How to Start a Medical Practice - Your Essential Checklist
Starting your own medical practice is a rewarding milestone in your healthcare career, but it can also feel intimidating. Medical school teaches you everything you need to know to start a career in medicine. However, one important topic is often overlooked: how to run a practice. It is a business after all.
From meeting legal requirements to setting up systems for practice management, the process involves juggling many moving parts. A clear roadmap can help you overcome challenges, seize opportunities, and ultimately create a thriving practice.
Whether your goal is to deliver exceptional patient care, gain independence, or make a lasting impact in your community, this essential checklist will guide you step by step through the process of confidently starting your private practice.
Why Planning Matters When Starting a Medical Practice
Opening a private practice offers huge opportunities, but it also comes with challenges. You’ll face decisions about legal requirements, financial investments, and operational workflows. A lack of preparation can lead to unnecessary stress, delays, and costs.
That’s why having a clear, strategic checklist is vital. It’s your roadmap to avoid pitfalls, meet compliance standards, and create a practice that thrives both clinically and financially.
During this process, providers may also benefit from evaluation tools. For example, this EHR Discovery Tool serves as a readiness assessment to help determine your preparedness to open your new practice. Answer a few strategic questions and receive a comprehensive practice readiness score and resources to get you on your way. Once you’ve made your way through the practice checklist, these resources can also help you select an EHR that best suits your needs.
Whatever your preparation strategy looks like, we offer a comprehensive checklist below to get you started on your medical practice journey.
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Step-by-Step Checklist to Start Your Medical Practice
Develop a Medical Practice Business Plan
Every successful medical practice begins with a solid business plan. It’s a blueprint for long-term success and helps you stay organized and focused on your goals. Here’s how to begin.
Define your services and specialties
First, it’s essential to outline your goals and mission. What is your niche? Are you focusing on general practice, pediatrics, or dermatology? Decide if you plan on being a solo, partnership, or group practice. Next, set your goals. Determine short and long-term objectives for patient volume, revenue growth, and community impact.
Financial projections and budgeting
Estimate startup costs like medical equipment and salaries. This projection also helps you secure funding or working capital if needed. Here are a few costs to consider:
- Upfront expenses: office space, furnishings, medical equipment, marketing efforts (i.e., website development, social media, print ads), and EHR/revenue cycle management (RCM) system costs.
- Ongoing costs: rent, IT support costs (software/internet/phone), payroll/benefits, additional services like legal, vendor, or accounting services.
Understand the marketplace
Conduct a market analysis to assess local competition, demographics, and demand to ensure your practice offers something valuable and needed. For example, evaluate the number of similar specialties in the area to understand if there’s a need for your specialty in the marketplace.
Understand the Legal Requirements for Medical Practice
Complying with legal requirements is essential to protect your practice from liabilities. Here are a few crucial items to consider:
Choose a Business Structure
Selecting the appropriate business framework for your medical practice is more than bureaucratic detail. It can determine whether your practice succeeds or struggles to make ends meet.
Options include sole proprietorship, partnership, or LLC (with sole proprietorship taxation). Each type comes with specific legal and tax implications:
- Legal: The structure you choose impacts your personal liability protection. The correct structure can protect your assets from business liabilities.
- Tax: Different structures can lead to vastly different tax outcomes, and that can either cost you or save you a lot of money each year.
Ultimately, your business structure can affect your long-term growth and planning. It can also impact how you bring in new partners, sell your practice, or transition ownership when you retire. Do your research and plan carefully.
Register Your Practice
Secure a federal Employer Identification Number (EIN) and register your practice name with state authorities. Also, consider Drug Enforcement Administration (DEA) registration if applicable.
Obtain Malpractice Insurance
Medical malpractice insurance covers physicians and other healthcare professionals for liability stemming from disputed services resulting in a patient’s injury or death.
Depending on the location and nature of your practice, malpractice insurance can be obtained in different ways according to the Insurance Information Institute, including:
- An individual or group policy obtained through a medical risk retention group (RRG), an organization of medical professionals that provides liability insurance
- An individual or group policy purchased from a private insurer
- Insurance provided as part of a policy held by an employer (i.e., a hospital)
Review Contracts and Liability Protections
Contracts, such as those with vendors and insurers, must be carefully reviewed to avoid ambiguities with terms and conditions and ensure they comply with relevant laws and regulations.
Work with an experienced attorney to ensure your lease agreements, vendor contracts, and other partnerships safeguard your interests.
Meet Medical Licensing and Credentialing Requirements
Your medical license and credentials are the foundation of your ability to practice legally.
Let’s dig into these vital requirements, why they matter, and what to expect during each process.
Medical Licensing Requirements: Each state has specific licensing rules and timelines, so review these conditions thoroughly and plan ahead. Depending on your needs, you can apply for a full, limited, or temporary license.
While the specific requirements for obtaining a medical license vary between jurisdictions, the Federation of State Medical Boards (FSMB) states that boards look closely at some standard factors, including:
- Medical education
- Performance on a national licensing examination
- Postgraduate medical education/training (i.e., residency)
Insurance Credentialing and Enrollment Process: The insurance process for providers involves a multi-step process where your qualifications are verified, and then you are enrolled in networks to become eligible for reimbursement. It is important to work with insurers to verify your qualifications so you can accept patient insurance payments.
For example, many commercial insurance carriers utilize the Council for Affordable Quality Healthcare (CAQH) platform to obtain provider credentialing information. It is a central database for providers and health plans to share information. Insurers may require a complete and up-to-date profile in the CAQH system, so make sure your information is ready to be reviewed.
NPI and Tax ID Numbers: The National Provider Identifier (NPI) is a 10-digit number that the Centers for Medicare & Medicaid Services assigns to identify healthcare providers. It is required for HIPAA compliance to simplify billing and ensure accurate claim processing.
The Tax ID is used by the IRS to track income and payments and is required for many business activities like opening bank accounts.
Ensure HIPAA Compliance from Day One
Protecting patient data is not optional. HIPAA compliance for new practices is key to avoiding legal issues and maintaining patient trust. Here are a few ways to begin this process:
- Implement data protection policies: First, familiarize yourself with the necessary legal/regulatory requirements. Next, outline how patient records will be stored, accessed, and shared securely.
- Provide staff training: Educate employees on handling protected health information (PHI) responsibly. The HIPAA Journal is a great resource for training tips and information on this topic.
- Invest in HIPAA-compliant EHR solutions: Your EHR should be designed with encrypted security features. For example, the EHR system should have a secure application programming interface (API) that ensures all data transfers are safe and compliant with regulations like HIPAA. A well-designed API promotes interoperability, enabling your systems to work together cohesively.
Building the Foundation of Your Practice
Select the Right EHR and Practice Management Software
You’ve registered your practice, obtained insurance and required licenses/certifications, and implemented compliance measures and policies. Now it’s time to create the practice space of your dreams and equip yourself with an EHR system that improves patient engagement and practice management.
Here are some key features to consider when selecting the right system:
- Look for an integrated system that offers appointment scheduling, billing, and a patient portal in one platform. For example, you may want a practice management system capable of sending reminders via email, SMS, or even app notifications, catering to different patient communication preferences.
- Opt for cloud-based solutions. This scalable technology grows with your practice, offering flexibility and mobile access.
- Use readiness assessments such as the EHR Discovery Tool to help match your practice with the right solution.
RELATED ARTICLE: What to Look for in an EMR and Practice Management Software
Medical Office Equipment List
Creating a functional and welcoming environment ensures your practice runs smoothly. Work with your practice manager to assess what is needed and what your budget can afford. To start, consider the essential items below.
Exam room basics: Stock essentials such as exam tables, basic diagnostic and clinical equipment (i.e., blood pressure monitors, pulse oximeters, ECG unit), medical supplies such as disposable gloves/masks, and any specialized equipment if needed.
Administrative and IT setup: Invest in office furniture, computers, secure Wi-Fi, and phone systems.
Patient-facing tools: Enhance the patient experience with items like self-check-in kiosks and communication systems.
Staffing Your Medical Practice
Your team is the backbone of your practice. They also directly impact the overall work environment. So, hiring the right candidate matters. Here are a few tips to get you started.
- Use different hiring channels (i.e., online job boards, healthcare-specific recruiting platforms) to hire the right clinical and administrative staff.
- Craft a highly focused job description. Make sure that the candidate aligns with your practice values and culture.
- Verify credentials. Ensure licenses and certifications are up to date.
- Establish strong onboarding workflows. Provide robust training that includes compliance and operational protocols.
Managing Finances and Billing from the Start
Choosing a Billing Solution that Scales
Efficient billing ensures steady cash flow and fewer headaches. When choosing the right billing solution for your new private practice, consider the following strategies:
Decide on in-house versus outsourced billing: In-house medical billing involves managing billing processes internally, while outsourcing means hiring a third-party company to handle billing tasks.
The best choice depends on a practice’s specific needs and resources. If you want greater control over your billing, in-house could be the right move. If you want to scale your practice and need access to a more experienced billing team, outsourcing may be the way to go.
Consider integrated billing tools: Streamline processes with systems that have built-in capabilities. For example, opt for an EHR system that integrates billing software, practice management, and clearinghouses in one platform to address your billing needs. This type of solution saves time and helps improve clean claim rates by eliminating multiple data entries and human errors.
Focus on claims management and reporting: Use intelligent software that tracks claims and provides financial insights. For example, look for a software solution that offers billing dashboards. These tools give you regular reports on claim rates and revenue, so that you know what is working and what can be improved.
Revenue Cycle Management for New Practices
RCM is critical to practice growth, financial health, and long-term stability. The trick is to maintain healthy RCM while also focusing on patient care. Here are some tips to achieve this balance.
- Monitor key metrics: Analyze metrics such as denial rates, days in accounts receivable, and collection percentages.
- Invest in automation tools and use analytics for growth: RCM automation improves cash flow by optimizing claims submissions and payment postings. Leverage reporting tools to spot trends and make data-driven decisions.
- Consider outsourcing RCM: Research RCM services that handle the complete lifecycle of your medical claims. Opt for services that offer consistent workflows, continuous claims monitoring, and reduce administrative tasks.
Start Your Practice with Confidence
Launching your medical practice is an exciting endeavor, but it requires careful planning and execution.
Key Takeaways to Remember:
- Develop a business plan, focusing on services, costs, staffing, and the marketplace.
- Understand state board requirements and get all necessary licenses/insurance to start your practice.
- Ensure HIPAA compliance in all areas, from EHR data protection to staff training.
- Select the right EHR system and billing solution for smooth operations.
By following this comprehensive checklist, you’ll tackle each step—from business planning and compliance to technology solutions—with confidence. The right mix of preparation, compliance, and tech tools ensures you can serve patients effectively while building a thriving business.
If you’re ready to bring your vision to life, explore the EHR Discovery Tool to find the best-fit solution for your new practice!