The high cost to start and manage a medical practice is considered by many to be one of the greatest challenges. Not everyone has that kind of cash in the bank and most often rely on loans to get a practice up and running. To ensure finances are in order and stay in order, every practice will need to use some sort of accounting software. This ensures that the practice’s books are up to date with their current financial situation. The bank will likely want to see this information if a loan is being taken out to finance a practice. External accountants can be used to manage the finances but practice owners can also use these free accounting tools and have an in-house accounting team too.

Other factors affecting the cost will include the location and size of the practice, and if you opt to purchase new or used equipment. The importance of a great location cannot be understated; although it may cost more, it will be a driving factor in the practice’s ability to capture new patients, as convenience is a large factor in the purchasing decision.

Your practice will also incur recurring costs of medical supplies and utilities on top of the monthly rent, which in Long Island is $30/sq. Ft. per year. Once you factor in your rental costs, utilities, medical equipment, and supplies, there is the technology involved in managing a medical practice. In today’s world, you will need an Electronic health record system for streamlining communication and managing patient records.

Electronic health record (EHR) systems are now common practice and considered essential technology; they streamline communication, track patient records, and integrate with billing and revenue cycle management. Top of the line software saves time and physician aggravation, but it comes at a high cost. Systems average $6,000 per month with initial deposits around $25,000.

Practice management system is a separate technology that integrates with the EHR system to manage your medical practice operations. This will allow you to manage your staff and facilities as well as your billing and collections.

Medical billing can be a daunting task for a new practice; it is a time-consuming process that requires expertise and experience. Third-party billing companies are available, but most users report poor customer service, as the third party always seeks to capture the lowest hanging fruit. Whenever possible, in house billing is preferred, but the time and cost to set up and manage a billing and collections team can be quite high.

Staff payroll becomes a large expense as you expand your team; at first, it is wise to start out by just filling the positions that are absolutely necessary for running a profitable business. As you grow and start to add more clients with an increase in referrals and demand, you can expand the staff to a wider field of medical professionals that will give your patients a higher level of service and care. As your practice begins to grow to the point of needing to hire more staff, implementing an easy to use software that can help you to manage aspects like the payroll may be beneficial. This area of your business can be very time-consuming, so looking at whether companies like Zenefits or Gusto is the better choice for completing your staff payroll at a faster rate should be done as soon as you hire more than your intended starting number. Don’t put this off, as it could be very helpful and effective going forward. The slow and systematic approach to growing the staff is extremely important, not only does an inflated staff incur higher monthly payroll, there is a high cost in the training and managing of each employee, estimated at $6000 to $8000 per employee.

There are a lot of challenges that come with owning a small business, and the medical field may present some of the toughest to overcome.  There will be constant battling with insurance companies for payouts, onboarding new staff members, and staying on top of the latest technology and medical equipment. One of the most daunting challenges, and one that you will face immediately, is acquiring patients, many physicians struggle, especially at first, with acquiring new patients.  It will get easier as you develop a brand and recognition; if you provide a great service, your patients will refer other patients. But while you are building, you need to also invest in marketing in your local area, to drive new patients to your business. In this digital age, there are a lot of options, plenty of avenues to get your name out there and gain exposure, but with this comes a higher and constantly growing cost. Not only on your time, but on advertising budgets for digital ads, reputation management, and more.

Most young or veteran physicians who want to experience the benefits of private practice, the independence of ownership, while having the ability to generate the strong profits past generations have experienced, should look to join an existing practice with a loose management structure. While these practices are not extremely common, Independent Physician Partnerships do exist, and they afford the provider the ability to manage their patients and control their business, while cutting the risks, lowering the costs, and dramatically increasing profits and work satisfaction. When controlling your own business, it’s so important to stay on top of finances and expenses. This will help the business owner to determine how they can start making a profit. To keep an eye on expenses, business owners could benefit from Filecenter’s software that allows people to file all of these receipts digitally. This could be helpful for a physician to manage their finances and eventually make a profit in their business.