The healthcare industry is growing by leaps and bounds. Healthcare is anticipated to account for nearly 20 percent of the GDP in the next seven years. Healthcare spending is projected to grow at an average rate of 5.5 percent annually through 2026, which is good news if you are starting a medical practice.
Opening a medical practice is no easy task. There are some important considerations to keep in mind when starting a medical practice.
Put a Plan in Place
A business plan is a roadmap for how to structure, run, and grow a business. Even if you are starting a medical practice, it is still a business. A business plan helps you with each phase — from startup through management after you open your doors. Business plans are often required by banks or other financial institutions that may be lending the money necessary for a business to grow. The Small Business Administration is a great source of information on the details on how to construct a good business plan.
Medical practice business plans should all have at least four major sections:
- Descriptions of your proposed business, including the products or services, the value proposition, and the success factors.
- A market analysis, including market demand for your products or services and the competitors in the market.
- You will need a financial feasibility study which includes assumptions, proforma income and expense, cash flow statement, and balance sheet. This measures the viability of your business through financial indicators. The result will depend on the estimated initial investment needed to start your medical practice
- You will also want to outline marketing plans and strategies and management structure.
When starting a medical practice, funding is key. There are several types of financing available, depending on your needs and what you can qualify for.
Major banks across the country have special lending practices and programs that are specifically intended to assist medical practices cover startup costs.
- Medical practice loans – These are specialized business loans specifically designed for healthcare professionals. Available at traditional banks as well as through online lenders, these loans account for the financial background of doctors, such as medical school debt. Medical practice loans usually have generous borrowing limits compared to other business loan options.
- Term loans – While these types of loans don’t always allow you to borrow as much as a medical practice loan would, this type of financing offers a lump sum of capital upfront, typically at a fixed interest rate. You can then use that money however you see fit in your practice.
- Small Business Administration loans – The SBA works with lenders that offer small business loans, guaranteeing a portion of the loan. This acts as an insurance policy for the lender, which encourages them to make loans available to eligible businesses. If you qualify, you can get up to $5 million in funding through the 7(a) loan program. Rates are competitive and similar to term loans. You can use the loan proceeds to meet virtually any need in your medical practice.
- Business line of credit – This is an option to consider if your practice has ongoing financial needs or you’re worried about borrowing more than is really necessary. A business line of credit is a revolving line, which means that instead of getting a lump sum of money, you have a credit limit you can draw against as needed. These loans often have a higher interest rate than a traditional loan.
License to Practice
Starting a medical practice as opposed to a traditional business requires you to acquire numerous licenses before you can open and begin accepting patients. Here are a few examples of the licenses medical practices are needed to obtain.
- Medical license – All states require doctors to be licensed, although the exact requirements vary by state. You look up the requirements state by your state’s board on the Federation of State Medical Board website.
- DEA Registration – You must register with the Drug Enforcement Administration (DEA) if you are to prescribe medication.
- Dispensing Physician Registration – In addition to registering with the DEA, your state may also require you to register with their state pharmacy board or another regulatory board before you can dispense drugs.
- National Provider Identifier (NPI) – Like a social security number, all medical providers need a national provider identifier number which will be registered with government programs such as Medicare and Medicaid as well as private insurance companies. You can apply for your NPI through the National Plan and Provider Enumeration System website.
Check Your Credentials
One challenge you will face when starting a medical practice is the need to obtain credentials. Credentialing is typically a process that involves the completion and filing of paperwork to accept government or private health insurance from patients. The process can take several months. Reimbursements from third-party payors are not made until your medical practice has been properly credentialed. Insurers will require you to be properly licensed, and depending on the state, will also require you to have malpractice insurance. Malpractice insurance can protect your personal assets in case a patient sues you.
Letters of the Law
You’ll need to choose the legal business structure for your business. Do you want to form an S corporation or a C corporation? S corporations only pay taxes on their personal income from the business. C corporations are taxed at the entity level and on their personal income from the business.
Once you determine the type of structure, you’ll need to apply for an employer identification number, or EIN, before starting your medical practice. You can do this on the Internal Revenue Service website. Depending on your state, you will also need to register for state and local taxes.
Rather than strike out on your own, investing in a healthcare franchise such as American Family Care, the nation’s leading provider of urgent care, accessible primary care, and occupational medicine, may be a smart option for you. Not everyone with a medical degree excels in the business side of healthcare. Conversely, franchising helps entrepreneurs without a medical background get involved in this lucrative industry.
The franchising experts at American Family Care will walk you through the process of starting your business — including all of the requirements mentioned above and more. While you will own your own business, you will never be in business alone with AFC as a partner, thanks to the company’s incredible support and ongoing training systems.
AFC has more than 200 clinics and 600 in-network physicians caring for nearly 3 million patients a year. Ranked by Inc. magazine year after year as one of the fastest-growing companies in the U.S., AFC’s stated mission is to provide the best healthcare possible, in a kind and caring environment, while respecting the rights of all patients, in an economical manner, at times and locations convenient to the patient.
For more information, visit www.americanfamilycare.com.