Not too long ago, young doctors just out of residency would jump at the chance to work with a renowned specialist or join an already established practice. But now, some medical practitioners in Texas and elsewhere are deciding to go into business on their own.
Although the skillset for starting a business differs for those who are highly skilled in the medical field, young professionals who are up for the challenge can reap the rewards of independence, flexibility and the chance to make their dream become a reality. For entrepreneurs starting up in Austin and surrounding communities, it will be important to first get an overview of licensing as well as the financial and legal aspects of the project.
Funding the project and choosing a business entity
Doctors who are just starting out often have student debt to pay off. As any business needs an initial outlay, it can make sense to first refinance those student loans, which will make potential investors or granting institutions less squeamish about lending to the project. When examining the total costs of the new medical practice, it is important to include all expenses in the startup, including:
- Real estate or leasing costs
- Medical equipment and office supplies
- Legal and consultant fees
Once the practice is operational, physicians will also need to have ample financial means to cover the cash flow gap that will inevitably occur as they are waiting for insurance reimbursements.
Choosing the appropriate business structure is likewise critical to the needs of the practice. Many medical practitioners form S corporations, which allow them to pay taxes on their personal income only, and also provide limited liability.
Licensing and credentialing
New medical practices must also follow both federal and state licensing requirements for their practice, some of which are specific to the medical field. Some of these include:
- Licensing by the Texas Medical Board.
- National provider identifier number, which private insurance, as well as Medicare and Medicaid, use to identify health providers across the country.
- Drug Enforcement Administration (DEA) registration, which is necessary for a physician to prescribe medication to patients.
Likewise, the credentialing process is necessary for the medical practitioner to be able to accept private or government health insurance, and this can take several months. Credentialing is an essential means of protecting the doctor’s assets in the event that a patient sues them.