How to start a medical practice checklist: 12 essential steps

This how to start a medical practice checklist covers 12 steps, from the business plan to opening day. Most physicians need 9 to 12 months to finish them. Credentialing sets the pace, because commercial payers typically take 60 to 120 days to approve a new provider.

Budget $70,000 to $250,000 or more, depending on specialty and location, and start credentialing before you sign a lease. The steps below give you the order, the timing, and the traps that push an opening date back.

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Key takeaways

The 12 steps cover planning, legal setup, financing, licensing, credentialing, premises, staffing, software, HIPAA, billing, insurance, and marketing.

Payer credentialing typically takes 60 to 120 days, so start it before you sign a lease.

Budget $70,000 to $250,000 or more, plus three to six months of operating expenses held in reserve.

Run the phases in parallel. By day 90, ten of the 12 steps should already be under way.

Practice management software like Pabau covers scheduling, intake forms, billing, and patient messaging in one system.

The 12-step startup checklist at a glance

The checklist below covers every major decision point, roughly in the order you’ll meet them. Some phases overlap. EHR selection happens alongside credentialing, and staffing runs parallel to office setup.

Plot those day ranges on a calendar and the numbering stops looking like a queue. By day 90, ten of the 12 steps are already running.

Build your medical practice business plan

Before you contact a bank or sign a lease, you need a medical practice business plan that holds up to scrutiny. Lenders require it. More practically, it forces you to stress-test your assumptions before they cost you.

Your plan should cover specialty focus, operating expenses, and expected payer mix. Add projected patient volume at months 3, 6, and 12, plus a 12-month cash flow forecast. The American Medical Association publishes a getting-started series for physicians entering private practice that follows the same planning sequence.

• Mission and vision: define your clinical focus and patient population
• Competitive analysis: identify other practices within your catchment area
• Revenue projections: model income by payer mix (insurance, cash-pay, Medicare)
• Operating budget: include rent, payroll, supplies, software, and insurance
• Exit strategy: plan for partnership or acquisition scenarios from day one

Choose a legal structure and register your business

Most physicians choose between a Professional Corporation (PC), a Professional Limited Liability Company (PLLC), and a sole proprietorship. Each carries different liability protection and tax treatment. Consult a healthcare attorney, because state law varies on which structures physicians may use, and some states require a PC.

Once your structure is chosen, register with your state and obtain an Employer Identification Number (EIN) from the IRS. Then open a dedicated business bank account and keep personal and practice finances separate from day one.

Secure financing and plan for startup costs

Startup costs for a medical practice typically run from $70,000 to $250,000 or more. The range depends on specialty, location, and whether you lease or buy your space. These figures are estimates, and a healthcare accountant can model your specific scenario.

Financing options include SBA 7(a) loans, conventional bank loans, and practice acquisition financing for physicians buying an existing practice. Lenders will ask for the cash flow forecast from your business plan, so finish that first.

Get licensed, credentialed, and enrolled with payers

This phase runs longer than most physicians expect. Start credentialing as early as you can, ideally before you sign your lease.

• State medical license: verify your state board’s current requirements and timeline (typically 60-90 days)
• DEA registration: required if prescribing Schedule II-V controlled substances; apply via the DEA Diversion Control Division
• NPI registration: free through the NPPES portal at nppes.cms.hhs.gov; get a Type 1 (individual) and a Type 2 (organization) NPI
• CLIA certification: required if your practice performs any lab testing beyond CLIA-waived tests; apply through CMS
• CAQH ProView profile: complete this universal credentialing application first, because 1,000+ commercial health plans accept it
• Medicare and Medicaid enrollment: done through CMS PECOS; Medicare enrollment typically takes 60-90 days

Commercial payer credentialing typically takes 60 to 120 days, and it varies by payer and by specialty. Plan your cash flow around that wait, because you cannot bill a plan you are not yet contracted with.

Set up your office and choose your EHR

Office setup and EHR selection happen in parallel. Don’t choose your EHR after you’ve committed to a space. The software drives workflow decisions that affect your floor plan, exam room count, and front desk layout.

Office setup checklist

• Negotiate a lease with a build-out allowance (often $20-$50 per square foot from landlords in medical corridors)
• Verify ADA compliance in your space design
• Source medical equipment through a group purchasing organization to reduce costs
• Set up supply inventory tracking from day one to avoid stock-outs

EHR selection for a new practice

Your EHR is the operational spine of your practice. Judge it on specialty fit, billing integration, patient portal capability, and total cost of ownership. Implementation typically takes 1 to 3 months, so plan it alongside staff training.

Solo and small practices have a narrower shortlist than a hospital-owned group, since the cost of a consultant-led rollout rarely fits the budget. Our comparison of the EHR for solo practice market covers the systems that install without one.

Ensure HIPAA compliance before opening day

HIPAA compliance is not a one-time checkbox. It takes policies, training, signed agreements, and ongoing documentation. The HHS Office for Civil Rights enforces the HIPAA Security Rule, which requires a written security risk assessment before you open.

• Privacy Policy and Notice of Privacy Practices: must be provided to every patient
• Security Risk Assessment: required under 45 CFR § 164.308(a)(1) before handling any patient data
• Business Associate Agreements (BAAs): required with your EHR vendor, billing company, and any third party handling PHI, under HIPAA Security Rule 45 CFR § 164.308(b)
• Staff HIPAA training: document initial training for all staff before opening, then repeat it annually
• PHI breach notification procedures: your policy must be written before you go live

The HHS summary of the HIPAA Security Rule requirements sets out the administrative, physical, and technical safeguards your policies have to cover. Work through it before opening day, not after a payer or a patient asks for it.

Set up billing, revenue cycle, and business insurance

Revenue cycle management decides whether your practice survives the first year. Claims submitted with errors get denied. Denials that aren’t worked within 30 to 60 days become write-offs.

• Select billing software or an in-house billing team with experience in your specialty
• Enroll with a clearinghouse for electronic claims submission
• Build your superbill with the CPT codes and fee schedule for your specialty
• Set patient payment policies before your first appointment, and collect at time of service where you can

Insurance coverage checklist: malpractice (claims-made or occurrence policy), general liability, workers’ compensation, property insurance, and cyber liability. Coverage minimums vary by state, specialty, and hospital affiliation, so consult a healthcare-focused insurance broker.

Market your new practice and build a patient base

A clean setup still fails if nobody knows you exist. Patient acquisition for a new practice needs both a digital presence and referral relationships.

• Google Business Profile: claim and optimize it before opening day, because it drives local search visibility
• Practice website: include specialty, location, accepted insurances, and an online booking link
• Physician directories: Healthgrades, Zocdoc, Vitals, and your specialty association’s directory
• Referral network: introduce yourself to primary care physicians and specialists who refer into your specialty
• Patient reviews: build a process to request reviews from satisfied patients, since reviews convert new patients

The tactics that fill a schedule in year one are not the ones that keep it full in year three. Our guide on how to grow a medical practice covers what comes after the launch push.

How long does it take to open a medical practice?

Most physicians need 9 to 12 months from decision to first patient. Six months is possible for a cash-pay specialty practice. An insurance-based primary care practice realistically needs 12 months or more once credentialing is factored in.

Common mistakes when starting a medical practice

Practice failures trace back to the same handful of mistakes. Knowing them in advance doesn’t guarantee you avoid them, but it gives you a fighting chance.

• Starting credentialing too late. Physicians who wait until the lease is signed are three to four months behind before they begin.
• Insufficient working capital. No insurance revenue arrives until credentialing completes, so reserve three to six months of operating expenses before opening.
• Skipping HIPAA compliance documentation. A missed BAA or an absent security risk assessment costs far more in penalties than doing it correctly at the start.
• Choosing the wrong EHR. An EHR that doesn’t fit your specialty slows every clinical encounter, and switching after 12 months is expensive and disruptive.
• Underinvesting in patient acquisition. Opening without a Google Business Profile and a working website means starting from zero, so build both 60 to 90 days ahead.

How Pabau covers the software steps on your checklist

A new practice usually buys scheduling, intake forms, charting, billing, and patient messaging from four or five separate vendors. Each one needs its own contract, its own BAA, and its own training session before opening day.

Practice management software like Pabau runs those jobs in one system, built for specialty and wellness practices. Appointments, digital forms, clinical records, invoices, and reminders share a single patient record, so nothing is rekeyed between tools.

Consolidating into one practice management app also means one vendor BAA to sign and one workflow to train staff on. Every subscription includes every feature, so a solo practice starts on the same system a three-site group runs.

Onboarding is structured rather than self-serve. Your team is configured and trained while credentialing is still pending. That is the one stretch of the launch when nobody is seeing insurance patients anyway.

Launch your practice on one software system

Pabau gives a new practice scheduling, digital forms, billing, and patient communications in a single platform. Fewer vendors to contract with, and one workflow to train your team on.

Book a demo

Conclusion

Opening a practice rewards planning in parallel. Put credentialing, licensing, and financing on the calendar together in month two. The remaining nine steps then have room to move without pushing your opening date.

Two decisions are expensive to reverse: your payer mix and your software. Both lock in workflows you will live with for years, so give them more deliberation than the lease.

Choosing practice management software before opening day saves a painful migration in year two. Book a demo to see how Pabau handles scheduling, intake, and billing for a practice that hasn’t seen its first patient yet.

Continue your research

Still shortlisting systems? Best medical practice management software compares the platforms a new practice is most likely to evaluate.

Worried about the rollout itself? EHR implementation sets out the data migration, configuration, and training steps in order.

Opening with two or three staff? Best EMR for small practice weighs the options that suit a very small team.

Need cash coming in before payers pay? Patient collections covers point-of-service payment policies that protect early cash flow.

Frequently asked questions