Industries That Thrive During Recessions
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a medical billing business?
Software for a startup can be outsourced through a cloud-based billing software company. The price points here range from $60 per month to $250 per month per user.
Of course, you can grow your medical billing practice quite large. A medium-to large-scale operation requires professional, in-house systems, which can cost upwards of $50,000 to install. Servers add another $3,000 to $5,000 to the cost, and training adds another $3,000 to the startup total.
You’ll also need backup hard drives at $50 to $150 per drive, ethernet switches and wires at $50 – $100 per wire, depending on length, software licensing at $1,500 to $3,500 per user, software upgrades at $1,500 to $3,500 per year, and IT support at $150 to $200 per hour.
What are the ongoing expenses for a medical billing business?
Ongoing expenses include software, insurance, utilities, and office supplies, along with labor costs. These costs range from $100 per month just for software up to $10,000 or more per month if you have a small medical billing company. Medium and large companies spend hundreds of thousands of dollars per month to keep the business running.
Who is the target market?
The target market is as broad as the healthcare industry. You can narrow your focus, of course, and target specific types of practitioners and providers. This is what most small to medium-sized medical billing companies do.
How does a medical billing business make money?
A medical billing business makes money in several ways:
- Billing by the hour
- Billing by the claim
- Taking a percentage of the funds collected from claims
How much can you charge customers?
The industry-standard rate is $4 to $6 per claim. If a company charges fees as a percent of total sums collected, prices range between 5% and 10%. Some companies charge upwards of 15%. Hourly rates are rare these days but may range between $20 and $50 per hour. You can also set a flat fee per clinician or an initial fee plus a percent of sums collected on claims.
How much profit can a medical billing business make?
Profit potential varies a lot, but typical gross margins are between 5% and 10%.
How can you make your business more profitable?
Making the business more profitable involves specializing. Most successful medical billing companies don’t work with everyone and anyone. A business might become known in the Chiropractic community, for example, or choose to work exclusively with veterinarians or family doctors. Some medical billing companies customize their services for specialists like cardiologists or ENTs.
Another way to improve your company’s profits is to hire talented medical billing specialists who are good at collecting payments. Since this business only thrives when collections are high, your employees need good people skills, empathy, and raw sales talent to succeed at collecting current and past-due medical bills.
What will you name your business?
Choosing the right name is essential and challenging. If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit this DBA guide to learn more.
iWhen registering a business name, we recommend researching your business name by checking:
- Your state’s business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It’s crucial to secure your domain name before someone else does.
Everything you’ll need is HERE.