In Part One of this two-part series, we examined the personal aspects of starting a practice… what to consider before committing your time and hard-earned cash.
If you missed Part One, you can read it here.
Once you’ve checked in with yourself and feel confident about moving forward, the next step is to take your vision and put it into action.
Launching a practice may feel overwhelming. Countless moving parts need your attention; breaking them down into practical steps makes the process manageable.
Here are the key steps to take to get your practice up and running.
1. Get clear about your Business Model
What do you want to do? What kind of practice, what type of care do you want to deliver and to whom? And what are your financial goals?
Every successful practice begins with a clear vision.
Will you focus on primary care or provide a specialty service? Will you accept insurance or start a direct pay practice?
For example, if your financial goals are to make as much money as possible, then starting a general primary care, insurance-based practice may not get you to your goal.
Along with your business model, you also need to define your ideal patient: the person or persons you most would like to work with.
Take some time to answer these questions, as they will shape everything that follows: your business plan, the amount of money you need to get started, your marketing strategy, and even your daily operations.
Additionally, try to gain as much clarity as possible about your mission and the values you want your practice to reflect; it will help guide your decisions as you move forward.
2. Create a Business Plan
Just as an architectural plan guides the construction of a house, a business plan serves as a roadmap for building a business.
When a startup needs lenders or investors, it must submit a comprehensive business plan to them before being considered for funding or investment.
However, not all new businesses require lenders or investors. If that’s the case, do you still need a business plan?
Yes, you do… and here is why.
The business plan is most important for the person starting the business… for you!
Committing your vision, market research, financial projections, your marketing and operational plans to paper forces you to think through the details, from start to finish.
Your business plan will tell you if your idea is viable or if you need to return to the drawing board. It will help you stay the course when things get tough, providing a concrete measure against which you can gauge your progress.
3. Financing the Practice
Usually, starting a practice requires some upfront investment of both time and money.
However, counter to common belief, it doesn’t need to be an enormous sum; many NPs start their practices on a shoestring and grow them from there.
Depending on the type of practice you want to start, startup expenses may include lease and utility deposits, furnishings and medical equipment, computers, software to run the practice, and initial salaries for yourself and any staff members.
It takes money to market the new practice, to pay for billing, bookkeeping, accounting, and legal advice, among other expenses. Your business plan will tell you how much money is required to get started.
Your next step, then, is to identify your funding sources and establish an emergency reserve to cover unexpected costs.
Funding your new practice may come from personal savings, small business loans, or grants.
The right option depends on your specific situation and the scale of your practice.
4. Choose a Name, Legal Structure & Register the Business
The name of your practice is the first thing people will see. Ideally, it should reflect what your practice is all about, be easy to remember, and spell.
Your business name will appear on all relevant documents, including accounts, tax forms, contracts, and more. While it’s not the most critical item, it’s important and deserves some serious consideration.
Your next decision is to decide on a legal structure for your practice. This is a critical decision that will directly impact your tax obligations, level of liability, and the degree of administrative complexity.
Your legal structure may also affect your ability to sell the practice in the future, when you’re ready to move on.
Spend time educating yourself about the available options, which include the Sole Proprietorship, LLC, PLLC, S-Corp, and Corporation. Each structure has its pros and cons depending on your goals and state regulations.
I mention the sole proprietorship only to present a complete list of legal structures. However, it should not be considered as a viable option; your research will tell you why…
Once you’ve chosen a name and legal structure for your business, apply for a Tax ID (EIN) and complete any state-specific filings required to operate.
A Word of Caution…
While the name of your business and legal structure can be changed at any time, the process is cumbersome and complex.
It requires administrative and legal filings, updates to contracts and registrations, and reapplying for licenses and tax IDs, among other tasks.
Spend time researching and gathering the necessary information. Consider getting professional help to understand your available options to choose the one that’s best for you.
5. Licensure, Credentials, and Compliance
Before you open your doors, make sure all your professional credentials are in order, including your NP license, DEA registration (if applicable), and NPI numbers. This includes your NPI-1, your personal number, and NPI-2, the number for your practice.
If you plan to accept insurance, start the credentialing process early. Often, the process will take several months until you’re fully credentialed with all companies.
The credentialing process is not complicated, but tedious. Once you’ve collected the required information for one company, organize it and use it to get credentialled with other companies.
Apply the squeaky wheel principle and stay on top of the process by checking back with the companies to see if additional documentation is required and how soon you can expect to be credentialed.
Finally, don’t forget to implement compliance measures, including HIPAA and any state-specific regulations.
6. Secure Space for your Practice
No matter if you’ll be leasing a traditional medical office space or plan to work from a shared medical office, your location and space matter.
Consider the visibility and accessibility of the location. How convenient will it be for patients to get to your office?
Is there enough parking, including spaces reserved for disabled parking?
If there are stairs in the building, is there an elevator nearby that is easily accessible?
Does the office space itself meet your specifications and needs? Is the landlord willing to make changes to the space?
If signing a lease, be sure you understand all the terms—what’s included, what is not provided, and what your responsibilities will be.
7. Obtain Insurance Coverage
Once you’ve secured your office space, obtain insurance coverage to protect yourself and your practice.
Start with malpractice; shop around for and select a malpractice policy for yourself so you will be covered from day one.
Next, work with a broker or shop around for general liability and property insurance. Your malpractice policy may not cover slip-and-fall injury claims.
Depending on the type of practice, you may need additional coverage. Contact your state to determine if and what other policies (e.g., workers’ compensation) you may need to stay in compliance.
8. Set up your Infrastructure
To operate a viable practice, you’ll need an electronic health record (EHR) system, a billing solution, a scheduling system, and a secure communications system.
Research EHR and billing solutions and decide whether you’ll handle billing in-house or outsource it.
Develop policies and procedures for scheduling, intake, patient care, and other key areas of your practice.
Even though it might be early, try to put systems in place to streamline the operations in your office over time. Having effective systems in place can make or break your workflow and your practice.
9. Building a Team
You may decide to start as a solo provider and continue to work as such.
Alternatively, you may decide to start your practice with employees from the start. Typical employee roles include front-desk staff, medical assistant, and biller.
Hiring the right person for the job is crucial. Take time to develop individual job and employee criteria. When hiring, don’t rush the process, but hire slowly.
Once hired, properly onboard the new employee and provide the necessary training to set clear expectations from the start.
10. Develop a Marketing Plan
No matter how well-designed and furnished your new office is, nothing happens until patients come through your doors.
No practice can thrive without patients.
Well before opening day, think about how you will bring patients to your practice.
Will you use online marketing through your website, a Google Business Profile, posting to social media, or by buying ads?
Will you tap into your community connections and look to networking, referrals, and patient word-of-mouth marketing? All are powerful tools for growing your patient base.
Or will you use “old-style” methods, including print ads and mailing postcards to reach potential patients?
Ideally, you’ll use a combined approach to market and attract patients to your practice.
Whatever marketing methods you decide to use, the key is to keep marketing consistently to grow your practice.
In Summary…
Starting a practice is both exciting and challenging.
Before opening your doors, test everything. Run through every system. Review patient intake forms and procedures. Check your supplies and all equipment.
Consider a gradual launch with only a handful of patients before hosting a grand opening. This allows you to smooth out any kinks and catch any problems.
Starting a practice is a complex process that rarely unfolds sequentially. While there are numerous tasks to complete before opening, I believe we’ve covered the most critical ones in this article.
By following the outlined steps, you can confidently transition from idea to reality.
Starting your practice won’t be without bumps in the road. However, with the right amount of preparation and persistence, you can create a thriving practice that reflects your values and serves your community well.
Ready to start a practice…? Please tell us your questions and let us know your concerns by leaving a comment below; we want to hear from you!
By Johanna Hofmann, MBA, MAc., EAMP; regular contributor to the NPBusiness blog and author of “Smart Business Planning for Clinicians.”