The financial and operational readiness needed to open a medical practice

Are you ready to practice medicine on your own terms but feel overwhelmed by the business side of independence? You're not alone. Launching a private practice is a major milestone, but success depends on more than clinical skill. It requires a solid business foundation.

For physicians taking the leap, this planning phase is where vision meets reality. Thoughtful preparation here will allow you to build a practice that is both professionally fulfilling and financially sustainable.

Define your vision

Every independent practice begins with a clear understanding of what kind of medicine the physician wants to practice and who they want to serve.

Do you envision a traditional insurance-based model, or would a direct primary care (DPC) or concierge structure better fit your goals? Are you targeting a niche population, such as chronic disease management or lifestyle medicine, or offering broad family care?

These choices will determine everything that follows — your staffing, technology needs, space requirements, and revenue model. Defining your “why” helps align business decisions with your mission, ensuring the practice grows around your core values rather than financial pressures alone.

Build a realistic financial plan

Before making any commitments, create a detailed financial projection. One of the most common pitfalls is underestimating startup costs and overestimating early revenue, which can lead to significant stress in the first year. Startup costs for a small primary care practice can range from $70,000 to over $100,000, depending on your location and model.

Key budget categories include:

• Facility costs: Lease, utilities, buildout, and furnishings.
• Staffing: Front desk, clinical ancillary support, billing, and administrative assistance (onsite or virtual).
• Technology: EHR, telehealth, and billing platforms.
• Licensing and insurance: Professional liability, business insurance, and state/local registrations.
• Marketing and patient acquisition: Website, branding, and patient acquisition efforts.

Revenue projections should account for realistic patient volume and payer mix. A break-even analysis — understanding how many patient visits or memberships you need per month to cover expenses — helps guide sustainable growth.

If the numbers don’t work, adjust the model before moving forward. It’s far better to refine assumptions early than to course-correct after opening.

Secure the right financing

Fortunately, physicians are often strong candidates for small business financing due to their earning potential and stable career history. Common funding sources include:

• Traditional bank loans or SBA loans.
• Medical practice startup programs offered by certain banks or equipment lenders.
• Personal capital or physician partnerships.

Some doctors start lean by using personal funds for the initial phase, then seek additional financing after proving early revenue. Regardless of approach, it’s essential to have cash reserves for at least six months of operating expenses — this cushion provides flexibility during ramp-up.

Choose the right structure and support

Your business entity — whether an LLC, S-Corp, or professional corporation — will influence taxes, liability, and ownership flexibility. Consult both a health care attorney and an accountant familiar with medical practices early in the process.

Beyond legal structure, surrounding yourself with the right professional partners is key. Many independent physicians rely on fractional or outsourced services to keep operations efficient and costs predictable:

• Billing and revenue cycle management
• Compliance and credentialing support
• Human resources and payroll
• Marketing and digital presence management

These partnerships allow physicians to stay focused on clinical care while ensuring the practice runs smoothly behind the scenes.

Operational readiness: Systems and processes

Before opening your doors, create workflows for every major function: scheduling, billing, referrals, inventory, and patient communication.

Consistency is the foundation of efficiency. Documented protocols help new staff integrate quickly, maintain compliance, and deliver a reliable patient experience.

When selecting technology, prioritize interoperability and user-friendliness. A flexible EHR system that integrates billing, scheduling, and telehealth reduces administrative burden and minimizes errors.

Think long-term from day one

The goal isn’t just to open your doors — it’s to stay open and thrive. Build scalability into your systems from the start so your practice can grow without constant reinvention.

Track key performance indicators such as patient volume, revenue per visit, collection rate, and overhead percentage. Regular financial reviews — monthly in the first year — help identify issues before they become problems.

Final thoughts

The excitement of independence can tempt physicians to move quickly, but success depends on thoughtful preparation. A strong foundation allows you to focus on patient care instead of daily crises.

In the next article of this series, we’ll explore how to build the right infrastructure — from staffing and technology to vendor partnerships — that supports long-term success.

Melissa Starowitz, MHSA, is the owner of Cornerstone Healthcare Consulting and Management, which helps physicians launch, manage, and optimize independent practices nationwide. Learn more at www.cornerstonehealthcareconsulting.com.