Starting Your Own Medical Practice? What Physicians Need to Know Before Opening Their Doors

Opening an independent medical practice can give physicians greater control over how they practice medicine, how patients experience their care and how the business itself operates. It also introduces an entirely different set of responsibilities. When you work within a hospital system, large group or other employed environment, much of the infrastructure required to keep a practice running exists behind the scenes. Credentialing happens. Claims are submitted. Insurance is verified. Staff members are hired and trained. Reports are generated. Payments are posted. When you open your own practice, someone has to build – and manage – every one of those systems. That is why starting a medical practice requires more than finding an office, hiring employees and setting an opening date. A successful launch begins with building the operational and financial infrastructure that will support the practice long after the doors open.

What Do You Need to Start a Private Medical Practice?

The exact requirements will vary depending on specialty, location, payer mix, practice model and services offered.

Operationally, however, most new medical practices need to establish systems for:

• payer enrollment and credentialing

• billing and revenue-cycle management

• coding and documentation

• scheduling and patient registration

• eligibility and benefits verification

• prior authorization and pre-certification

• patient payment processes

• staffing and training

• policies and workflows

• technology and practice-management systems

• financial and operational reporting

• compliance and administrative responsibilities

These functions are interconnected. A delay or weakness in one area can quickly create problems somewhere else.

Start Credentialing Earlier Than You Think

Credentialing and payer enrollment should be addressed well before the first patient is scheduled. Physicians transitioning from employment sometimes assume that because they are already credentialed with a payer through their current organization, those arrangements will automatically carry over to the new practice. That should not be assumed. A new entity, tax identification number, location or payer relationship may require new enrollment or contracting processes. If credentialing is delayed, the practice may be ready to see patients before it is ready to be appropriately reimbursed for treating them. That can create a cash-flow problem almost immediately. Credentialing therefore should not be treated as an administrative task to address shortly before opening. It should be part of the practice’s early launch strategy.

Build Your Revenue Cycle Before You Have Revenue

One of the biggest mistakes a new medical practice can make is waiting until patients are being seen to determine how billing will work. Revenue-cycle planning should begin much earlier. Before opening, the practice should know how information will move from scheduling through final account resolution.

Who verifies insurance?

Who determines whether authorization is required?

How are charges captured?

How quickly are claims submitted?

Who works denials?

How are payer issues escalated?

Who reviews aging A/R?

What reports will leadership receive?

Who is responsible when something falls outside the normal workflow?

These may sound like billing questions, but many of them are actually business-process questions. A strong revenue cycle depends on clearly defined responsibilities across the practice.

Decide How Medical Billing Will Be Managed

New practices generally have several options for managing billing: building an internal billing operation, outsourcing some or all revenue-cycle functions, or creating a hybrid model. There is no single model that is right for every medical practice. An in-house operation may provide direct control and close integration with practice staff, but it also requires recruiting, training, managing and retaining employees with the appropriate expertise. An outsourced model can provide access to specialized resources and reduce some internal administrative burden, but the quality of the relationship, communication and reporting matters tremendously. A hybrid structure may allow a practice to retain certain functions internally while bringing in outside expertise for others. The important decision is not simply who will submit the claims. It is whether the entire revenue-cycle structure gives the physician appropriate visibility, accountability and support.

Design the Front Office as Part of the Revenue Cycle

The revenue cycle begins before a claim exists. Scheduling, registration, eligibility verification, authorization and patient communication can all affect what happens financially later. That makes the front office one of the most important components of a new practice’s financial infrastructure.

• Before opening, establish clear processes for:

• collecting accurate demographic information

• obtaining current insurance information

• verifying eligibility and benefits

• identifying authorization requirements

• communicating patient financial responsibility

• collecting appropriate payments at the correct point in the process

• documenting information consistently

When these processes are designed intentionally from the beginning, the practice is less likely to spend its first year trying to undo habits that were never effective in the first place.

Hire for the Practice You Are Building

A new practice may begin with a small team, which means individual employees often carry significant responsibility. That makes role clarity particularly important.

Who owns scheduling?

Who handles insurance verification?

Who monitors authorizations?

Who communicates with the billing team?

Who reviews unresolved issues?

Who watches performance indicators?

A job title alone does not answer those questions. Well-designed workflows should define what happens, who is responsible, when a task should occur and how the next person in the process knows it has been completed. The objective is not to create unnecessary bureaucracy. It is to prevent important responsibilities from disappearing into the space between two people’s jobs.

Know Your Numbers From the Beginning

Physicians opening an independent practice are becoming business owners as well as clinicians. That does not mean they need to personally perform every financial or administrative function. It does mean they should have meaningful visibility into how the practice is performing.

Revenue-cycle reporting should help leadership understand issues such as:

• charges and payments

• days in A/R

• A/R aging

• denial patterns

• payer performance

• charge lag

• outstanding claims

• reimbursement trends

A bank balance tells you how much cash is available. It does not necessarily tell you whether the revenue cycle is healthy. Creating reporting expectations before opening establishes a much stronger foundation for future decision-making.

Don’t Wait for a Problem to Build Your Processes

When launching a medical practice, it is easy to focus on what must happen immediately.

Find the office.

Choose the EHR.

Hire the staff.

Get credentialed.

Open the doors.

But some of the most important decisions are the ones that determine what happens after opening day.

How will problems be identified?

How will staff be trained?

How will workflows be evaluated?

How will performance be measured?

What happens when the practice grows?

Building those systems intentionally at the beginning is usually easier than trying to reconstruct them after problems become embedded in the practice.

Frequently Asked Questions About Starting a Medical Practice

How far in advance should physicians begin planning a private practice?

The timeline varies considerably based on specialty, location, payer contracting, credentialing, staffing, technology and facility requirements. However, operational and revenue-cycle planning should begin well before the intended opening date, particularly when payer enrollment or credentialing is involved.

What is often overlooked when starting a medical practice?

Physicians naturally focus on clinical care, facilities and staffing. Revenue-cycle workflows, reporting, front-office processes, credentialing timelines and clearly defined staff responsibilities can receive less attention even though they have a significant effect on the business after opening.

Should a new medical practice outsource billing?

It depends on the practice. Size, specialty, internal expertise, staffing resources, desired level of control and complexity of the revenue cycle can all influence whether an in-house, outsourced or hybrid billing model makes the most sense.

When should revenue-cycle planning begin?

Before the practice opens. Establishing workflows for registration, eligibility, authorization, charge capture, coding, claim submission, denials, payer follow-up and reporting before patient volume begins can help prevent avoidable problems later.

Build the Practice Behind the Practice

Patients will experience your clinical practice. Behind it, however, is an operational practice they may never see. That second practice determines whether information moves correctly, employees know what is expected, claims move efficiently and leadership understands how the business is performing. Building it deserves the same intentionality as building the clinical side.

MedRecovery Solutions works with physicians and medical practices to develop and strengthen the operational and revenue-cycle infrastructure behind patient care.

For physicians preparing to establish an independent practice, involving experienced operational and revenue-cycle guidance early can help turn a collection of necessary tasks into a practice designed to work together from the beginning.