Developing a good medical billing business plan is a valuable tool for getting your business off the ground. It Doesn’t Have to be Fancy. A business plan for starting your medical billing business is a plan to succeed – or a road map to succeed. Learn what a medical billing business plan is and What it Should Include.
It doesn’t have to be a long or complicated document – just the what, when, and how you plan to accomplish your goals. Something to outline your business strategy. It should include:
- Mission statement
- What separates your business from the competition – how you will differentiate your business
- How you are going to accomplish your goals
- Start-up expenses
- Sources of funding
- Timeframe for turning a profit
- Marketing strategy
- Permits and Licenses
- Funding sources
- Your background and expertise
- Estimated Income and plan to attain
- Milestones with timeframe
If you plan to obtain start-up funding, a lender will most likely require a more detailed business plan.
Basically your medical billing business plan states what you are going to do and how you are going to get it done. It starts with a mission statement that describes what you are going to do to be successful.
Here’s an example of the thinking that goes into developing a medical billing business plan.
Your mission statement might go something like this:
Create medical billing service business by offering superior knowledge and service and utilizing state of the art billing systems and exemplary customer service. Reach net profit of $50K/year in 3 years.
The Secret Sauce
Here’s an example of how you might differentiate your medical billing business from competitors – your “secret sauce” – if say you have unique expertise in pain management billing:
From my extensive experience and expertise in medical billing – and pain management in particular, I’ve developed a knowledge of the unique demands of billing for pain management. Most practices in this specialty are missing out on significant revenue opportunities due to lack of expertise in the unique requirements of insurance reimbursement in this specialty.
Many pain management practices are outsourcing their reimbursement to billing services that do not understand the unique requirements of billing for pain management. My expertise provides a marketing advantage in identifying specific missed reimbursement opportunities as well as estimating the significant improvement in income for pain management practices in the Atlanta area. ACME Medical Billing Associates will capitalize on this niche, our competitors lack of knowledge in this field, and our own expertise and my track record as a pain management billing specialist for over 10 years.
Once you’ve developed your vision and your unique position, now you need to plan the specifics of how you’ll get there.
Estimate Your Income
First we need to estimate the anticipated monthly income for a client. The numbers I use here are strictly for illustrative purposes. The income can vary widely depending on location, size of practice, specialty, how long established, etc.
My experience has been that a single provider practice can generate a monthly fee anywhere from $1500 to $5000. Let’s be conservative and assume $2500 for this example. Depending on what type of billing system and configuration you go with, let’s say your monthly cost to serve this provider is $600. This covers clearinghouse fees, software maintenance and updates, phone and internet service, printing supplies, postage, licenses, marketing, training, etc.
Your net monthly profit = $2500 – $600 = $1900/month
Annually this is $22,800/year
You must remember that as you take on more clients, you likely will need help. The issues you have to deal with will double with a second practice. This is when you need to think about hiring some part time help. I had excellent results hiring stay-at-home moms in my neighborhood who wanted to earn extra money. This will add to your costs that you need to factor in as you bring on new clients.
For your second client, let’s say you estimate needing someone 15 hours a week – so you don’t have to work 80 hours a week! At $12 per hour this comes out to about $720/month. Again this can vary widely.
So now you’ve signed your second doctor. Let’s crunch the numbers again:
Income= 2 x $2500 = $5000
Expense = 2 x $600 + $720 = $1920
Net monthly profit = $3080 a month or $36960 a year
Your office expenses for a second practice probably won’t be as much as for the first ($660 for this example) but we’re just estimating here.
So at this rate it looks like to reach your goal of $50K/year net, you would need 3 clients averaging $2500/month.
Set Attainable Goals
A good approach here would be to set a goal of attaining 1 new provider a year. This is a very achievable goal and allows you to learn and develop your business.
To sign the first client I would recommend setting a goal of 6 months – maybe three months if you are real aggressive. You could then assign yourself action items to attain this goal.
They might look something like this:
- Call 5 practices a day
- Visit 2 health fairs and hand out business cards
- Place business cards in hospital physicians parking lot
- Deliver baked goods with marketing materials to 5 potential clients offices a week
- Attend monthly BCBS insurance seminar
- Mail out 20 letters a week to potential clients offering to perform a HIPAA compliance assessment
I just listed a few of the marketing techniques I used as examples. Your marketing strategies will vary depending on results.
Start Up Funding
Your business plan is a great place to plan your start up funding needs until your medical billing business becomes profitable. This would include items like marketing, office equipment, software, training, licenses, accounting advice, etc. When getting started your biggest expense is likely marketing. This may include developing a website (or hiring someone to), online or traditional mail type marketing, flyers or brochures, etc. You want to make your business look professional so don’t get too cheap here. Remember a website is a great tool in selling your expertise. Most people look up a business online to determine their credibility and learn more about you.
Many people starting a medical billing business are doing so from their home. The obvious advantage is the cost savings. With the advances in technology these days – in particular cloud computing and web based medical billing software, start-up expenses can be quite modest.
Your Biggest Asset
One of the purposes in developing a medical billing business plan is to raise funding. In doing this don’t neglect your biggest asset – you! Many people starting a medical billing business already have experience in billing and coding. In developing your business plan, make sure you emphasize your knowledge, experience, training, etc. If you have expertise in a particular specialty, that’s an asset that’s of value to your investors and signifies your business is more likely to succeed because of that.
So don’t neglect to sell yourself in your business plan – it’s your most valuable asset.
In summary a medical billing business plan serves two purposes: to give you a road map and as a way to sell your idea to your lenders. Even if you plan on financing your business yourself, a business plan is a great checklist to capture all the tasks that need to be completed. And remember it should be a living document that you review and update periodically to reflect your progress, changes in priorities, and realities of starting a business.
Go to Microsoft Office Templates and type in “Business Plan”. They have several great business plan templates and checklists in both Word and Excel formats. Remember your medical billing business plan doesn’t have to be complicated.