Your Step-by-Step Guide to Launching an Independent Medical Practice

If you’ve been considering branching out and starting your own medical practice, you’re probably feeling a lot of things. Excited, nervous, and maybe even a little overwhelmed. Launching a private practice is a big decision in and of itself, and taking the plunge is only the first step. At Benchmark Solutions, we’ve worked with hundreds of small medical practices over the years, and we’re intimately familiar with what it takes to start and run a private practice. We’ve created a step-by-step guide to help you determine if opening an independent medical practice is the best next step in your career. In our guide, we’ll cover:

What Is an Independent Medical Practice?

An independent medical practice refers to a healthcare facility that is owned and operated by one or more healthcare professionals, typically a physician or a group of providers in a similar specialty. Unlike large medical corporations or hospital-employed physicians, independent medical practices function on their own, allowing practitioners to have full control over their practice operations, patient care, and decision-making processes.

The healthcare providers in an independent practice have the freedom to choose the type of practice they want to establish, the location of the practice, and the services they want to offer. These practices can range from primary care offices to specialty clinics, and may include services such as concierge medicine or ancillary services. Independent medical practices play a crucial role in meeting the healthcare needs of communities and offering tailored, patient-centered care.

Benefits of Operating Independently

Operating independently as a physician comes with numerous benefits that can enhance both the quality of patient care and the practice at large.

Independent physicians have more control over their practice, allowing them to prioritize personalized patient care.

Providers have the freedom to choose what they want to focus on and what kind of work they do on a day-to-day basis.

Since independent practices are usually small, staff members can collaborate closely and work as a cohesive unit.

Workloads are easier to manage within independent practices.

These are just a few of the many benefits that come with operating a private practice — but there are also challenges to be aware of.

Challenges of Launching an Independent Practice

Launching an independent medical practice can come with its fair share of challenges, and each should be considered before going down that path.

  • One of the main difficulties is the limited staff and resources that may be available, particularly for healthcare providers who are just starting out.
  • Independent practices may not have dedicated staff to manage insurance companies and other aspects of medical billing.
  • Widespread shortages of nurses and other healthcare professionals can make hiring a challenge.

While launching an independent practice may present challenges, with careful planning and a proactive approach to problem-solving, healthcare providers can overcome these obstacles and create a successful and thriving practice.

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Logistics of Opening a New Medical Practice

Launching an independent medical practice involves careful consideration and planning of various logistical aspects. From securing office space to acquiring necessary equipment and hiring staff, there are several critical steps that need to be taken to ensure a smooth start. From finding a suitable location to obtaining the right licenses and permits, we will cover all the essential steps to help you navigate the logistics of setting up a successful independent medical practice.

Establish a Comprehensive Timeline


Develop a Project Plan:

Start by outlining the major milestones and tasks required for practice establishment. Consider tasks such as securing funding, finding office space, acquiring equipment, hiring staff, and obtaining necessary licenses and insurance policies.

Create a Checklist:

Make a detailed checklist of both pre-launch and ongoing tasks. Include items like setting up a business structure, obtaining an Employer Identification Number (EIN), creating a fee schedule, implementing a practice management software, and establishing compliance protocols.

Set Timelines:

Assign target completion dates for each task in your checklist. Consider the dependencies between tasks to ensure a logical sequence and avoid delays. Prioritize critical tasks that could cause significant delays if not completed on time.

Monitor Progress:

Regularly review the progress against your timeline and adjust as needed. Keep in mind that unforeseen challenges may arise, so build in some flexibility to account for unexpected delays.

Decide on Your Business Model

When launching an independent medical practice, one of the key decisions you’ll need to make is choosing the business model that best aligns with your goals and the needs of your patients. Here are three popular options to consider: traditional, concierge, and direct primary care models.

Traditional Model
Traditional Model

The traditional model is the most commonly known approach to running a medical practice. In this model, physicians accept insurance reimbursement for services provided to patients. While it offers a wide patient base and potential for high patient volume, it also comes with administrative burdens, such as dealing with insurance companies and managing medical records.

Concierge Practices
Concierge Practices

Concierge practices, on the other hand, provide a more personalized and exclusive experience to patients. With this model, physicians charge patients an annual fee or retainer for enhanced services and increased accessibility, often including longer appointment times and 24/7 availability. This allows for a smaller patient roster, enabling physicians to provide more comprehensive care.

Direct Primary Care Model
Direct Primary Care Model

Another option is the direct primary care (DPC) model, which focuses on a direct relationship between the provider and patient, bypassing insurance companies. Patients pay a monthly or annual fee for unlimited access to primary care services. This model offers increased accessibility, longer appointment times, and reduced administrative burdens.

When deciding on your business model, consider the benefits and structure of each. Traditional practices can provide a wider patient base, while concierge and DPC practices offer the potential for increased patient accessibility and reduced administrative burdens. By selecting the right business model, you can ensure your independent medical practice meets the needs of both your patients and yourself.

Type of Corporate Entity Formation

When launching an independent medical practice, choosing the right corporate entity formation is crucial for establishing a legal structure that aligns with the goals and needs of your practice. Here are some common types of corporate entities to consider:

Sole Proprietorship

This is the simplest and most common form of corporate entity for independent practices. In a sole proprietorship, the practice is owned and operated by a single individual. It offers ease of setup and management, but the drawback is that the individual assumes all liability for the practice’s debts and legal obligations.

Partnership

If you plan to launch the practice with one or more partners, a partnership structure might be suitable. In a partnership, ownership and management responsibilities are shared among the partners. It offers shared resources and expertise, but it also means shared liability.

Limited Liability Company (LLC)

An LLC provides the benefits of both a corporation and a partnership. It offers limited liability protection to its owners (members) and allows for flexibility in management and taxation. This structure can be ideal for practices with multiple members and employees.

Professional Corporation (PC)

A PC is a specialized form of corporation specifically designed for professional practices, such as medical practices. Similar to an S-Corp, it offers limited liability protection to shareholders and allows for flexibility in management and taxation. However, it requires compliance with specific regulations and licensing requirements.

It’s important to note that laws and regulations governing corporate structures vary from state to state. It’s advisable to consult with a legal professional or business advisor familiar with the specific regulations in your state to ensure compliance and select the most suitable corporate entity formation for your independent medical practice.

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Set Your Budget and Create a Financial Forecast

Setting a budget and creating a financial forecast is crucial when launching an independent medical practice. Working with a certified financial planner, accountant, and attorney is essential in determining expected short-term and long-term revenue markers and expenditures.

To begin, carefully plan and budget for anticipated start-up costs. This may include securing office space, purchasing medical equipment, setting up office systems, and hiring staff. It’s important to consider the possibility of negative cash flow during the initial stages of the practice, as it may take time to build a patient base and establish consistent revenue.

Working closely with a financial planner, you can develop a comprehensive financial forecast that takes into account various factors such as projected patient volume, insurance reimbursements, and overhead expenses. This forecast will help you understand the financial health of your practice and identify potential challenges or areas for improvement.

Additionally, it’s important to regularly review and update your budget and financial forecast as the practice grows and evolves. This will ensure that you stay on track with your financial goals and can make informed decisions regarding investments, expansions, or cost-saving measures.

By setting a budget and creating a financial forecast, you will have a clear understanding of your practice’s financial standing, allowing you to effectively allocate resources, manage expenses, and make strategic decisions to achieve your long-term financial success.

Complete Legal Requirements

When launching an independent medical practice, there are several legal requirements that need to be completed. These requirements ensure that the practice operates within the law and provides high-quality care to patients. Here is an overview of the steps involved in meeting these legal obligations:

1- State Licensing

Obtaining a state medical license is crucial for any medical practitioner. This process involves completing an application, providing required documentation, and passing the necessary exams. Each state has specific requirements, so it’s important to research and comply with the regulations in the state where you plan to practice.

2- National Provider Identifier (NPI)

The NPI is a unique identification number assigned to healthcare providers. It is required for billing purposes and is used by insurance companies and other healthcare organizations to identify individual practitioners. Applying for an NPI is a straightforward process that can be completed online.

3- DEA Registration

If your practice involves prescribing or dispensing controlled substances, registering with the Drug Enforcement Administration (DEA) is mandatory. The DEA registration process requires filling out an application, providing supporting documentation, and paying the registration fee. Compliance with federal regulations on controlled substances is crucial to ensure patient safety and prevent substance abuse.

4- Employer Identification Number (EIN) Registration

When launching an independent medical practice, one important step is to register for an Employer Identification Number (EIN). An EIN is a federal taxpayer identification number that is required for business entities, including medical practices, that have employees, pay taxes, or are required to file federal tax returns.

5- Additional Regulations

Depending on the type of medicine practiced, there may be additional certifications or registrations required. For example, if your practice includes an in-office laboratory, you may need to obtain certification to ensure compliance with quality control and safety standards. Similarly, if you plan to use X-ray equipment, registration with the appropriate regulatory authorities is necessary.

6- Malpractice Insurance Coverage

Malpractice insurance coverage is an essential component of operating an independent medical practice. It protects healthcare providers from potential financial loss in the event of a malpractice claim or lawsuit. Without proper coverage, a practice owner could face costly legal fees, settlements, or judgments that could severely impact your financial stability and reputation.

 

Office Space and Equipment Needs

Finding the right office space and acquiring the necessary equipment are crucial steps in launching an independent medical practice. When searching for office space, consider factors such as location, accessibility, parking availability, and proximity to potential patients and referral sources. Additionally, evaluate the size of the space to ensure it can accommodate your practice’s needs, such as examination rooms, waiting areas, and administrative spaces. As for equipment, create a comprehensive list of the medical equipment and technology required for your practice, including examination tables, diagnostic devices, computer systems, and practice management software.

Pick Your Location

When launching an independent medical practice, one of the crucial decisions you need to make is choosing the right location. Selecting an appropriate location can greatly impact the success of your practice.

To begin, consider the patient population in the area. Research the physician-to-population ratio to determine if there is a need for more primary care providers. Evaluate the average patient wait times and local hospital recruitment efforts to understand the demand for medical services in the community.

Additionally, it is important to assess population trends and community growth. Look into the demographic data to identify potential patient pools and ensure that the area has a sustainable and growing population to support your practice in the long run.

Furthermore, take into account existing or planned locations of other medical practices. Competition can affect the viability and growth of your practice. Identify underserved areas or areas where there is a lack of specific medical services to seize potential opportunities.

Consider the type of space that will work best for your practice. Determine if you require a walk-in ready space or if a space that needs some cosmetic upgrades can be adapted to your needs. Evaluate the size and layout to ensure that it meets your practice’s needs and fits your budget.

Choosing the right location requires careful consideration of various factors. By analyzing the patient population, physician-to-population ratio, community growth, and existing competition, you can make an informed decision that sets your independent medical practice up for success.

Purchase Medical Equipment and Supplies

When starting an independent medical practice, it is essential to purchase the necessary medical equipment and supplies. First, identify the essential equipment, hardware, supplies, services, and furnishings needed for your practice. This typically includes examination tables, medical instruments, diagnostic equipment (such as stethoscopes and blood pressure monitors), sterilization equipment, medical gloves, disposable gowns, office supplies, and furniture.

Once you have a clear sense of what supplies and equipment you’ll need, it’s time to go shopping. This process can be done in a cost-effective and efficient manner by considering a few key factors. Depending on your medical specialty, there may be a need to purchase specialty-specific equipment and machines which can quickly become costly. Look for retiring doctors who might be willing to sell their equipment at a reasonable price. Additionally, explore the option of purchasing from overstocked hospitals or medical supply companies that offer discounted rates.

Overall, being mindful of cost and prioritizing essential equipment will help you purchase medical equipment and supplies for your independent medical practice in a practical and efficient manner. With careful planning and research, you can acquire the necessary items to provide high-quality care to your patients while also managing your budget effectively.

Software Requirements

In today’s digital age, having the right software is crucial for the smooth and efficient operations of any medical practice.

Practice management software and EHR software are the two most important pieces of technology you’ll invest in.

PM Software

Select Your Practice Management Software

Selecting the right practice management software is crucial for the success of your independent medical practice. This software serves as the central hub for managing various aspects of your practice, such as scheduling, billing, reporting, and insurance verification. Practice management software helps you streamline processes and improve patient satisfaction.

Download Our PM Software Buyers’ Guide

EHR Software

Choose Your EHR Software

When launching an independent medical practice, choosing the right EHR software is crucial for the smooth and efficient operation of your practice. Your EHR system serves as the primary location for storing and referencing patient medical records. EHRs should make it easy to document patient encounters and be fitted with time-saving workflows so you can focus on providing exceptional care to your patients.

Download Our EHR Software Buyers’ Guide

Hiring

Building a skilled and dedicated team is crucial for the success and growth of your independent medical practice. Staffing medical practices can be a major challenge as there are many types of roles to fill, from nurses, to administrative staff, and more. We’ve rounded up some of our best practices for hiring in today’s competitive climate.

Hire Medical Professionals

Once you’ve established your independent medical practice, it’s time to build a team of qualified staff to support your practice operations and provide high-quality care to patients. While you might initially start as a sole provider, as your practice grows, hiring medical professionals becomes essential.

One of the main benefits of having a team is the ability to provide comprehensive care to your patients. By hiring additional physicians and nurses, you can offer a wider range of medical services and ensure that patients have access to the care they need under one roof.

When hiring medical professionals for your independent medical practice, carefully consider their qualifications, experience, and compatibility with your practice culture. Conduct a rigorous hiring process, including credentialing and background checks, to ensure that you build a team of skilled individuals who align with your practice values.

Investing in a strong team of medical professionals and office staff not only enhances practice operations but also contributes to the provision of high-quality care and patient satisfaction. By hiring qualified staff, you can ensure that your independent medical practice thrives and delivers excellent healthcare to your community.

Considerations for Hiring Administrative Support

When launching an independent medical practice, it’s important to not overlook the importance of hiring administrative support. While the medical professionals on your team provide the essential care, it’s the administrative staff that keeps the practice running smoothly.

One key position to consider is the office manager, who plays a crucial role in handling much of the administrative work. They set the tone for the office and assist in setting up the rest of the office operations. The office manager will oversee managing medical records, insurance policies, appointment scheduling, and billing so nothing slips through the cracks.

If you’re able to, dedicated billing staff can significantly contribute to your ability to maintain a financially healthy practice. Collecting payments can be a major challenge practices face — but it doesn’t have to be.

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Establish a Plan for Collecting Payments

Establishing a plan for collecting payments is a critical aspect of launching an independent medical practice. If you’re coming from a larger healthcare corporation, you’ve probably never had to experience the intricacies involved with collecting patient payments — but there are a lot of moving parts to consider.

Research Billing Best Practices

Medical billing is a critical aspect of running an independent medical practice efficiently and effectively. Implementing best practices in medical billing can help ensure accurate and timely claim submissions, minimize billing errors, and maximize revenue for your practice. Here are some key best practices to consider:

1. Utilize Billing Software or Outsourced Services

Implementing billing software or outsourcing your billing to a professional medical billing service can streamline the billing process and help prevent errors. These tools can automate tasks such as claim generation, submission, and follow-up, reducing administrative burdens and improving accuracy. Some practice management software, like Benchmark PM, even have billing features built-in.

2. Establish a Patient Financial Policy

Clear and transparent communication with patients about your financial policies is crucial. Establishing a comprehensive patient financial policy that outlines payment expectations, insurance coverage, and any applicable fees helps manage patient expectations and supports smooth financial transactions.

3. Create a Fee Schedule

Developing a well-defined fee schedule will help you determine the cost of services, enabling consistent and accurate billing. Ensure that your fee schedule reflects the services rendered, aligns with industry standards, and complies with insurance policies.

4. Emphasize Coding and Documentation

Accurate coding and thorough documentation are vital for proper claim submission. Familiarize yourself with coding manuals such as CPT, ICD-10, and HCPCS to ensure correct coding practices. Utilize various forms for prescriptions, patient registration, and medical records to capture all necessary information.

By adhering to these best practices, you can maintain accurate billing records, improve revenue cycle management, and provide exceptional financial services to your patients. Streamlining your medical billing processes will not only reduce administrative burdens but also contribute to the overall success of your independent medical practice.

Consider Outsourcing RCM

Outsourcing revenue cycle management (RCM) can provide numerous benefits and considerations for an independent medical practice. RCM encompasses various tasks, such as coding, billing, claim submission, and payment collection. Outsourced RCM experts can help alleviate strain on administrative staff while bolstering your bottom line. By working with a dedicated agency from the onset of your new practice, you can establish workflows knowing you’ll have an extra set of hands from RCM specialists.

Check Out Our Guide to Outsourcing RCM

Go for Launch!

Launching a new medical practice requires careful planning and preparation, but if you follow the steps we’ve laid out in this guide, you’ll be on your way to launching your independent practice. And when you do open your doors, make sure you celebrate — without private practices, our healthcare industry wouldn’t be able to meet the diverse needs of patients. We’re here to support you in any way we can.

Benchmark Solutions provides EHR software, PM software, and comprehensive RCM solutions ideal for independent medical practices.

At Benchmark Solutions, we understand the unique needs that small and independent medical practices face. Our EHR software, PM software, and RCM solutions are great on their own, but even better together. If you’d like to learn more about how we can help make your new practice a success, contact us today.

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