Starting a Practice

January 1, 2005

I am starting a solo pediatric practice and hoping to take commercial insurance. Do I need a license from the Department of Health and Human Services even though I am not seeing Medicare patients? Do I need a business license?

Question: I am starting a solo pediatric practice and hoping to take commercial insurance. Do I need a license from the Department of Health and Human Services even though I am not seeing Medicare patients? Do I need a business license?

Answer: There are some overlapping issues in your question: business structure and contracting.

Most practices structure themselves as a formal entity such as a limited liability corporation or professional corporation. The consequences of each vary by state, so you'll want to work with an experienced accountant or other professional to get some help on that.

You must also apply for federal, state, and sometimes local tax ID numbers so everyone knows where to find you come tax time.

And you must register your business with the state.

Any business would have to take those steps. As a medical practice, you also need to have your credentials ready, including a state medical license, DEA number, board certification, and an up-to-date CV. You then contact the payers in your area for applications and submit all the paperwork for their credentialing process - which can take nine months! Eventually, they'll send you contracts that establish your fees. Meanwhile, you'll also, presumably, apply for hospital privileges.

Since you're a pediatrician, you don't need to worry about Medicare. You might, however, look into the state's Medicaid program. Compare Medicaid's rates with rates from other payers to get a sense of whether you want to participate in Medicaid - or if you are committed to that program for other reasons.