Medical Billing Company Business Plan, Marketing Plan, How To Guide, and Funding Directory
The Medical Billing Company Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start a Medical Billing Company business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.
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Medical billing companies are extremely important businesses for physicians, physician groups, and specialty medical clinics. The complexities of medical billing can be arduous, and as such – it requires a substantial number of individuals that can properly code and submit insurance claims and reimbursement claims to private insurance companies as well as publicly funded health systems. The expense of maintaining an in-house medical billing department for a smaller medical practice is extremely high. As such, many medical practices, especially solo physicians, will turn to using a medical billing company in order to reduce this expenditure. Usually, medical billing companies take a fee of 7% of the total amount of billings are processed through their systems. While this can be a significant expense for any practice – the benefits are substantial given that these companies rarely have denied claims and there was always able to handle any issue that arises when an infrequent denial does occur.
The startup costs that are associated with a new medical billing company are relatively low. Generally, these businesses can be started for approximately $50,000 to $100,000 depending on the location and the number of medical billing specialists will be on staff from the onset of operations. The demand for these services does not wane in any economic climate, and given that the revenue generated from physicians offices are highly predictable – the revenues generated among medical billing companies are extremely predictable as well.
Given the extensive economic stability of these businesses, almost all financial institutions are willing to provide the necessary capital in order to start a new medical billing company. It should be noted that a medical billing company business plan will be required among any individual that is looking to raise capital for this type of business. This business plan should include a three year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page that features information that is in line with industry standards. As it relates to industry research, there are approximately 4,000 companies within the United States that provide medical billing services to physicians, surgeons, and medical clinics. The industry employs approximately 10,000 people and produces annual revenues in excess of $4.2 billion. In each of the last five years, annual payrolls have exceeded $2 billion.
Within the business plan, special attention should be paid to the demographic analysis that needs to be developed in order to have a laser focused marketing plan that targets physicians, group practices, and medical clinics. It should include an examination of annual revenues, annual profits, number of physicians on staff, number of nurses on staff, and the scope of their practice. This information can be easily sourced through a number of different private research firms that can issue reports specific for this type of purpose. There are also a number of marketing firms that maintain this information within a database – and as such, this information can be sourced relatively inexpensively. Within the business plan as well, a full examination of any local and regional competitors should be included. As some medical billing companies operate as just one person operating in a freelance capacity, examination and discussion regarding how these competitors will impact the way that the medical billing company does business should be included to.
A medical billing company marketing plan also needs to be developed. This marketing plan should focus substantially on directly contacting physicians, practices, and medical clinics within a 50 mile radius in order to develop a client base. Large packets of literature that showcases services of the business, expenses, and related information should be included within the documentation. It is also important that the medical billing company maintain an expansive website that clearly showcases the benefits of using the medical billing company in order to reduce insurance denials as well as boosting profits for any of the company’s clients. This website should be listed among all major search engines including Google, Yahoo, and Bing. While it is not necessary to maintain a presence on social media, most companies are producing and maintaining these pages so that people can read reviews about specific types of services. It is infrequent that a physician will leave a review on a social media page, but it is important that this type of pages maintained that many people now use a number of different channels to source potential service providers.
A medical billing company SWOT analysis should be produced as well. As it relates to strengths, these companies are completely immune from negative changes in the economy given that they are rendering a service to physicians and medical clinics. The gross margins generated from medical billing services are extremely high, and they are able to remain profitable and cash flow positive in nearly any economic climate. The underlying operating expenses can be somewhat high depending on the amount of staff and their experience.
For weaknesses, there is a significant amount of competition within this field given its economically secure nature and its profitability. As such, the founder of a new medical billing company needs to develop a highly focused marketing campaign and differentiating factors that will allow the business to easily obtain clients from the onset of operations. Additionally, this industry is constantly changing given the complexities of private insurance, Medicare, and Medicaid billing. As such, a significant amount of capital needs to be reinvested into continuing education as it relates to this industry.
For opportunities, many of these businesses will expand by acquiring third-party medical billing firms that are already in operation. This can be one of the quickest ways that these businesses can expand. Additionally, these firms can make significant investments into their marketing campaigns and other operational infrastructures in order to acquire new clients. Once these businesses are profitable, most financial institutions are willing to provide a significant working capital line of credit that can be used for expansion purposes.
For threats, the healthcare industry is constantly changing and an owner of one of these firms need to have a complete understanding of the industry at all times. As reimbursement rates for private insurance and publicly funded health systems decline, the revenues of the medical billing company will decline as well given that their income is based as a percentage of managed billings. It is important that the owner have an understanding of politics and given how Congress can frequently change the publicly funded system reimbursement rates.
Medical billing businesses do undergo a number of changes on a yearly basis, they are always going to be in demand among smaller physician practices, smaller group practices, urgent care facilities, and medical clinics. The complexities of this industry allow for third-party demand for outsourced medical billing services. There may be some risk associated with automation – it is still required that a person interpret the laws and reimbursement rates related to each service rendered to a patient. As such, automation within this field may be viewed as a positive as it will remove some of the grunt work related activities that are associated with a medical billing company.