A medical practice business involves three or more physicians that are engaged in the practice of medicine as a legal entity sharing business management, facilities, records, and personnel. This line of business comprises groups of physicians of various disciplines, including primary care physicians and specialist doctors.

Statistics have it that in the United States of America alone, the general medical practice industry Market Size in 2022 is 354 billion with market size of 3.3 percent, growing from 2.8 percent between 2017 and 2022. There are approximately 154,808 diagnostic and medical practice businesses in the United States responsible for employing 1,801,962 people.

Steps on How to Start a Medical Practice Business

  1. Conduct Market Research

The first step in the market research process for your medical practice business is to develop market-based research questions in line with your overall business goal and objective. Please note that market research helps businesses measure their reputation in the market over a period of time.

It is a great way to measure the progress of your business as well as compare your status to your competitors to see where you are trailing, where you have an advantage, and what you need to do to stay competitive.

a. Who is the Target Market for Medical Practice Business?
  • Schools
  • Corporate organizations
  • Sports clubs
b. Is Medical Practice a Profitable Business?

Yes, the medical practice business is quite profitable. The gross profit margin for the surveyed practices averaged 35.9%, according to the Prosperity Health survey. In absolute dollar terms, gross profit per GP (taking into account owners, contractors, and contributing GPs) averaged around $166,000, with higher-performing practices averaging more than $250,000 per GP.

c. Are There Existing Niches in the Industry?

Although there is no niche area in the medical practice business, it is common for some medical practice businesses to be categorized in either solo practice, group practices, or employed physician practices and they can specialize in any of the following;

  • Family practice services
  • Internal medicine services
  • Pediatric services
  • Surgery services
  • Obstetrics and gynecology services
  • Other medical and management services.
d. Who are the Major Competitors?
  • Cleveland Clinic
  • Kaiser Permanente
  • PhyMatrix Corp
  • Physician Reliance Network
  • ProMedCo Management Co.
  • Physician Reliance Network
  • American Oncology Resources
  • Advanced Health Corp.
  • Physicians Resource Group
  • PHP Healthcare Corp.
  • FPA Medical Management
  • PhyCor
  • MedPartners
e. Are There County or State Regulations or Zoning Laws for Medical Practice Business

Yes, there are county or state regulations and zoning laws for medical practice businesses, and players in this industry are expected to work with the existing regulations governing such business in the county or state where their business is domiciled.

Please note that if you are planning to house your medical practice in a purpose-built facility or propose an extension to an existing building, you must apply to your local planning department for approval.

f. Is There a Franchise for Medical Practice Business?

Yes, there are franchise opportunities for the medical practice business, and here are some of them;

  • Physicians Practice S.O.S. Group
  • American Family Care
g. What Do You Need to Start a Medical Practice Business?
  • A Feasibility Report
  • Business and Marketing Plans
  • Business Licenses and Permits
  • A Good facility
  • Computers, Laptops, and Servers
  • EIN (Employer Identification Number)/Federal Tax ID Number.
  • A Corporate Bank Account
  • Medical Equipment and Tools
  • Employees
  • Startup Capital
  1. Memorable Medical Practice Business Names

  • Bee and Company© Medical Practice, Inc.
  • Broad Street® Medical Practice, LLC
  • Brown© Medical Practice, Inc.
  • Star Pros® Medical Practice, Inc.
  • The Expats™ Medical Practice, Inc.
  • Becky and Co™ Medical Practice, LLC.
  • Houston Medics© Medical Practice, LLC
  • Room 101® Medical Practice, Inc.
  • Health Pros© Medical Practice, Inc.
  • Sarah© Medical Practice, Inc.
  • Famil Health® Medical Practice, Inc.
  • Stella Martins® Medical Practice, LLC
  • Othniel Jabez® Medical Practice, Inc.
  • White Block® Medical Practice, Inc.
  • Glass House® Medical Practice, LLC.
  • Shannon Stev® Medical Practice, Inc.
  • Health and Wealth® Medical Practice, LLC
  • Frank James® Medical Practice, LLC
  • Open Medics® Medical Practice, LLC
  • Pearly Gate® Medical Practice, LLC.
  1. Register Your Business

a. What Type of Business Structure is Best for Medical Practice Business

Even though there are several options when it comes to the business structure for a medical practice business, the one that most players consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.

Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.

b. Steps to Form an LLC
  • Choose a Name for Your LLC.
  • File Articles of Organization.
  • Choose a registered agent.
  • Decide on member vs. manager management.
  • Create an LLC operating agreement.
  • Comply with other tax and regulatory requirements.
  • File annual reports.
c. What Type of License is Needed to Open a Medical Practice Business
  • Medical Practice License
  • General Business License
  • Health and Safety Permit
  • Zonal Permits (Applicable in some cities)
  • Signage Permit
  • Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Medical Practice Business

These are some of the certifications you can work towards achieving if you want to run a medical practice business;

  • Certified Medical Office Manager (CMOM)
  • Certified Medical Practice Executive (CMPE)
  • Certified Medical Manager (CMM)
  • Certified Practice Manager (CPM)
  • Certified Physician Practice Manager (CPPM).
e. What Documents are Needed to Open a Medical Practice Business
  • DBA
  • EIN
  • Business and liability insurance
  • Federal Tax Payer’s ID
  • State Permit and Building Approval
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use
  • Online Privacy Policy Document
  • Contract Document
  • Company Bylaws
  • Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?

If you are considering starting a medical practice business, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible to run the business without anyone infringing on your work.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Medical Practice Business

When it comes to starting a medical practice business, the startup costs could range from $50,000 to over $250,000 depending on how much equipment the business owner decides to purchase and the facility leased. Please note that this amount includes the salaries of all the staff for the first month of operation.

b. What are the Costs Involved in Starting a Medical Practice Business
  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
  • Promotional expenses for the grand opening of the medical practice business for $3,500, as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring a business consultant – $2,500.
  • Insurance (general liability, workers’ compensation, and property-casualty) coverage at a total premium – $2,400.
  • The cost for payment of rent for 12 months at $1.76 per square foot in the total amount of $75,600.
  • The cost for facility remodeling (construction of racks and shelves) – $10,000.
  • Other start-up expenses include stationery ($500) and phone and utility deposits ($2,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
  • The cost for computer software (Accounting Software, Payroll Software, CRM Software, Microsoft Office, QuickBooks Pro, drug interaction software, Physician Desk Reference software) – $7,000
  • The cost for start-up inventory (medical supplies and drugs, instrument and equipment)) – $50,000
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • The cost of purchase and installation of CCTVs: $3,000
  • The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
  • The cost of launching a website: $600
  • Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Medical Practice Business?
  • The size of medical practice business
  • The choice of location
  • The required licenses and permits
  • The type of facility
  • The additional service offerings
  • The cost of hiring and paying a business consultant and attorney
  • The cost for branding, promotion, and marketing of the medical practice business
  • The cost for furnishing and equipping the medical practice
  • The cost for insurance policy covers
  • The cost for registering the business
  • Source of your drugs and medical supplies and ongoing expenses
  • Cost of recruiting and training your staff
  • The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

Actually, it is not compulsory to build a new facility for your medical practice business, but, if you have the required finance, it will pay you to build your own facility. The truth is that building or reconstructing a facility will allow you to come up with a facility that will perfectly fit into your overall business goals and vision.

e. What are the Ongoing Expenses of a Medical Practice Business?
  • Drugs and medical supplies
  • Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
  • Equipment maintenance
  • Salaries of employees
f. What is the Average Salary of your Staff?
  • Chief Medical Director (President) – $65,000 Per Year
  • Medical Practice Manager) – $60,000 Per Year
  • Doctors – $55,000 Per Year
  • Pharmacist -$54,000 Per Year
  • Nurses – $48,000 Per Year
  • Sales and Marketing Executive – $30,000 Per Year
  • Accountant – $32,000 Per Year
  • Client Service Executive (Help Desk Office) -$28,000 Per Year
g. How Do You Get Funding to Start a Medical Practice Business?
  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from, government, donor organizations, and angel investors
  • Source for soft loans from your family members and your friends.
  1. Write a Business Plan

a. Executive Summary

Broad Street® Medical Practice, LLC is a standard, licensed, and government-approved healthcare service provider that will be located in the heart of Miami Beach, Florida – United States of America. We have been able to acquire a standard corner–piece facility that is highly suitable for the kind of medical practice business we want to operate.

Broad Street® Medical Practice, LLC will operate 24 hours 7 days a week medical clinic and practice service. Our medical clinic will be open round the clock to attend to clients (patients). We have a standard medical call center that is manned by trained health workers. Our employees are going to be well trained to operate within the framework of our organization’s corporate culture and also to meet the needs of all our customers.

b. Products and Service
  • Family practice services
  • Internal medicine services
  • Pediatric services
  • Surgery services
  • Obstetrics and gynecology services
  • Other medical and management services.
c. Mission Statement

Our mission is to establish a world-class medical practice business that will be known for clinical and highly reliable medical practice.

Vision Statement

Our vision is to become the number one choice when it comes to medical practice services in Florida.

d. Goals and Objectives

The goals and objectives of the medical practice business are to make healthcare services available to the general public.

e. Organizational Structure
  • Chief Medical Director (President)
  • Medical Practice Manager
  • Doctors
  • Pharmacist
  • Nurses
  • Sales and Marketing Executive
  • Accountant
  • Client Service Executive (Help Desk Office).

Marketing Plan

a. SWOT Analysis
Strength:

The strength of the medical practice business is that we have well-experienced and certified medical professionals under our payroll. So also, we operate in a location where we can easily collaborate with other key stakeholders in the healthcare industry.

Weakness:

As a new medical practice business, it might take some time for our organization to break into the market and gain acceptance especially from top profile clients in the fast-growing and highly competitive medical practice industry; that is perhaps our major weakness.

Opportunities:

The rising elderly population will drive demand for medical practice services, bolstering industry revenue. So also, Medicare and Medicaid reimbursements account for 19.6% of industry revenue and lower patients’ out-of-pocket healthcare expenditures, thus stimulating greater patient demand for industry services. Federal funding for Medicare and Medicaid is expected to increase in 2022, presenting a potential opportunity for the industry.

Threat:

One of the major threats that we are likely going to face is an economic downturn and unfavorable government policies. It is a fact that the economic downturn affects purchasing power. Another threat that may likely confront us is the arrival of a new medical practice business in the same location where ours is located and where our target market exists.

b. How Do Medical Practice Businesses Make Money?

Medical practice businesses make money by offering the following services;

  • Family practice services
  • Internal medicine services
  • Pediatric services
  • Surgery services
  • Obstetrics and gynecology services
  • Other medical and management services.
c. Payment Options
  • Payment via bank transfer
  • Payment via credit cards
  • Payment via online bank transfer
  • Payment via check
  • Payment via mobile money transfer
d. Sales & Advertising Strategies
  • Introduce your medical practice business by sending introductory letters alongside your brochure to residents, corporate organizations, schools, sports clubs, and key stakeholders.
  • Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
  • Create a basic website for your business to give your business an online presence
  • Directly market your services.
  • Join local medical practice business associations for industry trends and tips
  • Advertise our business in community-based newspapers, local TV and radio stations
  • List your business on yellow pages ads (local directories)
  • Encourage the use of word-of-mouth marketing (referrals)

Financial Projection

a. How Much Should You Charge for your Service?

Medical practices are generally valued off a multiple or fraction of revenue. The most common general practices would be in the 0.5 to 0.7 times their annual revenue range. As you get to higher-end specialties, you can go to 0.8 to 1.0 times annualized revenue.

b. How Much Profit Do Medical Practice Business Owners Make a Year?

It depends, but available reports show that the gross profit margin for the surveyed practices averaged 35.9%, according to the Prosperity Health survey. In absolute dollar terms, gross profit per GP (taking into account owners, contractors, and contributing GPs) averaged around $166,000, with higher-performing practices averaging more than $250,000 per GP.

c. What Factors Determine the Amount of Profit to Be Made?
  • The capacity of the medical practice business
  • The types of customized services and products offerings
  • The location the medical practice business is covering
  • The management style of the medical practice business
  • The business approach of the medical practice business
  • The advertising and marketing strategies adopted by the medical practice business.
  • The number of years the medical practice business is in business
d. What is the Profit Margin of a Medical Practice Business?

The profit margin of a medical practice business is not fixed, it will depend on some factors that are unique to your location. But according to Forbes, the average net profit margin for private physicians’ offices is about 13 percent, bolstered by an average gross margin of 97.5 percent.

e. What is the Sales Forecast?

Below is the sales forecast of a medical practice business. It is based on the location of the business and other factors as it relates to such startups in the United States.

First Fiscal Year:

  • $200,000 (From Self – Pay Clients)
  • $350,000 (From Medicaid Covers)

Second Fiscal Year

  • $250,000 (From Self – Pay Clients)
  • $400,000 (From Medicaid Covers)

Third Year

  • $300,000 (From Self – Pay Clients)
  • $550,000 (From Medicaid Cover)
  1. Set Up your Office

a. How Do You Choose a Perfect Location for Medical Practice Business?
  • The demography of the location especially as it relates to old people who are regulars when it comes to health issues
  • The demand for the services offered by medical practice businesses in the location
  • The purchasing power of businesses and residents of the location
  • Accessibility of the location
  • The number of medical practice businesses, dental clinics, hospitals, and medical healthcare facilities in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al
b. What State and City is Best to Open a Medical Practice Business?
  • Birmingham, Alabama.
  • Nashville, Tennessee.
  • San Diego
  • Reston, Virginia.
  • Houston, Texas
  • West Palm Beach, Florida.
  • Fort Worth, Texas
  • Tarrytown, New York.
  • Los Angeles, California.
  • Green Bay, Wisconsin.
c. What Equipment is Needed to Operate a Medical Practice Business?
  • Hospital Stretchers.
  • Defibrillators
  • Anesthesia Machines
  • Patient Monitors
  • Sterilizers
  • EKG/ECG Machines
  • Surgical Tables
  • Blanket and Fluid Warmers
  1. Hire Employees

When it comes to hiring employees for a standard medical practice business, you should make plans to hire a competent Chief Medical Director (President), Medical Practice Manager, Doctors, Pharmacist, Nurses,  Sales, and Marketing Executive, Accountant, and Client Service Executive (Help Desk Office).

  1. Launch the Business Proper

You can decide to open your medical practice business with an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party. The bottom line is that with a proper launching of the medical practice business, you will officially inform people in your city that your medical practice is open for business.

a. What Makes a Medical Practice Business Successful?
  • Choose a good location and facility to launch the business
  • Hire only competent, hardworking, and trustworthy staff
  • Be deliberate with equipping and furnishing your facility
  • Encourage the use of word of mouth to promote your medical practice business
  • Leverage on all available online and offline platforms to promote your medical practice business
b. What Happens During a Typical Day at a Medical Practice Business
  • The office is open for the day’s work
  • To-do list is reviewed
  • Employees go straight to their job description (patients are attended to, tests are conducted, and reports are written)
  • Deliveries of orders are made
  • Reports are written and submitted to superior officers
  • The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Medical Practice Business?
  • Excellent clinical testing skills
  • Excellent scientific skills
  • Good managerial and human development skills
  • Visionary Leadership
  • Team-building & Interpersonal Skills.
  • Excellent communication and negotiation skills.
  • Organizational skills.
  • A strong understanding of the medical practice business
  • Attention to detail and the ability to concentrate for long periods
  • The ability to analyze quality or performance.
  • Good Supervisory skills
  • Work experience in a laboratory, or hospital
  • Experience in managing people
  • Experience in business administration
  • Experience in handling software and hardware.