Starting a medical practice is a demanding, sometimes even overwhelming, yet exciting process that can come with a high price tag. To determine whether launching a medical practice is right for you, consider the following cost breakdown:
First and foremost, consider the property, as you’ll need a physical location.
We’ve used estimates from the article on ‘clinic’ space types and its requirements from the Whole Building Design Guide, which recommends securing at least 1,840 square feet for optimal clinic efficiency.
Below is a sample property that, at the time of the article’s creation, was available to rent in the Chicago area from the commercial property LoopNet.
Based on this example, the property’s yearly rental cost is just over $51,000.
Current Total: $51,000
HR, Payroll and Benefits
A business depends on the quality of its workers. Top-of-the-line employees need top-of-the-line resources, and organizations like Gusto and Insperity offer full-range payroll and HR services for as little as $50 per month ($600 annually). Finding the fit for you from full service to tech leveraged is the important part.
Current Total: $51,600
Accounting and Scheduling
The last thing a medical practitioner should have to manage is clinic finances and operations. Patients need your full attention, or they’re going to take note. Thankfully, there are plenty of services designed to handle the back end of your business, which allows you to focus on your patients.
Payroc: Credit card transaction management
Xero: Full-range accounting
NextPatient: Client scheduling and operation management
Nextech: Specialty services for practice management
On average, the full range of these services will cost around $10,000 per year.
Current Total: $61,600
As a newly-established practice, it will take time to build your patient base. That might tempt you to handle your practice’s billing. While it might seem manageable with a small customer base, the demand will grow. Eventually, a dedicated bill handler becomes critical.
Efficient medical billing can streamline client payments by cleaning up claims before submission, which makes them easier for insurance carriers to define. At Auctus, our 97 percent clean claims rate minimizes transactional issues due to miscommunication.
When purchasing tools, remember this key point: only buy what you need. There’s no greater waste of your company’s resources than equipment that gathers cobwebs in the supply closet.
An accidental extra order of syringes might not be enough to put your clinic in the red. An unused lipo machine, however, isn’t quite as easy to write off. Only commit to such investments when the need arises.
Even established clinics can face financial disarray when dealing with a lawsuit gone awry. In Illinois, malpractice insurance averages anywhere from $20,000 to $40,000 per year. Specialized practices, however, may fall outside this range.
Current Total: $81,600 – $101,600
No matter how meticulously you allocate your funds, be sure to leave some wiggle room. A buffer fund of around $200,000 to $300,000 will leave your clinic with breathing room in the event of an unexpected issue.
Final Total: $281,600 – $401,600
Considering the above breakdown, it’s easy to see how quickly costs rise when starting a medical practice. There are still other factors to consider, such as employee salaries, but these must be assessed individually. Regardless, this information helps you to make informed decisions that will allow your practice to thrive.