Opening a medical clinic, like any small business, is a massive undertaking that’s difficult for many people—especially for those who know only the medical side of a practice. If you’re thinking of starting a medicine practice, our key tips below will help your clinic begin on the right foot toward becoming functional and profitable.
Obtain Funding
The first concern when building a medical clinic from scratch is securing the cash to get it up and running. Dollar amounts for how much a medical practice needs to get started depend on the situation and the practice itself.
There are two main considerations for securing funding: the startup costs, such as the medical and office equipment, and the initial operating expenses for overhead costs, staff, vendors, and more. It takes months or years for a medical practice to come close to earning a profit and generating a stable revenue stream. So until then, keeping the lights on will require additional funding. Unless you’re independently wealthy, the best way to secure funding is to get investors and loans from banks, and to do that will require a business plan.
Create a Business Plan
Like any other business, a key tip for starting a functional medicine practice is to create an informative and detailed business plan. A business plan acts as a pitch for banks and investors to secure funding and a roadmap for the medical clinic’s first couple of years of operation.
Most medical professionals launching a practice are more concerned about the medical side of the business. However, the operational and administrative side of things requires much of the thought and resources. There are many aspects of a business plan, so we’ll touch on some key elements below and how they relate to medical practice.
Executive Summary
The executive summary is the first section of a business plan and the first thing banks and investors will read. As the name suggests, this section is all the big ideas and plans of the other sections boiled down to a concise and attractive summary.
While it appears as the first section in the document, you should write it last to summarize the rest of the business plan accurately. The summary should be around a page or two long and feature the plan’s general information and best points, including who you are, what your practice offers, the competition, etc.
Problem and Solution
The core of any profitable business, whether a medical practice or a hot dog stand, is the problem and solution. What is the problem that the business is solving, and how will it solve the problem?
This section for a new medical clinic generally concerns the lack of specialty care in the practice area. For example, the problem may be that the aging population in such-and-such areas doesn’t have reliable chiropractic care within 50 miles, which this new chiropractic clinic will solve.
Target Market
Every business has a target market, which comprises the people the business will market toward and who will make up the core of its customer base. The target market section will relate to the problem and solution section. For example, if there aren’t enough gynecological or pediatric services in the area that a gynecology or pediatric clinic is proposing to solve, target market research will support the claim.
The target market section of a medical business plan should also include an ideal patient profile. This profile should include information like the patient’s income, health problems, where they live, their insurance, etc. It’s also wise to include a list of competitors for this target market and how this new practice will offer something different.
Marking and Sales Plan
After outlining the target market of the new practice, it’s time to explain how the practice will attract and retain this target market. A new practice has the disadvantage of not being known in the community and industry, so the marketing and sales plan is crucial for reaching the target market.
Will the clinic focus on direct mail campaigns or advertise more online? What areas will the advertising budget be most focused on and why?
Incorporate the Practice
Assuming you secure funding for your medical practice, it’s time to start the legal proceedings of starting the business, which include incorporating the practice. In many states, medical clinics can only operate as professional medical corporations, so it’s not much of a choice.
Incorporation provides many benefits to the owner—mainly, it protects the owner from personal liability for the business. So if it fails or faces problems, the business—not the owner—is liable. But owners who operate as medical professionals, like a chiropractor who runs their own clinic, would still be liable professionally for malpractice or negligence.
Invest in Quality Equipment and Staff
It may be tempting to cut corners regarding initial expenses and equipment to reduce costs at your new clinic. And while there are plenty of areas where you can make compromises, the equipment and staff are worth investing more money into for greater long-term value to the medical clinic. For example, for a chiropractic clinic, high-quality treatment tables and experienced chiropractors are well worth the investment over shoddy equipment and new staff.
New owners should also want to invest in experienced professionals for their front-office team, if they have one. An experienced front-office team will help clinic operators navigate the tumultuous waters of the first months and provide a clear delineation between the administrative and treatment side of the business.
Purchase Medical Business Insurance
Like any other business, a medicine clinic needs quality insurance coverage to protect management, employees, and the incorporated business. The following is coverage that every medical clinic requires:
- General liability insurance
- Business income insurance
- Commercial property insurance
- Workers compensation insurance
Medical clinics also have specialized insurance that caters to the unique circumstances of medical practices, such as medical malpractice insurance and medical office business insurance. Overall, quality insurance coverage is as critical to a business’s survival as the management and employees are.
Conclusion
We hope our guide on creating a medical clinic has been informative and helpful. If you’re starting a practice and need insurance coverage, Baxter & Associates can help you find medical malpractice insurance quotes that suit your business and situation. Contact our staff to learn more and find the right insurance policy for you.
