Launching Your Own Healthcare Facility: A Step-by-Step Guide

From Resident to Independent: Dr. Dana Cohen's Journey

After completing her residency at Albany Medical Center, Dr. Dana Cohen landed a position with none other than Dr. Robert Atkins, the renowned figure behind the Atkins diet. However, just a few years into this prestigious role, she felt the urge to break free from the confines of working for someone else. In 2002, she embarked on her challenging yet thrilling adventure – opening her very own medical practice in a charming brownstone in New York City.

The Daunting Leap into Private Practice

"At that age, I was incredibly young and, frankly, a bit clueless about the whole process," reflects Cohen in a candid conversation with NerdWallet. While becoming a physician entails rigorous years of training, that preparation can only take you so far when you decide to start a practice on your own. This pathway is often riddled with challenges, requiring advice from various professionals, including healthcare attorneys, accountants, and medical consultants.

Understanding the Financial Landscape

In the world of private practice, financial backing is essential. NerdWallet has compiled resources geared to support new practice owners in their quest for funding, taking into account trustworthiness and user experiences with lenders. Recognizing that fewer doctors are opting for small practices due to the high startup costs and the complexities of navigating insurance companies, Franklin Walker of the North Carolina Medical Society Foundation sheds light on the growing challenges faced today.

The Reality of Patient Payments

For those brave enough to venture on their own, the hurdles expand even further. Dr. Linda Delo, a family physician located in Port St. Lucie, Florida, articulates her struggle with cash flow—especially when there's a significant gap between patient care and insurance reimbursements. "If they leave without settling their bill, getting it back can be a nightmare," Delo expresses, revealing that she has accumulated over $100,000 in unpaid invoices due to unresolved claims and non-paying patients.

Strategies for Successful Billing Practices

In an effort to mitigate these issues, Delo has taken proactive steps by having her staff gather insurance details and verify coverage in advance of appointments. Educating patients about their insurance obligations helps set clear expectations, paving the way for smoother financial transactions.

Blueprint for a Successful Medical Practice

Launching any small business, including a medical practice, demands meticulous planning. Essential components include creating a business plan, securing funding, obtaining legal guidance, and ensuring compliance with both federal and state regulations. Many medical professionals, much like traditional entrepreneurs, often require small business loans to support initial expenses. While navigating potential debt can be intimidating, Cohen found relief with a loan from the U.S. Small Business Administration, despite her student loans hanging over her.

Assessing Startup Costs Wisely

When determining the financial needs for a new practice, it's vital to scrutinize startup expenses, such as real estate, construction, equipment, and professional service fees. With costs quickly accumulating from office equipment to medical supplies, Walker advises that acquiring an existing practice might be a more financially prudent decision compared to starting from scratch.

Overcoming Setbacks and Innovating Solutions

Cohen’s initial venture did not last long due to insufficient patient volume to cover the hefty expenses of living in New York City. However, by opening a new practice in 2009 and sharing space with another physician, she adopted clever strategies to keep costs down. "There were times I would have a massage therapist use the space after hours, which turned out to be quite resourceful," she recalls.

Understanding Credentialing and Legal Obligations

Before officially accepting patients, physicians must navigate the lengthy process of credentialing, which often stretches across several months. Insurers require extensive details about education, residency, and proof of malpractice insurance. While not all states mandate malpractice insurance, having it offers essential protection against possible legal disputes.

Choosing the Right Insurance and Legal Structure

Practitioners need to explore which public health insurance programs align with their specialty, such as enrolling with Medicare for geriatric medicine or considering Medicaid for practices in low-income neighborhoods. Additionally, selecting the correct legal structure for your practice will influence everything from tax obligations to personal liability in lawsuits. Many doctors opt for S corporations to simplify their tax processes.

Compliance and Necessary Registrations

Getting a new practice off the ground also involves adhering to numerous regulations, including obtaining state licenses, a national provider identifier, and a DEA registration for prescribing medication. As requirements may differ based on specialty and location, consulting detailed resources, such as the Medical Group Management Association, can provide valuable guidance for prospective practice owners.

Joining Professional Communities for Support

Finally, tapping into networks such as the American Medical Association can offer significant assistance in navigating legal, ethical, and business management challenges that arise when setting up a medical practice. With the right support and resources, fledgling doctors can successfully carve out their niche in the medical landscape.