Tips for Doctors Starting a Private Practice

Tue Nov 11, 2025 by DrChrono Staff

Opening your private practice marks an exciting milestone in your career as a doctor—but it can also feel overwhelming. The paperwork, logistics, and legalities make it difficult to even know where to start.

The good news? You’re not the only one experiencing these challenges, and with a clear roadmap, you can establish a thriving practice that aligns with your vision.

This guide provides tips and step-by-step instructions to help you launch a practice and grow with confidence.

Whether you’re a new physician striking out on your own or a specialist branching off to open a private practice, this article will walk you through everything from forming a business plan to setting up daily operations.

Why Start a Private Practice?

Deciding to start a private practice is often driven by a passion for providing patient-centered care, combined with a desire for professional independence. Here are a few key benefits of taking this rewarding path:

Autonomy over care: You have the freedom to make decisions that prioritize your patients without external constraints.
Better patient relationships: By focusing on a smaller patient pool, you can provide more personalized care.
Financial potential: While owning a practice requires an initial investment, it can lead to long-term financial rewards—without the limitations of salaried positions.
Work-life balance: You’re in control of your schedule, office policies, and team, giving you flexibility over how you work.

Whatever the reason you have for starting this journey, this guide is for any healthcare provider ready to take the leap into private practice, including:

New physicians looking to start their careers
Specialists wanting more independence
Experienced doctors transitioning away from group practices or hospitals

Below, we provide a clear, step-by-step approach to help you map your way forward and build the private practice of your dreams.

Doctor watching tablet

Step-by-Step Guide: How to Start a Private Practice as a Doctor

1. Build Your Private Practice Business Plan

Before taking any action, create a comprehensive business plan. This document will function as a foundation, helping you clarify key decisions and secure funding if needed. Your business plan should include:

Market analysis: Research your local area, target demographics, and competitors.
Practice space design: Plan the layout and consider factors such as patient flow, exam rooms, reception areas, and other relevant spaces. Pro Tip: Consider scalability. Make sure you have sufficient square footage to accommodate future expansion.
Practice setting: Determine if you will be a solo or group practice owner.
Services and procedures offered: Clearly outline the procedures or specialties your practice will deliver.
Startup costs: Itemize costs such as leasing space and licensing fees.
Budget upfront and ongoing expenses. Upfront expenses may include office space and marketing efforts. Ongoing costs may include rent, utilities, or payroll.
Revenue projections: Plan how you’ll generate income and project financial feasibility (i.e., quarterly goals).

Here are a few free business plan templates and private practice resources/webinars to get you started:

Small Business Association business plan templates
American Medical Association (AMA) Ed Hub
AMA STEPS Forward Private Practice

2. Understand the Legal Requirements

Setting up a private practice involves meeting several legal requirements. Below is not an exhaustive list of these prerequisites, but it can help you create a plan:

Forming a legal entity: Common options include sole proprietorship, partnership, or Limited Liability Company (LLC). Each type comes with specific legal and tax implications. Many doctors choose to establish their practice as an LLC for liability protection and tax benefits. Consult a healthcare attorney to determine the best structure for you.
Obtaining permits and licenses: Healthcare regulations vary by state, so make sure to secure the appropriate practice license and zoning permits for your office location.
Comply with healthcare laws: Familiarize yourself with regulations that apply to your operation, including billing code sets and patient confidentiality requirements.

3. Obtain Medical Licensing and Credentialing

Without proper licensing and credentialing, even the most skilled physicians can’t operate legally. Here are a few key things to focus on:

State medical licensing: Each state has its own medical licensing board, so apply early and ensure all documentation is accurate. Read more about navigating licensing.
Insurance credentialing: Partnering with insurance companies to accept health insurance requires credentialing. This process typically takes anywhere from 3 to 6 months as insurers verify your qualifications.
The Council for Affordable Quality Healthcare (CAQH) system: Many commercial insurance carriers use this central database to obtain provider credentialing information. Insurers may require a complete and up-to-date profile in the CAQH system; therefore, ensure your information is ready for review.
Tax ID Numbers and National Provider Identifier (NPI): The NPI is a 10-digit number assigned by the Centers for Medicare & Medicaid Services (CMS) to identify providers. It is required for HIPAA compliance. The IRS uses the Tax ID to track income and payments.

Pro Tips: Unsure whether to reveal something or provide additional documentation? Do it anyway. Incomplete applications are one of the most significant speed bumps in the credentialing process. Remember to save and print a copy of your completed applications for your records before submitting them to any institution.

4. Secure Malpractice Insurance

Business plan? Check. Medical licensing? Check. Now it’s time for malpractice insurance.

Medical malpractice insurance covers physicians and other healthcare professionals for liability arising from disputed services that result in a patient’s injury or death. Simply put, it offers protection for both you and your patients.

Some important items to pay close attention to:

Type of coverage (claims-made or occurrence): Occurrence-based policies cover incidents during your policy period, regardless of when claims are filed. Claims-made policies cover only when the policy is active, so you may need “tail coverage” if switching insurers.
Policy limits (per claim or aggregate): Per claim is the maximum amount the insurance company will pay for a single claim. The aggregate limit is the total maximum amount the insurance company will pay for all claims within a policy period.

When comparing plans, consider coverage limits, exclusions, and premiums to determine the best fit for your needs.

5. Comply with HIPAA and Other Regulations

Patient data protection is critical when starting your practice. Use this quick checklist to ensure HIPAA compliance.

Install secure electronic health record (EHR) systems. Make sure the platform offers safety features, including encryption, audit trails, and regular updates/patches.
Appoint a HIPAA Privacy Officer to oversee all compliance measures.
Supply staff with HIPAA training. The HIPAA Journal is an excellent resource for training tips and the latest compliance information.
Utilize HIPAA-compliant communication tools to safeguard patient information.
Enter into Business Associate Agreements (BAA) with all business associates (i.e., vendors, consultants) who have access to protected health information (PHI). These agreements should outline how PHI will be protected and who is responsible for compliance.

Medical staff talking

Setting Up Your Practice Operations

Once the foundation is in place, it’s time to bring your practice to life. Here are clear tips for creating the practice you’ve always wanted.

6. Choose the Right Location and Set Up Your Medical Office

Where you establish your practice can make or break your success. Consider factors such as:

Proximity to your target market
Whether to lease or buy office space
Accessibility for patients, including parking and public transportation
Visibility; select a location that is easily visible from major highways or roads

Once you have found a location, it’s time to set up your practice. Here is a medical office setup checklist to help you begin:

Office supplies: Secure internet, digital phone system, office equipment, patient-facing tools (e.g., self-check-in kiosks), and furniture.
Medical equipment: Exam tables, diagnostic instruments, emergency equipment, medical supplies (such as disposable gloves and masks), specialized tools, and laboratory equipment.
Computer and IT infrastructure: Practice management software, EHR/EMR, hardware, and ongoing IT support.

7. Select the Right EHR and Technology Tools

An EHR system streamlines your ability to manage patient medical data. When choosing an EHR for private practice, consider:

Features like patient scheduling, medical history tracking, and billing tools
User friendliness and data security
An integrated system that offers an EMR, billing, and patient engagement in one platform
Opting for cloud-based solutions that can grow with your practice, offering flexibility and mobile access
Using assessments such as the EHR Discovery Tool for New Practice Owners to help assess your readiness and identify the right tech solutions.

8. Set Up Medical Billing and Financial Systems

Efficient billing is crucial to maintaining a steady revenue stream. Here are a few tips on how to create effective medical billing workflows and systems in your private practice.

To bill in-house or outsource? That is the question. Decide whether you will handle billing in house or if you will outsource it to a trusted medical billing service. In-house medical billing involves managing billing processes internally, while outsourcing means hiring a third-party company to handle billing responsibilities.

How do you decide? It depends on your 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 best option.

Integrated medical billing. Revenue cycle management (RCM) is critical to your practice’s financial health and long-term stability. To keep your revenue cycle operations running smoothly, consider an EHR system that integrates billing software, practice management, and clearinghouses into one platform to address your billing needs.

This type of solution may save time and help improve clean claim rates by eliminating multiple data entries and human errors. If you are considering outsourcing your RCM, research services that handle the complete lifecycle of your medical claims. Select services that reduce administrative tasks and offer consistent workflows and continuous claims monitoring.

9. Hire Staff for Your Practice

Determine your staffing needs based on your practice size and specialty (if applicable). Suggested roles include:

Front desk personnel
Clinical staff, including nurses and physician assistants
Billing and insurance specialists
Practice manager

When establishing a private practice, identifying candidates with the right skills, experience, and personality traits is essential. Here are a few hiring tips and best practices for onboarding to get you started:

Determine salary ranges and benefits.
Use various hiring channels (e.g., social media, professional networking sites, and healthcare-specific recruiting platforms) to recruit the ideal candidate.
Conduct thorough background checks and ensure candidates possess the necessary licenses/credentials.
Draft a highly focused job description. Does it include the exact responsibilities and skills required for each position? Does it thoroughly explain your practice’s values and culture?
Establish a robust onboarding/training process to bring new employees up to speed quickly. Create a comprehensive employee handbook with policies and procedures to streamline this process.

10. Create Efficient Workflow and Patient Experience Systems

Efficient medical practice workflows enhance patient experience by simplifying processes, reducing wait times, and improving communication. This leads to increased patient satisfaction and greater trust in you, the provider.

Streamlining daily operations and ensuring an exceptional patient experience may be achieved by using these tools:

Appointment scheduling software
Patient intake systems, such as online forms
Secure communication platforms for follow ups and reminders
Online patient portals that are user-friendly, allow patients to schedule and update visits, sign consent forms before appointments, and access educational materials

Doctor seeing Laptop

Take the First Step Toward Your Private Practice

Starting a private practice isn’t without its challenges, but there’s tremendous satisfaction and reward in carving out your professional path.

A Quick Recap:

Develop a business plan that focuses on services, costs, and the target marketplace.
Understand legal requirements and obtain all necessary licenses and insurance to start your practice.
Ensure HIPAA compliance in all practice areas.
It’s all about location, location, location.
Hire the right staff.
Select an integrated EHR system to support your practice’s financial health.
Focus on the patient’s experience to offer the best care possible.

Ready to begin creating the practice of your dreams? Take the first step and use the EHR Discovery Tool for New Practice Owners to assess your readiness and identify the right tech solutions today!

Looking for more information on this topic? Here are a few resources and stories from other physicians to help you through this process and beyond:

The American Medical Association
Medical Economics
The White Coat Investor
American Academy of Family Physicians