Guide to Starting or Expanding a Medical Practice
While many physicians are going to work for hospitals, and medical practices are merging with private equity firms, you march to the beat of a different drummer. You want to be the boss and mold a practice in your own image, and you’re not intimidated by the challenges of business.
Plus, many old challenges now have new solutions. For example, while the staffing available to run your office may be getting tighter, the software available to save staff time is getting more accessible, and while demands for data have increased, so have systems to report that data.
To begin charting your path to a new or expanded practice, download our handy timeline for credentials, offices, licensure, software and hiring.
4 Questions to Answer Before You Begin
When you’re ready to take the plunge, draft a summary business plan. Start by answering four key questions: Where will you set up or expand your facilities? Whom will you need on your team? When will you begin implementation, open, and start evaluating your key performance indicators? How will you find new patients and market your practice to them?
Where:
Office for Your Practice
Who:
Staffing for Success
What:
Technology to Save Time
How:
Marketing a Medical Practice
Where:
Office for Your Practice
Find new or expanded office space near your patients and consider medical clusters near hospitals to take advantage of potential synergies. To avoid build-out costs, choose existing clinical space, perhaps a suite vacated by a retiring physician.
Consider moving in with other physicians to share expenses. If you have complementary specialties, the office may have broader appeal, but if you have similar specialties, you may be able to cover for each other.
You don’t have to equip the entire suite on day 1. You can grow into it. Purchase the furnishings, signage and supplies. Contract for maintenance, and order the water and energy if they’re not included with the space. Don’t forget all those inspections, permits and certificates your locality may require — fire, safety, occupancy….
Who:
Staffing for Success
Staffing is critical, and skimping can be costly, but there are ways to save labor time. For starters, not every function needs to be staffed internally. Practices often contract for billing and payroll. For new internal staff, write job descriptions, order background checks, and equip each position with productive tools.
For example, patient engagement software like self-scheduling, automated appointment reminders and a kiosk at reception can help your front desk build the schedule and check the patients in and out. The medical staff can be more efficient with tools like check-in alerts and status updates. Finance managers can speed your revenue cycle with systems for claim scrubbing and curing denials.
What:
Technology to Save Time
Specialty practice technology has evolved significantly over the last few years, making a big impact on productivity.
Instead of the one-size-fits-all software you may have experienced in hospitals, you’ll want electronic health records designed just for your specialty, with medical knowledge built in and other systems integrated to reduce data entry and errors. The right EHR can speed documentation by suggesting diagnoses, treatments and notes based on provider history — and codes based on those notes.
Today’s practice management software can update calendars, help fill cancellations, parse eligibility errors and estimate patient charges. Payment systems can post receipts to patient ledgers and keep credit cards “on file.”
Plus, if your software lives in the cloud, you don’t have to buy and maintain your own servers, which can be costly. See how this works in other practices.
How:
Marketing a Medical Practice
Your most important question may be the “how.” How will you identify, reach out to, and bring in your best patients? How will you advertise, promote and market your practice?
Meeting and Greeting
Get out there and make yourself known. Meet the hospital administrators and develop some rapport. Apply for hospital privileges and get to know the nurses. Visit the primary care physicians and urgent care centers in your area, give people your cell number, and offer to help at odd hours. Join local business organizations, participate in them, and get involved with community events. Keep in touch with your mentors and pick their brains.
Online Marketing
Create a website and learn about search engine optimization. Make Facebook and Instagram pages. Start a blog. Create a steady stream of new content to inform your prospects, keep you at top of mind and attract the search engines to your site. Build a database for email and text campaigns. Positive online reviews are important, so invite patients to submit reviews to WebMD, Vitals, RateMDs, HealthGrades and Yelp!
Professional Help
You don’t have to do all this online advertising, promoting and marketing yourself. You don’t even have to hire someone on staff. You can work with a firm that specializes in marketing medical practices. These services integrate website design and maintenance, search engine optimization, blog creation, patient education, digital advertising, campaign tracking, call tracking, reputation monitoring and management, and E-stores (for practices that sell products as well as services).
Consumer Research
Today, online marketing is important to you because it’s important to your patients: 69% place importance on the availability of a modern-looking website, 74% place importance on online reviews when selecting a new doctor, and 90% place importance on using the latest tech.* These are just a few of the eye-opening insights from an original research study commissioned by ModMed, the 2022 Patient Experience Report: What Patients Really Think, available for download here.
Credentialing a Medical Practice
A new practice needs credentials to get paid by insurance. Start that process soon, since it can take months. Payers inquire about your medical education, residency, licensing and insurance. Find which carriers operate in your area and negotiate reimbursement contracts with each. Enroll on the Centers for Medicare & Medicaid Services website. If you serve low-income or elderly patients, join your local Medicaid program.
Today the trend is away from the fee-for-service model and toward value-based care. If you bill Medicare, the Merit-Based Incentive Payment System (MIPS) will affect your reimbursements significantly. Choose an EHR system that helps you gather, track and submit MIPS data.
Charting your path
Start insurance credentialing
Secure location and licenses
Review EHR, PM, other software
4 months out, to get set up and trained and avoid surprises.
Start hiring staff
Financing a Medical Practice
You’ll need a road map to capitalize a new or expanded practice — and yes, there will be detours. Write down your mission, vision, values, goals, objectives and activities. Instead of starting from scratch, consider buying into or taking over an existing practice.
Budget
Make a start-up budget for one-time costs like legal and accounting. Make an operating budget for ongoing revenue and expenses. Plan for the cash-flow issues that result from disruptions, expansions, dips in volume, lags in reimbursements and write-offs.
Credit
Pay off your med school debt before borrowing for a new practice. If you don’t have $100,000 to invest and another $100,000 in credit, develop a relationship with a bank that has medical experience. Don’t forget the US Small Business Administration.
Capital
Request what you need, no more, no less. Put off state-of-the-art machinery and consider buying equipment used. Look for other ways to reduce capital. For example, a cloud-based EHR system saves the considerable expense of your own servers.
Insurance
Insurance ranges from coverages you need to coverages you’d merely like. Consider malpractice (required in some jurisdictions), liability, contents, business interruption, health, disability, life, workers’ comp, employee fidelity, corporate and umbrella policies.
You’re not alone
So, you’ve decided to take the plunge and start or expand a practice. Excellent. With the right team at your side, you can navigate the roadblocks.
Consider hiring a consultant who’s helped start practices before and look for banks, accountants and legal firms with medical practice experience. When it comes to technology, reach out to ModMed. You’ll benefit from our experience helping others succeed in your specialty. Let’s get started.
* Data reflected is a combined stat of “very important” and “somewhat important,” “very likely” and “somewhat likely,” or “strongly agree” and “somewhat agree,” as applicable.
