A lot goes into setting up your own practice. Other than years of medical school, you need to have all your ducks in a row on the business side. It’s exciting to launch any new business, but a few things all small businesses need to have are, a business plan, funding and legal counsel. In addition, we put together a short list of things to think about before you take the plunge.
This one, we happen to know a lot about :). Under-capitalization is the number one reason for business failure. Consider all of your costs before you nail down how much you will need to borrow. We recommend you calculate to the closest dollar amount your revenue expectations and then list all expenses. This can include real estate, office furniture, computers, equipment, disposable supplies and don’t forget about attorney, accountant and consultant fees. Divide the expenses into what you will need before you open the doors, after you open the doors and operating expenses for the first year. Project the worst, most likely, and best case scenarios.
You’ll need to go through a process known as “credentialing” to accept government or private health insurance from patients. The entire credentialing process can take several months. It’s recommended to begin this process before a physician finishes up his/her residency or decides to leave the employ of a hospital or another group. Do not put yourself in a position of urgency. Insurers will typically ask about your medical education and residency, and they’ll want to see that you’re properly licensed and, in some states, have malpractice insurance. Check with your state department of insurance for more information.
The most important decision you will have to make relating to taxes for your new business is the type of legal structure you select for your company. Business structures are largely creations of state law, so there are minor variations on the details from state to state. The 5 common models are: sole proprietorship, partnership, limited liability company (LLC), s corporation, and c corporation. There are advantages and disadvantages to each of these classifications, the type of business entity you choose will depend on several factors such as liability, taxation and record keeping; but the key is to find the best fit for your organization.
Now you have your funding, your credentials, and your business is registered with your Secretary of State, the next major step is making sure you follow all the relevant regulations set by the federal government and your state. Many regulations are specific to medical specialties. You will need to get licensed by the medical board in your state, receive a national provider identifier number, and get a DEA number issued by the U.S. Drug Enforcement Administration. There are additional regulations depending on the type of medicine you practice and the procedures you provide. Be sure to do your homework before you open your doors.
These are just a few steps you will need to take to get your practice up and running. There are several organizations and associations you should look into before taking the plunge. The Medical Group Management Association has a detailed checklist for starting a medical practice as well as affiliate chapters in each state. In addition, physicians can joint the American Medical Association to get information about legal issues, medical ethics and practice management. Research your state to review your state-specific information. Check the Accreditation Council for Continuing Medical Education for a list of state medical societies and associations to help you along the way.
Most of all, good luck and enjoy being your own boss!