Medical Billing Business Plan - 10 Steps to Your Success
Your idea to start a medical billing business undoubtedly started with a vision. The idea may have come together in your head over a period of time or maybe you had an “aha!” moment while enjoying breakfast at your favorite coffee house. In any case, your vision is what motivated you to consider starting a business and turn the vision into a reality. Now that you have the vision, you want to make sure the results you envisioned come to fruition. One of the best ways to do this is to create a business plan.
What exactly is a business plan? According to the Small Business Administration, a business plan is “an essential roadmap for business success.” In a nutshell, it’s a blueprint of your vision. Can you imagine a contractor building a house using only the thoughts in their head? Sounds ridiculous, right? The same principle applies to starting a business without a business plan. Starting your medical billing business will require a commitment of your time, energy, and finances. It only makes sense that you should have some idea of how to make sure you are not wasting any of these valuable resources while also ensuring that you return a profit for your efforts.
You can organize your business plan how you like, but it should include detailed information about three key aspects of your business:
Your business idea
Your target market
Considering Your Business Idea
The basics for this section include a general description of your business and what it is that makes you unique. You can also include information about how you plan to make the business happen. For example, many medical billing companies employ consultants and use enterprise management software to help them build a business that stands out from others.
Considering Your Market
Some questions to ask yourself to create content for this section include “Who will consider what I offer valuable?”, “Am I targeting a specific area?”, and "Who are my competitors?” Providing answers to questions such as these present your market strategy and how you intend to become a viable business.
Considering Your Finances
All businesses require a financial investment to get started. In this section you should list everything you will need to get started (include cost estimates). Then, outline how you plan to pay for it all. If you are seeking a loan, include a copy.
You need to also do some financial forecasting by explaining how you plan to make money with your business. Visual representations are excellent for showing how you plan to make money with your business (the break-even-point), and are a good idea to include here. Examples include a balance sheet, a profits and losses statement, and a cash flow statement. These are based on your projections of incoming sales. Use a two or three-year period of time when creating these documents.
Depending on the information you include in your business plan, it can become a lot of information to digest in one sitting. A common strategy is to include an Executive Summary at the beginning of the document that provides a snapshot of each major point. This summary should provide the bottom line of your overall plan.
Considering the Future
Once you have created your initial business plan, store it in a safe location for future reference. You will need to revisit it and make any changes if any of the key information changes.
======== Detailed 10-step Plan to Write Your Business Plan =============
1. Formulate your Core Values - your success depends on your ability to build a team of fanatics about your core values. Can you confront everybody on your team who does not embrace your core values 100%? A typical mission statement sounds something like this:
"My Medical Billing Business is a medical reimbursement service and consulting firm designed to help medical and chiropractic practices become more efficient and save money. Providers outsource their insurance processing and medical billing to our firm for an enterprise-wide solution for all practice administrative functions."
2. Figure out your exit strategy - who will buy your medical billing business and for how much? When do you plan to sell it? For more details, visit here. Most medical billing business owners start their venture without a clearly formulated exit strategy. Do no repeat their mistake. Keep in mind Yoga Berra's quote "If you do not know where you are going - you will end somewhere else."
3. Identify your market - who needs your medical billing service? What medical specialties and in what geographical areas would you focus? Why? Who is your ideal client? How big is your market? Most medical billing business owners define their market share in terms numbers of practices that signed up for their services. This is not enough to understand your market share. For in-depth understanding, you need to present your numbers in terms of total revenues, which are the result of a product of number of patients, times visit per patients, times visit reimbursement.
4. Define your service - Will you offer just billing or will you include coding or transcription? How will you support your clients? Will you offer Training and if so, how extensive will it be? Will you offer a Billing SWAT team or Quality Assurance services? How will you handle Compliance issues? Will your service also include practice management software? If so, will this software be client-server or cloud-based? Example:
"National statistics show only about 82% percent of insurance claim are ever paid by insurance carriers. Using Vericle, my Medical Billing Business can increase the percentage of claims paid to around 98 percent. Next, statistics indicate that it currently costs a medical practice between $8.00-$10.00 per claim to process insurance for their patients. Using Vericle, my Medical Billing Business can reduce these costs by 50 percent or more. Finally, statistics show average turnaround on insurance claims to be 45 days or longer. Using Vericle, my Medical Billing Business can generally have money in the physician's hand within 14-17 days reducing outstanding receivables and improving cash flow."
5. Analyze your competition - What solutions already exist? Who offers a similar service? Think of giants like AthenaHealth, PracticeFusion, and Kareo. Do not ignore local competitors. What's their success rate? What's missing in their service that you can deliver better than our competition? How is your service different from others? What are your "keys to success?" Example:
"Our first key to success is the Federal Government initiative: Since 1985, the Federal Government has been urging the health care industry to submit insurance claims electronically. Presently, 70 percent of hospital claims and 25-30 percent of ambulatory visit claims are submitted electronically. HIT initiative, ARRA stimulus, and ONC-certification programs are designed to help doctors transition to electronic medical records and electronic insurance claim processing.
A second key to our success is Flexibility. Our Medical Billing Business understands that each practice is unique. We will engage practices after a through evaluation of the needs of each practice and precise identification of the solutions needed to help the practice become more effective efficient.
A third key is our diversified services. Our Medical Billing Business offers a one-stop-solution experience for medical administrative services. Unlike other systems, Vericle offers a unique integration platform, so that 3rd party software vendors, billing service providers, and medical practice management consultants and profitability coaches can integrate their products to offer a complete solution otherwise unavailable anywhere else."
6. Plan your marketing approach - how will you build a loyal community of referring clients? How will they know that your medical billing service is superior to others? How will you turn your clients into your medical billing business evangelists? How will you sell your service? Will it be a one-fits-all service or will it be a highly exclusive service? Can you build a systematic prospect attraction and customer selection process? Example:
"Our Medical Billing Business targets health care delivery units that utilize the HCFA-1500 or UB-04 claim format. This includes family practice, internal medicine, surgeons, psychologists, chiropractors, physical therapists, podiatrists, specialists, ambulance services, medical laboratories, etc. Solo-owned and established practices will appreciate using our services the most as they have already experienced the effect of the competition and payer hostility."
7. Describe your team - who will provide leadership for sales, marketing, operations, customer support, customer training, insurance claims follow up, quality assurance, client invoicing, and administration? Which functions will you develop in house and which - outsource? How will you ensure (not just promote - but ensure) teamwork? How will you discover, attract, and keep motivated the needed talent? How will you train your staff?
8. Define your pricing - how much will you charge for your service? Medical billing services typically charge a commission on insurance collections. Can you charge a premium, e.g., access fees? Why? Will your Medical Billing Business be able to actually quantify the total number of dollars you will charge your clients or will you just quote a percentage?
9. Compute your medical billing enterprise operating costs - Your medical billing service has three components: staff, process, and software. How will you deliver your service and how much will it cost you? Include staffing and technology expenses. Think of training and marketing costs. Which of these costs are fixed and which - grow in step with your customer base? Can you find medical billing software that supports all of your service delivery processes and all of your staff? Can you "eat your own dogfood" - share the same software with your clients?
10. Make financial projections - how much profit will you make? Exclude your own salary. Will you be able to implement your medical business exit strategy defined in #1?