How to Start Your Own Medical Billing Company

How To Start A Medical Billing Business

By Adam Nager, Founder

In an industry as lucrative as Medical Billing and Practice Management, many people often ask me: “What does it take to start a company in the medical billing industry”, “Can I become successful in the industry”, or “Is my background a good fit in the industry?”

What I Believe

I believe you can start your own medical billing business. And I believe you don’t need an extensive background in the industry to have the success I’ve had. I believe you just need to get started, and that you need to learn how to avoid the very common pitfalls most new medical billing companies make.

My Goal Is To Teach You

My goal is to not only answer these questions, but also many other frequently asked questions that help you avoid the common pitfalls you might experience in your first couple years of business.

How I Started (And Failed…)

I started in the industry in 2007 when I realized that I wanted to get into a business that was growing year over year and could push through any future recession that our nation faced.

By May of 2008, I had formed my own medical billing company. But after spending $20,000 on a week-long seminar for a product that promised to assist in processing claims, I realized there was much more to learn before getting to the level of success I expected.

I spent over a year knocking on doors, calling random doctors’ office, and hosting numerous networking groups. Even after all of my effort, I found myself nowhere closer to my goal. Even worse, I had accrued over $50,000 in debt.

But…Where Am I Now?

It wasn’t easy, and I wish I had learned sooner what I know now, but, in the end, I consider myself a success story. With over 50 unique clients, 500 medical providers, and providers across 30 states, I’ve finally figured out good systems for attracting new business, keeping that business, and providing services at large scale.

This tutorial and our primary in-person training programs are designed to distill those systems into practical tips that you can use to start your business and ensure success sooner.

In the end, I want you to share in the same success I’ve found and find the confidence in yourself to take the next step in your billing and coding business for medical providers.

Part I – Getting Started

So now to the question of how you should start your medical billing company and what ways can we ensure against common mistakes:

1) Make sure to treat this as a business and not just a hobby

a. What to expect

If you’ve ever spoken with successful business owners, they often tell your something similar – expect (and plan for) the unexpected. Businesses that promise to make you X amount of dollars in X amount of time are typically not realistic and, more often than not, will never match the promises they make. Understand that the medical billing business is a traditional service based business – you’ll need to provide a service to generate an income, and you’ll need to devote a certain amount of time into the business to build it up. My experience in working with entrepreneurs over the past 10+ years is that there’s always one question that every business owner asks: “What sets successful business owners apart from unsuccessful business owners?” In other words, “What do I need to do to be successful in this business?” Through the years, I’ve found that the answer always remains the same – treat the business as a business and not a hobby. A hobby is something you do regularly in spare time for leisure and pleasure. A business is something you build to make a living out of. A business takes money, time, and a dedication typically higher than that of a hobby – ultimately your rewards will be much greater working the business as a business and not as a hobby.

b. Why is it difficult?

No business is easy. Each business you may be looking to get into has common challenges: competitors, upfront costs, where and how to market, building your brand identity, and most importantly gaining your first client that can hopefully be used as a reference for new potential clients.

c. Knocking, rejections, tips for getting the foot in the door

I’ll tell you a secret of the business right now, but you have to promise to read the article till the end… Getting your first client will be the hardest thing you do in the business of medical billing and coding. But there are three ways to overcome this –

  • 1. Stay consistent in the business – get in touch with five new contacts per workday and don’t let day to day challenges get in the way of building your new business.
  • 2. Offer what competitors don’t – be a step ahead of your competition – don’t just stick to the basics when selling your services. (Think of ancillary services you can offer such as coding analysis, general practice consulting, merchant services, or even medical supplies…we teach more about these in our in-person training programs). Find partners that offer physician offices other solutions that you can bring into the potential client’s office to get your foot in the door while expanding your revenue stream. I’ve had great success offering less expensive ancillary services to physicians who initially turned down medical billing services, but who eventually move forward will billing services after a relationship was built. Learn all the ways in which you can help a provider, and you will be a more valuable and welcome asset to your client from the start.
  • 3. Set yourself apart – find a way to make potential clients remember you and your business. Whether it’s always bringing in something (fruit, candy, or information) or simply telling a joke every time you visit the office. You want them to recognize you and to develop a trusting relationship with you.

2) Invest in yourself

a. “The most important investment you can make is in yourself” – Warren Buffet

Every day, take a step forward in your business by investing some time into yourself. Learn about the latest and greatest within the business. Consider setting up Google Alerts to find out what news is breaking in ‘Medical Billing’, ‘Coding’, or ‘HIPAA’, or consider attending a local networking event [tk recommendation]. Spend a minimum of 1 hour per day in your new business.

3) Ensure you have the financial backing to be successful in the business

a. How much money do I really need to get started on my own?

If you are starting the business on your own without a training program, plan to put aside a minimum of 12 months working capital (enough to pay your bills, and run the business for a minimum of 12 months). (If you’re looking into our training program, you should plan to get your first contract within 6 months). I personally recommend a minimum of $6,000 for general business expenses for the first year or roughly $500 per month. With expenses ranging from a reputable phone system to quality marketing materials to a $250-$300 monthly budget for Google AdWords, this $500 monthly budget may go quickly.

b. How much money do I need to put up front?

When starting your own business, you should look for a support system to accompany and advise you along the way. Try to find a person, system, or company that can guide you through the process of getting your new business up and running, preferably a system or company that guides you through obtaining your first contract. While the upfront costs may seem daunting, it is a worthy investment that will grant you returns in the long run. If this were to cost you $30,000 or even $50,000 but saved you 6-12 months of failures, would the investment be worth it? In the medical billing industry, just one large account could generate up to several hundred thousand dollars every year. So, if the upfront cost can help you achieve this sort of income, it’s extremely valuable.

Once you’ve set up your business, I’d recommend moving into marketing efforts. I’ve found that the best avenues to generate leads are Google Adwords, Facebook Ads, or local tradeshows. The more your business name is out there, the greater opportunity you have to acquire more quality clients quickly.

4) Ensure you’re mentally prepared to own and operate a medical billing business

a. What sort of stress will I face?

Unfortunately, owning a business doesn’t come without some stress, headaches, and heartache. If there weren’t difficulties, everybody would be their own boss. From financial struggles to the stress and fear of hiring employees for your business, you need to consider the cost of not being prepared. Having someone you can talk to, discuss opportunities for improvement, and to just lean on in times of struggle is vitally important to a successful business venture.

b. What about knocking on doors and rejection?

Rejection can be difficult. However, here’s something to think about: If you were working at a hamburger stand as a cashier, you would be trained to ask everyone that ordered a hamburger whether or not they wanted cheese on the hamburger. If the customer said yes, would you be excited? And if they said no, would you hang your head in disappointment? I assume the answer would be ‘no’ to both. You recognize asking the question leads to an answer, yes or no, and you’re still going to have your job the following day. It shouldn’t affect your emotions. To overcome the rejection and stress you may encounter from knocking on doors, imagine you’re simply a cashier selling hamburgers.

5) Plan for the unexpected

a. What are some unexpected issues that came up for me?

As an employee, most decisions are made for you. You get told what time to report to work, where your office will be, how much you’ll make, when you take vacations, etc. However, as a business owner, it’s your burden and privilege to make these decisions on your own. You’ll make mistakes, but what matters is how you pull through them. It’s your ability to overcome these obstacles that will make you the successful business owner you are aiming to become.

As an entrepreneur, I’ve had my fair share of experiences with unexpected issues. One specific story that taught me a lot about pricing, service, and profitability comes to mind.

The year was 2010, the business was growing, and I was loving it. At the end of the year, I wrapped up all of our financials, handed them off to our CPA (our tax guy), and a few weeks later, he sent me a disheartening e-mail. It explained that my total income for the year was far less than I’d expected and that my tax liability was going to cost me considerably more than what I had in the bank account.

I had to make a decision on how I wanted to proceed. If I decided to stay in business, I needed to develop a process that would lead to a better 2011. Otherwise, the business would be closed by 2012. After plenty of hard work and learning, we were able to develop strategies to rework our contracts, reduce the cost of software, and cut down our overhead cost for data entry by implementing EMR solutions to many of our largest clients thereby.

My point? You need to constantly be engaged in the business and be comfortable thinking on your toes & making methodical decisions about how your business can be optimized. As a business owner, thinking systematically is one of the hardest and unexpectedly difficult things you’ll potentially face.

b. What can I do to protect against the unexpected? (Savings, insurance, support, etc.)

First and foremost, be prepared. Savings, a line of credit, or a low-interest credit card can support you in times of financial need. When I started the business, I was neither a biller nor coder. Luckily, I had invested in resources that I could rely on to provide me answers. This took a huge burden off of my shoulders in times of crisis.

Make sure to develop a support system. This way, when a question comes up and you’re unsure of the answer, you have someone you trust that you can call to get some answers.

6) Understand your competitors

Who exactly is your competitor? You have two main competitors: the office staff of the practice who may provide in-house billing, and other medical billing companies.

a. The office staff who provides medical billing in-house

Ultimately, when you call into a doctor’s office, there is one of two ways their medical billing is being done. It is either done by the staff within the office or it is done by an outside medical billing company. Doctors may want to keep their billing in-house because they consider it to be more cost-effective and it grants them greater control.

Over 50% of private physician offices currently use outsourced billing companies. However, as a new medical billing company owner that wants to convince the remaining half, you need to know the advantages of outsourcing to your company. Depending on the practice, you can offer lower costs, better software, specialized and dedicated billers, regular reporting, and consistency. When a private physician does their billing in-house, they typically have one employee handle it on top of many other tasks. This leads to imperfections in the work and leaves them vulnerable to problems if the employee is out sick. None of these issues exist with a dedicated, consistent third-party medical billing company.

b. Software Companies and Billing Companies

Many software companies have now started offering medical billing services to their clients. This is a natural step for a software company as they already have the client base to sell to. Unfortunately, software companies typically aren’t as experienced, may not have gone through any formal training, and traditionally don’t have the support team necessary for proper medical billing and coding.

You can set yourself apart from these software companies very easily by offering a dedicated account manager within your office to handle the doctor’s account or by offering on-site meetings once a month to go over key reports.

Part II – How profitable is building a medical billing business?

Part III – What are next steps?

Starting a business is scary, but it helps to have an experienced partner to guide you along the way.

It can be intimidating to not have a clear picture of where to begin. But we believe that starting with the right tools and the right coaching means reduced risk and quicker profitability.

That’s why we’ve developed comprehensive training that walks you through the tools, software, and best practices that lead to a successful medical billing business.

Sign up now for our online tour to learn how our training course can save you time, money, and reduce risk. The tour is free and can be completed in the comfort of your own home.

Click here to register for immediate access to our tour.

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