It is exciting when you are starting a medical practice because it is filled with mixed feelings of independence, freedom, and personal fulfillment. Owning a medical practice requires that you have experience in the medical sector and an understanding of how the health sector works. According to Doctorly, the cost of starting a medical practice is estimated to range from $70,000 to more than $100,000. Also, the Physician Practice Specialists estimates the cost of starting a medical practice to an average monthly cost of $6,000.
Finding out the cost of starting a medical practice is one of the top concerns of physicians. This is because you need to adequately plan and identify the cost of starting a medical practice, calculate your set-up costs and manage your finances well to avoid many surprises. Knowing this will help you make good decisions based on the good information you have gotten. It will also help you secure adequate funding to put your plans in motion. This video contains information on the cost to budget for to successfully launch a medical practice. There are different specializations in a medical practice. Some of them includes:
- Primary care health center
- Specialized medical practice
- Sexual health medical center
- Mental health medical center
- Addiction services medical center
- Community health center
- Rural health clinics
What steps do I need to take to start a medical practice?
- Every successful business requires proper planning, so you should plan your business.
- Identify your business entity.
- Conduct efficient market research.
- Choose an appropriate medical practice name and register your medical center.
- Pick a suitable and accessible location for your medical center.
- Have an adequate administrative setup and determine your business organizational structure.
- Finance your business.
- Purchase the essential equipment, materials or machinery, office equipment, fixtures, fittings, and technology needed for the smooth running of your medical center.
- Obtain the necessary medical certifications, memberships, and hospital privileges.
- Obtain tax identification numbers (i.e., Federal, State, or Local)
- Insure your medical center and obtain the appropriate licenses and permits.
- Have a team of experts that cuts across various fields in the medical sector.
- Hire qualified and efficient staff for your medical center.
- Adequately train and equip your staff.
- Find an attorney or seek legal advice.
- Find an accounting firm and set up bank accounts.
- Market and advertise your medical center efficiently.
There are varying factors that affect the overall cost of setting up and running a medical practice. Some of them include style, location, size, specialty, and real estate arrangement. All these factors play an important role in influencing the cost of starting a medical practice.
Costs to Be Considered in Setting up a Medical Center
- Malpractice Insurance: This should be obtained before the processing of medical credentialing paperwork. Typically, this costs $17,000 to $40,000 per year.
- General Liability Insurance: This costs about $1,000 per year.
- The cost of buying or leasing and remodeling your medical practice space and office space: This cost varies based on your city and state, the location of the office, size of the space, cost of the building or lease. The model size of a private medical practice facility should be 1200 to 1500 square feet, according to Prodigy MD. Approximately, it should cost about $150,505 to lease a suitable medical practice space.
- Purchase of medical supplies & software, and basic office equipment: You cannot have a medical center without having the essential equipment. A list of medical equipment needed in a medical center include AED defibrillators, antibacterial wipes, autoclave sterilizer, bandages, gloves, EKG machine, stethoscopes, blood pressure monitors, otoscopes, tongue depressants, medical ventilators, syringes, ointments, and ultrasound equipment, etc. Purchasing this equipment should cost about $69,464 in total.
- Furnishing: This includes the cost of purchasing a filing cabinet with lock, and furniture for the physician’s office, waiting room and patient rooms. The cost of these is dependent on the needs and individual’s office space and preference.
- Website & Marketing: The marketing of a medical practice is a continuous effort, and it is important to establish presence within the community. Websites, blogs, and online networks could easily attract patients and create an awareness for your medical practice.
It is preferable to hire a professional to maintain your medical practice facebook business page, influence your medical center on instagram, engage with your followers on twitter, or write blog posts related to the services your medical practice offers.
- Payroll and Benefits: You cannot run a medical practice alone. Therefore, you will need to hire a team of experts that cuts across different fields needed in a medical center. Some of the estimated average annual cost of hiring professional staff includes–
- Medical Assistant: $28,000 to $40,000
- Registered Nurse: $57,000 to $98,000
- Receptionist: $24,000 to $40,000
- Office Manager: $32,000 to $65,000
This makes a total estimated payroll cost of $565,024.
- Business annual tax: This is paid annually, and it usually includes the payment of self-employment tax. It varies from state to state.
- Other medical practice related insurance which includes: health, life and disability insurance, workers compensation insurance, employee practices liability insurance (EPL), disability coverage insurance, property insurance, employee fidelity bond insurance, business interruption insurance, and umbrella policy insurance. The cost of these depends on your state insurance fees and policy.
- Tax and legal advisors: to effectively run your medical practice, you will need to hire an accountant and an attorney. Although it is optional, it helps your medical practice sail smoothly.
- Office rent and utilities are paid monthly, which include the gas, electricity, telephone service, and internet connection needed to run a business.
- Technology: This initially costs $20,000 to $30,000 with an average of $6,000 per month in recurring costs. Typically, an average medical practice technology would cost the following annually.
- EHR: $15,000 to $70,000
- Practice Management system: $1,500- $3,500
- Phone system: $400- $600 per line.
If you need any additional help planning the launch of your medical practice, please contact our business planning and funding experts at www.QTBizSolutions.com to schedule a free consultation.