The demand for healthcare in the United States is growing at an alarming rate. According to the Centers for Medicare and Medicaid Services, healthcare spending in the US accounted for roughly 16.2% of the country’s GDP, or Gross Domestic Product, in 2008. That same year, the average American spent $7,681 on healthcare. The cost of healthcare is rising as well: premiums and co-pays for employer-sponsored health insurance have risen by 131% since 1999. Bloomberg reports that annual healthcare spending could increase to $4 trillion as early as 2015, double of what it was in 2006.
If you’re an entrepreneur, you should see this as an opportunity waiting to be seized. As the overall age of the population increases, so does the need for additional medicine, treatments, hospital stays, surgical procedures and diagnoses. As the need for healthcare increases, so does the need for businesses that can facilitate reimbursement from insurance companies and other payers for the services offered by hospitals, physicians’ offices and other healthcare settings.
Starting your own medical billing and coding business will not be easy. Anyone that tells you otherwise is lying. You’ll need to do the following, at an absolute minimum, in order to create a successful medical billing and coding business:
- Obtain a comprehensive understanding of medical coding and billing.
- Develop a business plan.
- Raise start-up funds.
- Set up your business.
- Market your business to hospitals and/or physicians’ office to build a client base.
- Manage your employees as your medical billing and coding business grows.
Even this is a gross oversimplification when you consider the full implications of each step, especially if you have no existing background in medical billing and coding. Fortunately, there are legitimately helpful resources available to those who do decide to take the plunge. There are also plenty of not-so-legitimate resources offered by individuals and companies that are only looking to take your money, money that you’ll desperately need when initially funding your business.
The Cost of Starting Your Own Medical Billing and Coding Business
It would be difficult to determine whether starting a medical billing and coding business would be a positive career move without first determining whether you can afford to do it. Consider some of the things that you’ll need to pay for, just to get your business off of the ground:
- Training in medical billing and coding. Depending on the route you choose, this could entail an online or classroom-based program from a medical billing and coding professional association ($1,000 to $2,500), or an associate’s degree in health information management or medical billing and coding from a reputable university ($10,000 to significantly higher, depending on where you go to school).
- Certification in medical billing and coding. This requires you to pay for, take and pass an examination costing roughly $300 to $400, plus the costs of study materials. Although you do not need certification in order to start your own medical billing and coding business, it will certainly raise your business’ appeal with potential clients.
- Basic office equipment, including a computer, phone, cell phone, fax machine, filing system, desk and chair. If you’re a bargain hunter, expect to pay at least $2,000 to $2,500 for all of this equipment. If you’re looking for quality, the figure easily approaches or exceeds $5,000.
- Connectivity. Keeping in touch with clients and making yourself readily accessible are two of the most important priorities for a medical billing and coding business. If you add up your land line(s), cell phone service and broadband Internet connection, you could easily be looking at $150 to $250 per month. This figure could double or triple if you purchase an Internet connection that’s actually designed for a business.
- Office supplies and reference materials, including insurance forms, paper, envelopes, discs, code books, insurance forms, etc. These will cost hundreds of dollars to start, and more in the long run considering that you’ll go through many of the supplies quickly.
- Medical billing and coding software. This is what you’ll use to process claims and complete your daily operations; it’s quite literally the heart of your business. You’ll pay at least $500 for high quality software.
- Office space. The cost of renting an office in your area will vary greatly depending on where you live, but you can expect to pay between hundreds and thousands of dollars each month. Obviously, you can scratch this expense if you plan on starting a medical billing and coding business in your own home.
How to Create Your Medical Billing and Coding Business
1. Seek Help
There are several organizations that cater to the needs of aspiring medical billing and coding business owners. The American Medical Billing Association, or AMBA, is one of the most trustworthy options. AMBA is a medical billing and coding professional organization that was established in 1998, and they offer a comprehensive MBAC business start-up kit for roughly $600. The kit includes software, instructional materials and training DVDs. Although this kit will hardly replace a standalone education in medical billing and coding, it does offer the basic tools necessary to get your company off of the ground. This program:
- Is backed by professional, certified medical billers and coders.
- Includes software that will actually facilitate the coding and billing process.
- Offers referrals from satisfied customers.
- Comes with customer support.
- Encourages you to check out their reputation with the Better Business Bureau.
- Is inexpensive compared to other programs offered by private companies with far less credibility in the medical billing and coding industry.
2. Develop a Business Plan
The core of any good business is a comprehensive, clearly composed business plan. Your medical billing and coding business is no different. A business plan will detail your goals and how you plan to achieve them. Consider including the following in your business plan:
- Business name: Choose a name that sounds professional and immediately describes the fact that your business deals with medical billing and coding. You’re trying to appeal to professional healthcare providers, not the general public.
- Mission statement: A few sentences about your company’s long-term goals and purpose.
- Your team: Who, if anyone, will be working for you?
- Problems and opportunities: Have you observed any problems in the medical billing and coding industry? Does your business plan to address them?
- Business concept: How will you define your business? Will it handle all aspects of the medical billing and coding process? Do you intend to work primarily with hospitals, physicians or both? Will your business emphasize coding over billing or vice versa?
- Form of business: Will you file your business as a corporation, limited liability company (LLC), partnership or sole proprietorship? Why?
- Goals: Where do you see your business in 1 year? What about 5 years or even 10 years?
- Finances: How do you intend to initially finance your business? Will it make enough money to meet your long-term goals, such as expanding and adding more employees?
- Key issues: What sort of issues and challenges do you expect your medical billing and coding business to encounter, short-term and long-term?
3. Establish an Office
This could be your home or a rented commercial space. If you do choose to work from home, you’ll thank yourself later for creating an actual office space. Ideally, this will be a separate room dedicated exclusively to your business, free of distractions. As a bonus, you’ll receive a tax credit if you establish a home office that is only used for work.
Before you decide on where to place your office, it’s important to examine your local zoning requirements. Medical billing and coding businesses receive frequent in-person visits from clients and parcel deliveries. You may need to place a sign outside to announce the fact that you’re running a business. You may also need to acquire the proper licenses and permits in order to make your business legal in your area.
4. Market Your Business
And now for the hard part: actually getting paid. In order for your medical coding and billing business to operate, you’ll need to find clients. You’ll also need to give them reasons why you’re a better option than the coders and billers they’re currently working with. The following tips should help:
- Talk to your own doctors. Tell them about your business. Would they be interested in your services? Do they know any other doctors that might be interested as well?
- Create some brochures and business cards. Mail them or drop them off at local hospitals and physicians’ offices.
- Be proactive when you do secure a meeting with a potential client. Professionalism is crucially important. After a meeting, follow up with a call.
- Be patient. Networking is a gradual process that can become a rapid one once you get the proverbial ball rolling. You may be discouraged if you’re unable to quickly find interested clients. Stick with it. If you still find yourself with a lack of work, take it as an opportunity to seek additional training and add more credentials to your title. You may be surprised to find a massive influx of clients simply because you’ve been certified.
About our expert. Jan Jacobs has worked in medical offices since the early 1980's. Ms. Jacobs has worked for M.D.'s and D.O.'s in primary care and specialty care. She is employed as a senior medical biller and has been at her current job for nearly 10 years, where she uses three different billing systems.
