Starting a medical practice involves a huge range of tasks. It can be difficult to keep track of everything. Often, it’s hard to find good quality information in the first place!
This guide will help you to:
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First of all, congratulations! The decision to open your own practice is a momentous occasion.
Your next step is to choose your geographical location. Personal factors like family & lifestyle are very important here, but you should also consider other factors like demand & competition within your specialty, cost of living relative to physician compensation in different regions, and even state tax rates . You should also confirm you’re not subject to a location-based non-compete clause with any previous employer.
Once you’ve decided in what part of the country you want to practice, you can begin the task of setting up the practice itself.
With a full year to go before you begin seeing patients, you must:
You’ll also want to choose a target date for opening! At this point, your opening day will be somewhat flexible, but will still provide you with a useful deadline to organize your time.
Depending on your situation, you may want to hire a practice startup consultant. Though consultants can be expensive, their fees can be well worth it, if you utilize their services effectively. Start with a professional association such as the NSCHBC, and also ask colleagues for reference, especially others in your specialty.
One of your very first steps will be choosing the best legal structure for your practice . You’ll need to consider a number of factors, such existing or potential physician partnerships, number of employees, expected revenue, potential sale of the practice in the future, and many other issues. Be aware that the laws & regulations governing corporate structures vary in each state.
You should discuss your business structure & other legal issues with a knowledgeable attorney who specializes in serving independent practices, or at least has extensive experience in this area. In general, healthcare attorneys serve physicians in their home state, though some firms do serve physicians around the country. Your attorney will assist you with basic steps such as:
State and local tax ID numbers may also be necessary in your location.
A long-term relationship with a knowledgeable, diligent, proactive accountant will likely be worth hundreds of thousands of dollars over the life of your practice, if not more. It’s worth investing the time and effort up front to find an excellent CPA , especially because your financial decisions now will have long-term implications. In addition to researching local & regional options, see White Coat Investor’s list of firms that specialize in advising physicians .
One of your most significant decisions will be to choose a location for your office. Keep in mind that over 60 percent of patients consider location to be an important factor when choosing a doctor. Be prepared to invest significant time and energy into evaluating potential locations for your practice. Be sure to consider issues such as (but not limited to):
You’ll need to evaluate the pros and cons of leasing versus buying medical office space in your area, and in your particular situation. Whether buying or leasing, a reliable team of advisors , including broker, insurance agent, and real estate attorney, is key. If you decide to lease, make sure you evaluate the terms and conditions of your lease thoroughly. If you’re considering buying your office, make sure you understand how to maximize the value of medical office real estate .
Before you begin looking at properties, you should be familiar with the basic requirements of a clinic or medical facility , and calculate your space needs with as much specificity as possible, using either free tools , a standardized industry framework , or another reliable, vetted method. Make sure to research specific design considerations related to issues relevant to your area of practice. Specialty journals & associations often provide excellent resources, such as this AAFP article on key design elements of family medicine clinics . For more general issues, PubMed is a great resource as well. There is abundant evidence that a high quality physical environment promotes health and well-being , so you want to get the design of your office right!
While analyzing & evaluating potential properties, you may want to seek advice from a healthcare architect. You can ask colleagues for references to experienced healthcare architects in your area. Be sure to do your own research & due diligence, and ask the right questions , before entering into a relationship with an architecture firm. Keep in mind that your practice needs may change in the future, and incorporating some flexibility into your office design & build-out may be desirable if a location permits.
Remember, designing your medical office space is an exciting & enjoyable process, but it is also a lot of work!
Careful business & financial planning will put your practice in good position to succeed. On the flip side, be aware that poor business planning and lack of access to capital are two of the most common reasons why small businesses fail.
There are various types of business plans , which can range from a single page summary to a formal document close to 100 pages long, depending on the purpose. You’ll likely want to draft at least two versions of your business plan:
Your business plan should address specific issues related to independent medical practice . Depending on your situation, you may also want to draft shorter “feasibility studies” to help you evaluate specialty services that could potentially be incorporated into your practice.
Cash flow projections will be a key component of your business plan. If your circumstances permit, saving cash for 6 months of operating expenses would be an excellent move. If your business plan indicates that your capital requirements exceed your savings, you’ll need to look into startup financing.
Regardless of whether you take a loan initially, you’ll want to set up a business line of credit as a backup funding source in case you need it. Lenders generally look favorably on physicians and medical practices, so you should have multiple options. Many regional & midsize banks have developed customized financial services for physicians, sometimes focusing on specific needs such as equipment financing. Be sure to research different types of funding, including dedicated healthcare lenders, large banks, non-traditional lenders, local banks, and any other funding sources that may be available to you.
This research will help you determine loan financing requirements for your particular situation, and allow you to compare terms of different funding offers. Obtaining multiple financing offers may also help you to negotiate better terms with lenders.
Once you have established your practice as a legal business entity, you should begin setting up appropriate bank accounts and other financial services. Again, many regional & national banks offer dedicated concierge-style financial services for physicians, and can assist with setting up the services you will need.
Congratulations! You’ve made a ton of progress thus far. With the big day getting closer, you’ll need to sustain momentum, while attending to the ever-increasing number of details that arise along the way.
Let’s keep going!
You’ll work with your architect to design your office layout. In the process, you’ll probably develop multiple potential space plans, and evaluate each one to determine how best to use your office space. Once you’ve settled on a plan, your architect will prepare your construction documents, and you’ll then begin to obtain bids.
In this process, remember a few things:
Once you have reviewed your bids & selected a contractor, you should review your owner-contractor agreement , with advice from your attorney as well. You’ll also need a plan to manage the construction itself after the contract is signed. While it’s not common and may not be necessary on smaller build-outs, you may want to consider consider hiring a construction manager to take the responsibility off your own shoulders. This is another situation where a practice management consultant can be a useful ally, since a consultant may have relationships with experienced construction managers.
The following only apply if you plan to have other doctors as partners, employees, or tenants in your practice. If you’re a solo practitioner, you can skip this section.
If your practice has multiple owners, a buy/sell agreement with sufficient funding provisions is an absolute necessity . While it may seem strange to create such an agreement before your practice even opens its doors, it’s actually a healthy process to discuss all potential future events with your partners now.
A well-structured agreement will bring all partners onto the same page , to protect against potential risks, avoid financial losses, and facilitate smooth transitions of ownership in the future. Each partner should be sure to discuss the agreement independently, in detail, with an experienced attorney, as well as other knowledgeable advisors.
There are at least 5 common physician compensation models , and new variations on these models are being developed all the time. The key is to find a model that works best for your practice. Each model has its advantages & potential pitfalls , so be sure to work with your partners & analyze each one in detail.
If your practice has physician employees, their compensation model will of course be different from that of the owners.
Recruiting a new doctor directly out of residency can be a great way to bring high quality talent to your practice. Make sure you understand how recruitment contracts function from the employee’s perspective as well, and seek advice from a knowledgeable attorney to avoid any legal mistakes .
Again, this only applies if you’ll have any physicians on staff as employees, rather than owners. It’s imperative that you seek experienced legal counsel to draft a comprehensive contract that avoids common mistakes & addresses all issues in the employment relationship.
There are also many resources for physician employees, including books , white papers , podcasts , and a number of law firms that specialize in contract negotiations on behalf of physicians. You can use these resources to understand these issues from the employee’s perspective, as you work with your attorney to draft agreements that will serve your practice’s needs.
While subleasing space to other physicians can be beneficial for both parties , there are many potential pitfalls in such an arrangement. If you plan to sublease space in your office to other physicians, or are considering doing so, you should again be sure to work with experienced attorneys who understand real estate issues, specifically in the context of a medical practice.
While direct pay models are becoming more popular , especially in primary care, it’s likely that you plan to accept insurance, and therefore you’ll need to go through the insurance credentialing process with each payer you plan to accept. You may also want to obtain privileges at one or more hospitals in your area, which means you’ll have to go through the hospital credentialing process as well.
A reliable credentialing service will save you lots of time and headaches. Our guide to credentialing services can help you identify a provider to assist you in your specific situation.
The important thing is to start early, since you can’t get paid, and can’t or shouldn’t see patients at all, until your credentialing is approved. However, you also can’t start until you have a number of pieces already in place. Delays should be expected, but if you start early enough, they won’t affect your ability to practice or bill insurance carriers.
The big day is getting closer! With less than 6 months to go, things start getting real.
While you may feel overwhelmed on a regular basis, it’s important to realize how far you’ve come. You have a lot of pieces in motion now, and even if each day seems daunting, things are falling into place.
While your office space likely won’t be ready yet, you’ll want to finalize agreements for purchase or lease of equipment, as well as necessary services now, so that everything is ready in time.
Your research & selection process will be a bit different for each type of equipment or service, but in general, you’ll need to define your requirements, then research qualified vendors, then prepare an RFP for each large purchase. The RFP will help you to efficiently solicit proposals from companies, then evaluate those proposals based on your budget & other criteria. With proposals in hand, you can coordinate demonstrations, evaluate your options, & finally negotiate purchase & service agreements with each vendor.
Almost every office process involves some sort of technology. Ideally, if you choose wisely & set everything up the right way, all this tech will actually make the workday easier for you & your staff.
Selecting practice management software is certainly a major decision, since every patient visit entails multiple interactions with this interface. There are essentially four different tiers of practice management software to choose from:
In general, software in each of these tiers may be appropriate in different practices, though we generally caution against choosing the budget tier for a number of reasons. Our own experience has given us in-depth knowledge of most of the major practice management software suites, and our team drew on this experience to create a comprehensive guide to practice management software to help you make your own decision.
You’ll also want to offer the best telehealth experience you can for your patients. Our comprehensive guide to telehealth rules will help you to understand the current regulations & the technologies available to you.
The AAFP has an excellent article on medical office design , which will help you think about how to set up your office. While some of the info is specific to family medicine, and some is outdated, most of it is still relevant & will apply to practices in other specialties. The AAFP article includes links to a number of good quality medical office furniture suppliers, some of which offer used & refurbished equipment as well.
For specialty-specific equipment, you’ll want to prepare RFP’s as mentioned above. Once you identify equipment & machines needed for your office, you can assess your needs & your budget. Then you should determine your ideal acquisition schedule, and submit major items for bid.
Your office staff will play a huge role in the success of your practice. The quality of your staff will affect nearly every aspect of your own workflow, as well as the experience (good or bad!) of your patients. Payroll will also likely be one of your largest expenses. Furthermore, the benefits & value of hiring high quality staff often accrue in ways that aren’t immediately obvious , and conversely, the damage done by bad hiring decisions is often far more severe than you might think. In short, you absolutely want to invest the time & resources to hire the right people.
The office manager is your most important non-medical employee. A practice manager will address much of your administrative work, and plays a key role in setting the tone of your office for patients, staff, and clinicians alike.
If you hope to hire a good practice manager, you should start by planning to create an excellent work environment for your employees. You should also understand the what a practice manager does , which will help you to know what to look for in a candidate. Various professional certifications for practice managers exist, with the MGMA being the most rigorous. While not required, these may help you distinguish highly qualified & ambitious candidates from others. You’ll certainly want to offer competitive pay & benefits for your area .
Your practice manager should probably be your first non-clinical hire, as she or he will assist you in setting up the rest of the office operations.
Interviewing & hiring employees is an intensive process and a huge investment. While your practice manager should probably take the lead in this process, it’s important for you to understand the hiring process at a high level.
First of all, you should realize the costs involved in hiring new employees, and also recognize that turnover can be extremely expensive once all direct & indirect costs are accounted for. There’s also a breakeven point in hiring & training new employees. Looking ahead, you should appreciate that training existing employees is often more cost-effective than hiring new employees.
Taken together, the above should motivate you to create a great work environment for your staff, since they’ll be key to your practice’s long-term success.
Many office tasks don’t need to be done on-site, & assigning these tasks to remote workers often brings dramatic improvements in both office efficiency as well as patient experience. Our guide to remote workers in medical offices will help you to understand what’s possible & how to proceed. AI-based tools also have an ever-larger role in healthcare, and while they are increasingly reliable, you should be mindful of whether they create the type of personal experience that your patients will appreciate.
Scribes are a specific type of remote worker, which is all but required for most physicians today. There are a number of types of scribes, each with its advantages & limitiations. Our guide to medical scribe services will help you figure our which is best for your practice.
