollar amount needed depends on your unique situation, but in general, you should aim to secure at least
$100,000 to cover equipment and startup costs. In addition, you should try to obtain a $100,000 line of credit to
cover payroll and bills until your revenue stream is established and stable, which will take some time.
If you’re not independently wealthy, or you just have enough money to set out the cost to open but also need to
have operating capital until revenue comes in, then you need a loan.
So, how can you convince a bank to front you the money you’ll need?


2. Create a pro forma
To figure out your financing, make a pro forma. A pro forma is the lighter version of a full-blown business plan, with
revenue and debt projections grounded in reality. In your pro forma, account for all your medical clinic expenses,
debt and anticipated revenues. Bankers can tell which projections are realistic and which aren’t; it’s their job to
make wise investments, so you’ll want to back up any numbers you use if you’re going to pursue a bank loan. A
strong pro forma will project at least three years into the future and sometimes as far as five years out.
The first thing you need to do is build a pro forma, which basically tells the story of what your revenue will be from
the first until at least the third year, because you need to go out and get financing. You need to include the costs to
set up the practice, your lease’s cost per square foot, your [electronic health record system] expense, medical
supplies and office supplies. You’re building a crystal ball of what the practice looks like, and you have to be able to
tell how all of those numbers came into being
3. Purchase equipment and staff your practice
Once you’ve obtained a loan and opened a line of credit, you’re ready to start hiring your team and purchasing the
office and medical equipment you’ll need. This task is easier said than done, and ample research is necessary for
each decision. But again, with a little planning and the right information, setting yourself up for success is just a
matter of effort. Here are some of the aspects you’ll want to consider

1 . Electronic health record systems
Electronic health record (EHR) systems, also known as electronic medical records (EMR) systems, are essential tools
of the trade for medical providers. Digitizing records and streamlining communication is a high priority for the
modern healthcare provider. An all-inclusive EHR serves as a one-stop shop for your patients’ records and histories,
communications with other providers, lab and prescription orders, and information on your revenue
cycle. Moreover, you’ll need a well-functioning EHR system to qualify for federal incentive payments
3 . Medical billing services
You can always outsource your billing to a third-party company. You’d still need a practice management system, but
at least your staff wouldn’t have to deal with overseeing the billing process. Not only is submitting claims timeconsuming and complex, but your team would also be responsible for responding to rejected or denied claims to get
the money due to your practice. When you opt for a third-party billing service, that burden shifts to the company
you’ve contracted with.
5 . Credit card processors
Although you’ll be making most of your money through payers like insurance companies and Medicare, your practice
will need a credit card processor for when patients need to pay at the point of care. Not only has the world of credit
card processing changed lately, with the addition of EMV chips and other security measures, but some systems are
more suited to the medical field than others. You’ll want to select a credit card processing company that offers
additional security and participates in the American Medical Association’s Member Value Program, which partners
with vendors to provide discounts and perks to medical practitioners.
2 . Why Must I Make Payment Immediately At Checkout?
Your practice management system (PMS) is the lifeblood of your practice. Integrated with your EHR system, practice
management software keeps track of all your front-office information and facilitates operations. Chief among its
uses is conducting and monitoring billing and collecting.
Not only will your staff use the practice management system to bill patients and send claims to payers, but any
relevant information will be shared between the EHR system and the practice management software, eliminating the
need to duplicate records.
4 . Background check services
Medical practices are founded on trust. Not only do they handle a lot of sensitive patient information every day, but
people are literally trusting the practice with their lives. That extends beyond exams, diagnoses and treatments.
You’ll want to know and be able to trust your staff, which means employing a background check system.
You’ll be interested in candidates’ criminal and employment histories, but healthcare providers have more to
consider beyond what the average background check provides. There are also required certifications and licenses to
consider. Failure to ensure your staff is properly credentialed could result in big problems for your practice.
6 . Office managers
As you assemble your front-office team, you’ll need a reliable office manager to run the day-to-day operations of
your practice. This person must be responsible and dedicated, but those qualities aren’t enough. You’ll need
someone who also has the necessary experience
“You need to decide how you’re going to staff your practice. Who’s going to help you run your practice? A friend? A
nurse? Your spouse?” The office manager needs vision and to take strategic actions to build the practice properly.

4. Prepare to open.
You must complete several logistical steps before you can open your doors, and they should be carried out in
conjunction with the preceding actions. Give yourself plenty of time to get incorporated as a legal entity, obtain
insurance and establish policies and procedures before you launch. Credentialing, for example, can take quite a
while and depends on the pace at which other organizations operate.
*Incorporating as a legal entity and obtaining a tax ID
This one is self-explanatory, but extraordinarily important. The main reason for incorporation is limited liability,
which means if you’re sued, only the assets held by the company are subject to any risk. If you don’t incorporate,
you’ll open up your personal assets to the threat of a lawsuit.
Moreover, certain tax benefits are associated with each type of entity. Whether you incorporate as an S-corp or LLC,
a C corp, or a general partnership, do your research on each type of entity and the potential advantages it offers
your practice
*Credentialing physicians with payers
You will also need to get your practice’s healthcare providers credentialed to submit claims to the payers you’ll be
working with. The credentialing process can take up to three months, but you may want to give yourself up to five
months in case something goes awry.
You’ll need to navigate the process for each payer you plan on submitting claims to, which includes offering up
information on each physician’s work history, proof of malpractice insurance, hospital privileges and attestations. It’s
a time-consuming process, but certain medical billing services such as Kayal Business Solutions can handle it for you.
*Establishing policies, procedures and compliance documentation
A set of responsible, current and verifiable policies and procedures, in addition to compliance with all legal
regulations, is vital to your practice’s success. These standards should cover all your daily operations, including data
entry, billing and interactions with patients. Since the healthcare environment is always changing, you’ll want to
periodically update your policies and procedures as well to make sure they don’t become antiquated and ineffective.
*Purchasing insurance
Every business owner understands the importance of insurance, but for medical professionals, it’s even more crucial.
First, you’ll want medical malpractice insurance coverage. You have to start thinking about insurance, You’ll need
malpractice and general liability.
5. Open your doors and evaluate practice performance.
Congratulations! If you’ve reached this point, you’ve put in plenty of blood, sweat and tears and haven’t yet seen a
dime in compensation for it. But your labor will all be worth it when you get the chance to cut that ribbon and
welcome your first patients to your very own medical practice. It’s an accomplishment plenty of healthcare providers
don’t get to enjoy in the modern medical industry, so pat yourself on the back.
Once your practice is established and running smoothly, you’ll want to put a mechanism for accountability into

place. Sure, you’ve hired an office manager you trust, but how can you hold them to task, especially if you’re busy
seeing patients day in and day out? Hire a consultant or an accountant who has experience monitoring medical
practices to occasionally review operations and report back to you.
After you set up a practice, there needs to be oversight of the practice beyond the office manager. “How do you
know every dime made it to the bank? You need to check that, so who makes sure that happens? Benchmark your
practice and ensure there’s oversight.”
Medical practice considerations to keep in mind
Here are a few things to keep in mind while you deal with the whirlwind of starting your own medical practice. These
are issues that can slow down or completely derail your progress leading up to opening day – or take you by surprise
when you think your practice is up and running smoothly
1. Construction needs
If you need to perform construction on your office space, start as early as possible. Otherwise, you might find
yourself well past your target opening date without a workable space. It’s always best to find a turnkey location
where you can immediately set up shop, but those spaces are not always available. Evaluate your location early on
and determine how much work needs to be done, then start hiring the contractors who will do it. With luck and
planning, construction will be complete by the time you’re ready to start purchasing equipment. There are so many
variables if you have to do a fit-out. It’s guaranteed: Construction always delays things. Even if you start planning in
January that you’ll open in June, be prepared for August.
2. Changing regulations and payer rules
The healthcare industry is a highly regulated one, with complex rules surrounding virtually everything a provider
does. For a small practice that doesn’t have legions of attorneys on retainer like a large hospital system does, it can
be challenging to navigate the web of legal requirements and payer rules. However, it’s extremely important to
understand what it takes to be in compliance. In fact, the rules governing the healthcare industry are constantly
being changed and updated, so even if you’re in compliance right now, you’ll have to keep an eye on the future.
For example, HIPAA requires all healthcare IT products to abide by a certain level of security standards to safeguard
patient data, which has become especially critical as digitization of the healthcare industry has increased, as has the
likelihood of cyberattacks. It’s your job to ensure that every product you select meets HIPAA standards.
3. Marketing
With all the necessary preparation for opening day, followed by the hustle and bustle of treating patients once you
do open, it can be easy to forget about marketing. Marketing and advertising are as fundamental to starting a
private medical practice as they are to any new business, particularly for general practitioners who won’t be able to
rely on a referral network for their patients.
This is a patient-caring, disease-treating business, but with that said, it is a business, and a practice needs to know
how to market itself. After all, how can you be a successful practice without attracting patients?
4. Advisors
With all the necessary preparation for opening day, followed by the hustle and bustle of treating patients once you
do open, it can be easy to forget about marketing. Marketing and advertising are as fundamental to starting a
private medical practice as they are to any new business, particularly for general practitioners who won’t be able to
rely on a referral network for their patients.
This is a patient-caring, disease-treating business, but with that said, it is a business, and a practice needs to know
how to market itself. After all, how can you be a successful practice without attracting patients?
5. Meaningful Use standards
The healthcare industry has been undergoing a period of digitization, largely focused on the adoption of EMR and
practice management software. Now known as Promoting Interoperability, the Meaningful Use standards prescribed
by the Centers for Medicare & Medicaid Services lay out exactly what is expected of a medical practice’s use of an
EMR system. You have to not only ensure that your EMR vendor is capable of meeting these demands, but that you
implement the technology in such a way that your medical business is functioning up to the required standards.
Otherwise, you could face reimbursement penalties