Flexibility, autonomy in business and professional decisions, and the ability to offer more personalized care are only a handful of the many benefits associated with starting a private medical practice. But despite the evident advantages, fewer physicians are choosing to open their own practice than ever before. A study from the Physicians Foundation found that less than one-third (31.4 percent) of physicians identified as independent practice owners or partners in 2018 compared to 48 percent in 2012 and 62 percent in 2008.
What’s behind the massive drop? In addition to the hassle of dealing with insurance companies and navigating changes in the healthcare industry, establishing an independent practice can be both complicated and costly.
While medical school may have trained you to become a doctor, it may not have prepared you for the obstacles involved with starting and successfully running your own business. If you are thinking of embarking on the exciting but complex process of starting your own medical practice, here are 6 startup and operational challenges to prepare for:
Securing financing. Building a practice from the ground up will likely require you to obtain outside funding -- particularly if you are fresh from medical school and saddled with student debt. To secure a loan, it is highly advisable to work with a consultant with experience in medical practice financing and seek out banks that have designated healthcare loan departments.
Depending on your situation, you may need to secure financing to cover startup costs such as:
● Renting or leasing an office space
● Investing in equipment and electronic healthcare record (EHR) software
● Purchasing medical and office supplies
● Getting insured
● Hiring a front-of-the-house team
Meeting state and government licensing regulations. Before you can open a healthcare practice, you must meet basic regulations established by the government and the state where you will practice. Regulations may vary depending on your state, type of medicine, and procedures offered, but starting a medical practice typically requires the following:
● Medical license. A medical license indicates you have met the minimum federal requirements for the undifferentiated practice of medicine. This includes graduating from an accredited medical school, completing residency training, and passing a national medical licensing exam.
● State board certification. In addition to meeting federal standards that govern medical training and testing, you must secure a license granted by the particular U.S. state or jurisdiction where you practice.
● National Provider Identification (NPI) number. As a healthcare provider, you’ll need to obtain a National Provider Identifier (NPI). An NPI is a 10-digit number that is used to identify your practice in healthcare claims and other standard transactions.
● PECOS – Medicare Provider Enrollment, Chain and Ownerhip System PECOS supports the Medicare Provider and Supplier enrollment process by allowing registered users to securely and electronically submit and manage Medicare enrollment information.
● Register with the Drug Enforcement Administration (DEA). Any healthcare professional who administers, prescribes, or dispenses a controlled substance must be registered with the federal Drug Enforcement Administration (DEA).
Credentialing. In order to be able to accept public and private health insurance at your practice and be eligible for reimbursable expenses, you must complete a process known as medical credentialing. Also known as healthcare credentialing, this is the process of applying to serve as an in-network provider with an insurance panel. When applying to become affiliated with different individual insurers, you may be required to submit the following.
● A provider enrollment application
● Medical license
● Board certification
● DEA License
● Malpractice insurance certificate
● Education and training information
Note that public healthcare insurers like Medicare and Medicaid reimburse all doctors equally for different procedures. However, you may need to negotiate reimbursement terms with private providers individually.
Contracting with the insurance payors is the next step. Knowing the reimbursement for services and supplies, in-office laboratory ,radiology and ancillary services, understanding clinical and medical policies specific to your specialty are important to be aware of.
Getting insured. As the owner of a medical practice -- particularly if you rent or own your own office space -- you are exposed to certain liabilities. To safeguard your practice from malpractice lawsuits and protect your business in the event of any injuries and accidents that occur on your property, you may need to obtain the following insurances:
● Medical malpractice insurance. Also known as medical professional liability insurance, medical malpractice insurance is a specialized type of professional liability insurance. Medical malpractice insurance covers healthcare professionals for liabilities that arise from procedures that resulted in patient injury or death. This type of insurance is essential for physicians and required by law in most states.
● General liability insurance. If you rent or own a commercial space, you may become liable for accidents and injuries that occur on the property. A liability policy can help protect your practice in the event that bodily injuries are sustained on the premises.
● Worker’s compensation. Most states require that businesses with over a certain number of employees obtain workers’ compensation, which covers costs associated with employee injury or illness at work.
● Property insurance. If you own or lease your business property, you may need to purchase property insurance to safeguard your building and equipment from damage, theft, vandalism, and other threats.
Hiring and administration setup. As the owner of an independent practice, you generally must hire a receptionist and/or an office manager to oversee daily operations -- including tasks like booking and confirming appointments, creating and updating patient records, and submitting insurance claims. In addition to hiring a front-of-the-house team, you’ll need to set up administrative policies, including:
● Creating employee agreements
● Developing a compensation model
● Establishing office policies
● Establishing staff hiring and training procedures.
Office setup and location. To help attract and maintain patients, it’s a smart strategy to seek out an office location that is accessible, visible, and in a well-trafficked area. In addition to location, consider your practice’s spacing needs to determine whether you want to lease a standalone building or occupy a larger suite in an office building. Keep in mind that if you choose to lease your own property, your office will need to be equipped, furnished, and inspected for fire, safety, and other relevant concerns.
To cut startup and operational costs tremendously, consider establishing your medical practice within a medical co-working space. An increasingly popular option among private physicians -- particularly those who are just starting out -- these spaces often come with fully equipped offices, shared reception and administrative staffers, and operational support. As fully managed business facilities, medical coworking spaces can help you reduce your financial burden while allowing for the flexibility, control, and freedom associated with owning your own practice.
Susanne Talebian is director of Operations at Cowork Medical.