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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:
Luckily we have done a lot of this research for you.
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.
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.
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.
A medical billing business makes money in several ways:
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.
Profit potential varies a lot, but typical gross margins are between 5% and 10%.
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.
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:
It’s crucial to secure your domain name before someone else does.
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