Starting a medical practice can be exciting and rewarding, but, at the same time it can present a number of unforeseen challenges. Like any other business, a medical practice involves planning, accounting, equipment, staffing and other activities to be planned properly. With rising business costs, administrative processes, and changing regulations, it can be difficult to start a new practice, if not paid attention at every step of the way. In this guide, we offer you a bird’s–eye view of what to consider when heading towards a new practice.
There is no ‘one size fits all’ formula to head-start a medical practice. Hiring a professional consultant who knows the potential pitfalls of starting a medical practice can be of great help. The requirements of a medical practice will vary from specialty to specialty and some regulations may differ from state to state. An experienced consultant can understand the variables and help you plan accordingly.
However, there are many common things that must be on your checklist when starting a practice from the ground up. With so much to do, you might be wondering where to start? Financing is where you’ve to start with.
A pro forma is a full-blown business plan that outlines debt and revenue projections in real-time. You’ll account for all your expenses, debts and expected revenues. A pro forma also includes certain questions such as where your patients will come from, are you a part of referral network or do you expect your patients off the street? Also, you have to count all the costs to set up your practice - your lease costs, investment in technology [electronic health record system], medical supplies and office supplies. You have to give a clear picture of what the practice looks like. A strong pro forma will project at least three years into the future and sometimes beyond.
Once you’ve opened a line of credit, the next biggest challenge is purchasing the medical equipment and hiring the staff. It is not simple as said; you’ve to do extensive research when making each decision. Proper planning and getting the right information can set yourself up for success. Here’re some of the things you’ll want to consider when starting a new practice:
Today, more than ever, digitizing records and streamlining communication have become a high priority for healthcare providers. Electronic health record (EHR) system has become a universal tool for practitioners. EHR has become a one-stop system for patients’ records & histories, communications, lab tests & prescription records and other information on your revenue cycle. In addition to this, the EHR system you use should qualify for federal incentive payments.
The Practice management system is the heart of any practice. Integrated with EHR system, the practice management system keeps track of the information and facilitates operations. PMS is mainly used for conducting and monitoring your billing and revenue cycle. Not only will your staff use the PMS for generating bills, but any information can be shared between the EHR system and PMS, thus eliminating duplicate records.
You have to consider how medical transcription fits into your practice. There are three main ways a medical practice performs transcription – in-house transcription, voice recognition software or outsourcing to a medical transcription service. Timeliness and accuracy are the two key aspects of medical transcription. Make sure your medical transcription software can integrate with your EHR system.
Before, you finally open your doors, there are some more things you should really be doing to start a practice.
This is considered as extraordinarily important for medical practices. The main reason behind incorporation is ‘limited liability’, meaning if something goes wrong, only the assets held by the company are subject to any risk, otherwise, all your personal assets will be subjected to lawsuits. Moreover, there are certain tax benefits associated with each entity type. Therefore, it is important to do your research on each entity type and get to know the potential benefits your practice gets.
Outlining a set of verifiable policies and procedures in addition to compliance with legal regulations is important for your practice. These policies should cover all your daily operations, including data entry, billing and interaction with patients. Make sure you periodically update your policies and procedures, otherwise they become ineffective.
Define a set of expectations for each role before you begin the hiring process. Write an employee handbook that includes office policies and benefits. Also, it is important to address patient privacy and security issues while outlining staff workflows. You’ll need to conduct a security risk assessment to comply with HIPAA and HITECH. Finally, don’t forget to create a HIPAA Notice of Privacy Practices (NPP) for patients to sign when they fill out their registration and medical history forms.
Insurance is important for every business, and for medical professionals, it’s even more crucial. Firstly, medical practices should be covered by malpractice insurance. Beyond this, the additional coverage you’ve to make will depend on the bank issuing your loan, as the coverage might vary from bank to bank. At the very least, you have to purchase malpractice, liability and life insurance policies when planning to start a new medical practice.
We hope this checklist helps you start a medical practice. So, set your wheels in motion and once you’re up & running can make all this work worthwhile.
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