How to Start a Medical Billing Business
Welcome to the Business Ideas section. Watch this video, I’m going to give you a quick start guide on How to Start a Medical Billing Business. Over the last decade, the medical billing service industry has experienced phenomenal growth. If you’re looking to make some money and make a difference in someones life, you should consider starting a Medical Billing Business.
The medical billing industry has experienced steady revenue growth due to heightened downstream demand for industry services. Healthcare providers have increasingly outsourced medical billing and upgraded their medical information technology infrastructure.
In 2022, medical coding changes have increased use of telemedicine services, so therefore demand for industry services is expected to have increased. As a result, industry revenue has increased, rising at an annualized rate of 13.2% to $4.9 billion over the past five years, including an estimated increase of 6.7% in 2022.
Your business will provide medical billing services to healthcare facilities like hospitals, clinics, nursing homes, trauma centers and more. Medical billers and coders translate doctors’ notes, procedures, and services provided into codes that can be submitted to insurance companies and other payers like Medicare and Medicaid. This type of service keeps hospitals and other medical businesses afloat, as they are directly tied to the organization’s revenue cycle. Without their efforts, care providers wouldn’t get paid for their vital work.
These are the main services you will be offering:
Payer Follow Up
A/R Recovery / Follow up
Most medical billing companies make between $1,000 to $150,000 a month, depending on the client's size, their needs, and how much they want your company to manage.
So, the more jobs you can book and clients you can get, the better and faster your business will grow.
Many medical billing services typically charge their new clients a start-up fee and a rate of about 5.5 to 10% of percent of collections plus a monthly minimum billable fee. Some also just charge the industry standard rate, which is $4 to $6, per claim. Margins are thin in the medical billing industry, but depending on how much work you can get, your company can do relatively well.
Also many companies choose to do 3 month contract minimums, with flexible month to month billing terms after.
Lots of service offerings, which means a lot of money for you!
Market Size: $5bn
Number of Businesses: 1,784
This Industry Employs: 66,303 people
So, here’s what you’ll need to get started:
Step 1 - Get a Business Plan
If you have no idea how an online business is supposed to operate or maybe you are a first time business owner, I'd recommend downloading a business plan from Bplans or getting a custom one created on Fiverr. Their plans outline exactly how this businesses works and what you should expect.
Step 2 - Find a Supplier for Software & Equipment
When you start a medical billing business, you're going to need Medical billing software, computer equipment, a reliable business phone systems. To find software you can simply go go google and type in "medical billing software for small business" or "list of top medical billing software".
Step 3 - Choose a Name & Register Your Business
Now, when you've got that sorted, it's time to officially register your business. You won't be able to start selling until you complete this step. You'll need to register & apply for a federal EIN Number, and form an LLC or Corporation.
Depending on what state you are in, Medical billing companies are legally required to operate under certain state and federal regulations regarding health information set forth by the Health Insurance Portability and Accountability Act (HIPAA). I recommend using MyCorporation.com, as they do have a variety of packages to choose from, but their most basic package will get you started right away.
There may be a few licenses and permits needed for your medical supplies business. You can work with MyCorporation to obtain these licenses, but I also advise that you check with your city or town clerk for any local requirements. You must be licensed and insured!
Having to handle patients’ data and insurance claims are a very important tasks and so you must be ready "experience wise" and also have certain certifications to stand out from your competitors in the industry.
This industry strongly encourages operators to get certain certifications to show commitment towards the business. When you hire people, find those who are fully credentialed to work in Medical Billing and Coding industry. These are some of the certifications that you should work towards getting if you intend to start and run your own medical billing company:
Certified Professional Biller (CPB)
Certified Medical Reimbursement Specialist (CMRS)
Medical Billing and Coding Certification
Medical Auditing Certification
Medical Documentation Certification
Medical Compliance Certification
Physician Practice Manager Certification
Keep in mind, it can easily cost over $2,500 to obtain licensing and can take up to 6 to 12 months to secure. You'll also need to obtain a quote for business liability insurance. This can be done through any service provider like Geico.
Legally Incorporate Your Business Today
Step 4 - Open a Business Bank Account
Now, since you're going to be getting all this money, you'll need somewhere to put it. It's pretty easy to open a business bank account, but they won't get you setup without having the legal incorporation paperwork and the EIN number that I just spoke about. You can work with a local bank that you already use or you can just choose a new one. Square also has small business banking and invoicing for new businesses.
Step 5 - Buy Website Hosting
The next step is to buy web hosting. I always recommend choosing Bluehost because they are the most reliable for small business websites. You also get a free domain name, a free ssl certificate and access to 24/7 tech support. So, you really can't beat it.
Buy Website Hosting with Bluehost
Step 6 - Work with a Website Designer
Once you pay for a website hosting plan with Bluehost, you'll get your login credentials.
You'll want to save that information and deliver it to the web designer in the next step. If
you don't know about Fiverr, it's a company that sells affordable web development and marketing services that get done really quick.
You just type in what you want in the search bar, and it will reveal tons of people who are willing to help you get a website up in less than 3 days. Once you choose the person you want to work with, give them the Bluehost login details and communicate your vision and plans for the website.
Find a Website Designer on Fiverr
Step 7 - Setup a Merchant Account to Get Paid
While they are working on your new website, you'll need to activate a merchant account for your customers to pay you through. Many businesses use paypal, square or stripe. I personally like Square, they make it super easy for me to accept payments online via my website or over the phone. I can also send copies of service agreements and invoice directly through Square. The account with Square is free, so once you signup, give these login details to the web designer to complete the payment integration process.
Signup for a Free Square Payments Account
Step 8 - Get Logo & Online Marketing Materials Designed
Finally, you'll need to start spreading the word about your business. A good place to start is getting a logo, social media graphics and online marketing materials created. For website branding, I recommend 99designs because the process is quick and painless and you actually get what you want and for marketing materials, I like envato, because they literally have tons of graphics for each and every single kind of business, on demand.
Get a Medical Billing Business Logo and Graphics
Get a Medical Billing Business Marketing Templates
Step 9 - Create a Money Game Plan
Since you now own a medical billing business, you can choose from a variety of services to sell. The most popular and profitable services are:
Credentialing & Enrollment
Accounts Receivables Management & Processing
Patients Collections Assistance
You’ll want to diversify your service offerings because this will help expand your customer reach. To maximize your profits, you’ll can create monthly maintenance membership plans or new customer referral discounts.
Step 10 - Be Prepared for Startup Cost
Now, I know you're probably wondering...What's the price tag on this baby? Startup costs for this kind of business, is around $5,000 if you are starting as solo entrepreneur, or can be an upwards of $35,000+. This number largely depends on how many medical billing and coding specialists you hire, payroll, how much money is spent on office equipment, insurance, office software, computers, legal, website design, business phones, company t-shirts, and marketing.
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About Adella Pasos
This Entrepreneur and Marketing Expert has shared her passion for growing brands from the ground up. She’s worked with Startups, Small Businesses, Fortune 500 Corporations and Entertainment Talent to help them recognize the value of marketing, and give her clients the ability to access their niche market via online, social media, mobile, merchandising, and events.
She hosts the What's Your Game Plan TV show features: Free Expert Advice, and Growth strategies for Business Owners Across the Globe. Access thousands of FREE Tips, Trends & Tools to Move Your Business Forward!