Key Takeaways
- Choose your practice structure carefully. Your entity, ownership structure, and any MSO or management relationships should reflect how you plan to operate the practice.
- Address legal and compliance issues before opening. Contracts, payor enrollment, patient agreements, HIPAA policies, and other requirements are easier to address before the practice is up and running.
- State law matters when starting a medical practice. Entity options, ownership rules, CPOM requirements, professional relationships, and other healthcare regulations can vary by state.
What to Know Before Starting a Medical Practice
Choosing a name, finding an office, and seeing your first patient are only part of starting a private medical practice. A physician starting their own practice also needs to make decisions about ownership, business structure, contracts, staffing, patient relationships, privacy, and healthcare compliance.
The right approach depends on your specialty, ownership structure, location, and how you plan to operate. Addressing these issues before opening can prevent problems that are much harder to fix after the practice begins operating.
1. Choose Your Practice Structure and Ownership
One of the first decisions is how you will own and structure the practice. Entity formation depends greatly on state law and the licensure of the owners. This may involve a PLLC, professional corporation, LLC, or another type of professional entity.
A medical practice LLC is not necessarily available or appropriate for every physician. State law may limit which entities healthcare professionals can use and who may own them. Your entity also needs to reflect whether you are opening a solo practice, starting a practice with other physicians, or bringing in non-clinical owners or investors.
If your practice will involve non-physician owners or outside management, consider corporate practice of medicine (CPOM) rules before you finalize the structure. In some situations, an MSO and management services agreement can separate clinical operations from administrative functions.
When starting a new medical practice, consider ownership, governance, and business relationships together. Our team of healthcare attorneys can ensure you begin your practice with a compliant foundation. Schedule your free initial consultation today.
2. Decide How You Will Work With Other Professionals
A new practice may need physicians, nurse practitioners, physician assistants, nurses, therapists, administrative employees, billers, or other contractors. Before hiring, decide which individuals will be employees and which, if any, will be independent contractors.
Written agreements should address compensation, duties, termination, confidentiality, malpractice coverage, restrictive covenants, and other responsibilities appropriate to the relationship. The classification should also match how the person works for the practice.
If you will employ or contract with other licensed professionals, state scope-of-practice, supervision, delegation, or collaborative practice requirements may also apply.
These decisions can affect your costs and operations from the beginning, so they are worth addressing before you make job offers or begin seeing patients.
3. Address Your Location and Business Contracts
If you plan to rent office space, carefully review the lease before signing it. A medical office lease may need to address permitted use, signage, patient access, build-outs, equipment, privacy, assignment rights, and how long the lease runs.
Your other business contracts deserve the same attention. Depending on your practice model, you may need agreements with an EHR vendor, billing company, laboratory, marketing company, telehealth platform, management company, or other vendors.
If you are working with an MSO or another business that will provide administrative services, also review the management agreement before the relationship begins.
A lease or business contract can create long-term financial and operational obligations. It is easier to address those terms before signing than after the practice is committed.
4. Set Up Payor Enrollment, Patient Agreements, and Payment Policies
If you plan to accept insurance, Medicare, or Medicaid, determine your payor enrollment and credentialing requirements early. Enrollment and credentialing can take time, and your practice may need to complete these processes before billing certain payors.
Your patient-facing documents should also match the way your practice operates. Depending on the practice, this may include registration and intake forms, informed consent documents, financial policies, patient agreements, and Good Faith Estimate procedures.
The process can look different for a traditional insurance-based practice, a cash-pay practice, or a concierge medical practice. If you are considering how to start a concierge medical practice, for example, the membership agreement should clearly explain fees, services, exclusions, cancellation terms, and the relationship between the membership and health insurance.
5. Put HIPAA and Other Compliance Policies in Place
Address HIPAA compliance before your practice begins handling protected health information. A website privacy policy is only one part of compliance.
Your practice may need policies covering the use and disclosure of patient information, security safeguards, patient records, workforce confidentiality, communications with patients, breach response, and relationships with business associates.
Other compliance policies will depend on your practice. A practice that prescribes controlled substances, provides telehealth services, employs staff, accepts Medicare, or handles certain types of medical records may have additional requirements.
Your website, patient portal, email and text communications, EHR, and other technology should also be considered as part of your overall privacy and compliance program.
6. Check State-Specific Requirements Before Opening
There is no single checklist for how to start a clinic or medical practice. State law can affect entity formation, ownership, CPOM, employment arrangements, scope of practice, telehealth, patient agreements, fee-splitting, and other aspects of your business.
The same practice model may require different legal structures or agreements in different states. This is especially true if you plan to practice across state lines or open locations in more than one state.
If you are leaving an existing physician employment arrangement to start your own practice, review your current employment agreement before making plans that could conflict with its terms. Restrictive covenants, confidentiality provisions, notice requirements, and other contractual obligations may affect your transition.
When Should You Talk to a Healthcare Attorney?
We recommend giving our team a call before you make the decisions that create long-term obligations for your practice. A healthcare attorney can review the proposed practice model before you form the entity, sign a lease, enter into an MSO arrangement, hire clinicians, or begin using patient agreements and compliance policies.
Jackson LLP works with physicians and other healthcare professionals on medical practice startups, including entity formation, ownership structures, contracts, employment arrangements, healthcare compliance, HIPAA, patient documentation, and other legal issues that arise before opening. We offer flat-fee pricing for many startup projects and provide a written quote before work begins.
If you are considering starting your own practice, the earlier you address the legal structure, the easier it is to build the rest of the practice around it. Reach out today for a complimentary 15-minute consultation.Â
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Frequently Asked Questions About How to Start a Medical Practice
What are the first steps to starting a medical practice?
The first steps typically include defining your practice model, choosing a business structure, addressing ownership requirements, reviewing contracts, securing a location, and identifying applicable state and federal healthcare requirements.
Do I need an LLC to start a medical practice?
Not necessarily. Depending on the state and the professionals involved, a medical practice may use a PLLC, professional corporation, LLC, or another permitted entity.
Can a physician own a medical practice with a non-physician?
It depends on state law and the type of practice. Corporate practice of medicine and other ownership restrictions may limit who can own or control a medical practice.
What legal documents do I need to start a medical practice?
Depending on the practice, documents may include formation and ownership documents, employment or independent contractor agreements, leases, patient agreements, informed consents, financial policies, HIPAA policies, and vendor or management agreements.
How long does it take to start a medical practice?
There is no standard timeline. Entity formation, credentialing, payor enrollment, lease negotiations, contracting, and other startup requirements can take different amounts of time depending on the practice and state.
How do I start a concierge medical practice?
A concierge practice requires the same foundational business and legal planning as other medical practices, along with careful consideration of membership agreements, fees, patient services, insurance arrangements, and applicable Medicare and state requirements.
