How to Start a Dialysis Center

One of the most important things to first focus on when starting a new dialysis center is the type of capital that will be used in conjunction with the startup. One of the most important features to most people that are starting a new dialysis center is that they are able to acquire the equipment necessary to provide nephrology services to the general public either via a business loan or equipment lease. Given the very high expense of dialysis equipment, many people that are starting this type of business will typically turn to using leases rather than loans.

This creates a much cleaner balance sheet so that further growth via expansion capital can be readily obtained in the future. The startup costs are typically associated with the new dialysis center generally run anywhere from $250,000 to $1 million. It should also be noted that many startups of these types of businesses are done through private investment rather than the use of owner funds, leases, and business loans. It is important for the entrepreneur that is starting a new dialysis center to very closely monitor and track how they intend to use their startup capital given the fact that there are a substantial number of ongoing expenses that must be paid first before invoices for dialysis service are paid. Almost all dialysis centers receive a bulk of their money from private insurance companies, patient co-pays, as well as through Medicare and Medicaid. The capital structure of a new dialysis center can be determined by a certified public accountant or related professional. In fact, most entrepreneurs are thinking of getting this field typically will retain both a CPA as well as a qualified attorney to determine which laws are applicable and how the business should be structured.

As it relates to corporate structuring, most dialysis centers are usually started via a limited liability company or S designated corporation. However, there are some instances where a regular corporation is the more preferable method of developing this type of business. Only a certified public accountant and qualified business attorney should make the determination as to what corporate structure is most appropriate. Some states do have certain rules and regulations as a relates to medically focused and healthcare businesses. As such, a qualified attorney can make the determination as to what corporate structure is most appropriate and they can make the appropriate filings with the state. The cost associated with using an attorney or a CPA to complete a incorporation typically is around $500-$1000 depending on the work that is needed.

It should be noted that in many states a limited liability company must have an accompanying operating agreement that is submitted when a new corporation is filed. And it attorney can develop the operating agreement specific for dialysis center. This is especially important to note especially when they’re going to be a number of partners at the onset of operations. Now that all states allow for single-member limited liability companies, the operating agreement for these types of businesses is pretty straightforward. However, when there are going to be a number of partners involved especially when certain members are going put up capital while other members are going to provide services – this can get far more complicated. As such, a properly developed dialysis center operating agreement can reduce any of the potential risks that are associated with developing a business with a number of partners.

A number of employees also need to be hired at the onset of operations for any dialysis center. In the event that the owner-operator is not a nephrologist, and this business is going to have to hire a qualified medical director. This can be a very high expense as most medical directors have a minimal base salary of around $250,000. Additionally, if there are going to be a number of staff nephrologists than the owner can expect that they are going to spend at least $200,000-$300,000 per year per employee on base salaries. Many dialysis centers will provide their staff nephrologists with profit-sharing programs, health insurance packages, 401(k)s, and other benefits that are normally associated with providing medical services. There is currently a saturation of nephrologists in the market given the substantial amount of people within the United States that require dialysis. As such, it is relatively easy to source a new nephrologist that could potentially work at this dialysis center.

Beyond having staff nephrologist, these companies also require to have a number of specialty nurses on staff. Nurses typically have a yearly annual salary of $65,000-$100,000 depending on the specific market in which the business is going to be located. It should be noted that certain nurse practitioners that have extensive experience in the field of dialysis can be hired as well and typically have an annual salary of $150,000-$200,000. As with all types of employee planning, a thorough and well-developed employee handbook needs to be produced as well. This handbook not only showcases the procedures and protocols regarding each aspect of medical services rendered, but also provides the rules and regulations that guy just the general business operations. Each employee should review and sign this document in order to ensure that any legal liabilities from employment practices are kept to an absolute minimum. An attorney can also assist the new dialysis center with determining which liability insurance policies issued acquire including Workmen’s Compensation insurance. Beyond the medical staff, most dialysis centers also have extensive support staff that includes administrative assistants, scheduling managers, patient liaisons, as well as support staff for company executives. Generally, these individuals have salaries that range anywhere from $30,000-$75,000 depending on their experience and their role in the company. It is important to note that the most expensive thing about owning and operating a dialysis center is a substantial amount of skilled labor that is required.

Marketing a four dialysis centers pretty straightforward given the strong demand in most local and regional markets for the services. Owner-operators of dialysis centers typically have extensive relationships with area physicians including primary care doctors, other nephrologists, hematologists, and internal medicine physicians. In some cases, referrals may be required from these physicians in order to be able to provide dialysis centers services to patients. As such, the foremost way in which these businesses can be marketed is through ongoing extensive use of physician referrals. Many of the staff nephrologists that are employed by dialysis centers also have admitting hospital privileges at area hospitals and medical centers. As such, by retaining staff that already have extensive relationships with these entities – the ongoing costs relating to marketing can be reduced over time. Almost all dialysis centers also maintain a website that showcases the services rendered, insurance is accepted, hours of operation, and how to contact the dialysis center in order to make an appointment. In some cases, the company’s website will have a online portal where a appointment can be scheduled directly to the website. This can substantially reduce the cost of maintaining a customer service call center where patients need to interact with another human being. However, medical billing specialist should be available on staff in order to answer patient questions when they submit invoices to insurance or if there is an issue with reimbursement.

A qualified attorney should also be hired in order to ensure that the dialysis center means all the appropriate licensure not only with the federal government both state government agencies as well. There are a substantial number of licenses as well as regulatory permits are needed in order to operate a medical or health care facility. As such, ate an attorney that is very familiar with healthcare businesses will ensure that the business is operating within the letter of the lot all times. A certified public accountant or related professional can also assist the dialysis center with obtaining the licensure required by the federal government in order to receive reimbursement from Medicare and Medicaid programs.

Given that many people that are on dialysis often receive Medicare or Medicaid, it is imperative that these forms refill correctly so that reimbursement time is kept to an absolute minimum. One of the primary issues with owning a healthcare businesses that they typically have a lag between the time services rendered and the time that they get paid. Usually, this can be anywhere from 90 days to 120 days. As such, a substantial amount of working capital needs to be kept on hand in order to ensure that the employees and expenses a business can be paid while the company is waiting on its reimbursement.

The outlook for the dialysis center industry is tremendous. As more and more people from the baby boomer generation enter their later years and have kidney issues, the demand for dialysis and nephrology services is going to continue to increase significantly. As such, more and more of these companies are being started each day. One of the key things that can be done in order to remedy the risks associated with competition is by establishing numerous locations and having a streamlined methodology of ensuring that payment is acquired very quickly. In some cases, in order to reduce the risks associated with these businesses the industry as a whole has seen a number of people use outsourced medical billing companies in order to cost-effectively receive payment. It is expected that at least 500,000 people year are going to require dialysis within the next five years. As such, the industry outlook for the dialysis center business is tremendous.

One of the best things about these types of businesses is that they are wholly immune from negative changes in the economy given the fact that this is a medical business and people are going to get sick and require the services at any time. While the barriers to entry and start up costs are very high, once accomplished this creates a very strong degree of economic stability for these types of businesses. More and more people are turning to the specialty of nephrology in order to meet the anticipated demand over the next 5 to 25 years as people from the baby boomer generation continue to age. Any entrepreneur that has in the extensive understanding of the healthcare industry is in a strong position to receive the capital they need in order to develop these types of businesses.

 

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