Do you want to start a medical billing & coding business from home? If YES, here is a complete guide to starting a medical billing business with NO money and no experience.
Okay, so we have provided you an in-depth sample medical billing business plan template. We also took it further by analyzing and drafting a sample medical billing marketing plan backed up by actionable guerrilla marketing ideas for medical billing businesses. In this article, we will be considering all the requirements for starting a medical billing business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Medical Billing and Coding Business?
If you have been looking for a way to work in hospitals but not as a health care professional, then starting a medical billing business might be the next best thing for you. Starting a medical billing business means that you get to help hospitals and doctor’s offices process claims with insurance companies and then try to make up the balance by having the patients pay up the balance due. This is a business where you will have to deal with too much paper work and so it is essential that you have the necessary experience required so that you can efficiently file insurance paper work and patients’ billing.
Once you have the necessary experience needed for you to start this business, you will also need to earn the required certification before you can start and run your medical billing business legally in the United States of America. You can earn this certification by either attending a traditional brick and mortar school or via online.
Whichever means you choose is fine as long as you check that the schools, especially the ones online, are duly accredited. The purpose of getting the necessary certification before starting your medical billing business is that it gives your business a boost and allows you to stand out from other competitors.
Just like any business, it is necessary that you conduct a thorough market research before starting this business. A market research allows you to gather the necessary facts that will allow you understand the industry you intend to operate in.
Starting a Medical Billing and Coding Business from Home – A Complete Guide
- Industry Overview
According to IBISWorld, the medical billing industry is worth $3 billion annually with an 8.8 percent growth between a five year period (2011 to 2016). There are more than 2,300 medical billing businesses in the United States of America employing over 7,000 people.
The industry is valued that high due to the rising demand for medical billing services, which has then led to more operators entering into the industry. Demand in this industry has risen mainly due to the growing population of the baby boomers who especially in the year 2016, required medical billing services after growing visits to the doctors.
Over the next five years (2016 to 2021), the industry has been predicted to experience steady growth especially as there will be more senior citizens who will make their demands via Medicare. Also within this period, the number of people with insurance is expected to rise in line with healthcare reforms which will then allow those with pre-existing conditions to be able to receive insurance. This growing demand especially via senior citizens will help the industry not only have huge demands which will be taken care of by operators but this will also boost revenue for the industry.
It should be noted however that regardless of the huge demands experienced in this industry, the market share concentration is still quite low especially as only one operator accounts for more than 14 percent of the total industry revenue, while the remaining operators in the industry generate less than 5 percent each in revenue for the industry.
Most of the operators in this industry operate on a large scale and therefore provide a variety of services such as claims adjustment, risk and consulting. According to IBISWorld, the largest player in the industry caused market share concentration to increase with its acquisition streak and a growing pace that has outpaced industry’s growth.
According to a research by Grand View Research, Inc. in 2015, the medical billing outsourcing market was worth over $6 billion and has been predicted to reach $17 billion by 2024. This is largely due to the fact that medical billing has become an intricate part of medical practice, especially as there have been several challenges from in-house billing processes especially with untrained staff, lack of proper financial policy, improper IT structure, as well as billing errors.
The challenges are why most hospitals and doctors’ offices prefer to outsource their medical billing processes; 95 percent of most independent physicians have stated that they prefer outsourcing their medical billing processes to running one in house.
Globally, North America has the highest revenue growth in this industry. The United States has had rapid changes in its healthcare structure and with rising healthcare costs have been the major driver in the North American region. In the industry, consolidation has been one of the major factors helping the growth of the market.
Hospitals are one of the largest clients of medical billing companies and provide the highest revenue especially with the rising healthcare costs which has caused profits to decline for hospitals and which has seen them turning to medical billing businesses to help them manage their revenue.
The medical billing market is segmented into in-house and outsourced billing according to Grand View Research, Inc. As at 2014, the total costs that were incurred by providers for in-house operations amounted to $252 billion. These costs were inclusive of running costs such as IT costs and maintenance cost for in-house billing team as well as administrative team.
This is in comparison to outsourcing which saw a significant reduction in costs for hospitals including fewer errors. Also, outsourcing meant that doctors and physicians could now concentrate on their primary duty which is to provide the best possible care to patients without having to worry about managing billings and recovering claims.
Even though hospitals had the highest market share as at 2015, the positive trend was held in check by increasing demands for medical billing outsourcing services by physician offices and private clinics. However, hospitals are still expected to lead in generating the highest revenue for this industry as they had more claim volumes compared to independent physicians and private clinics. Globally, the medical billing outsourcing market is broken down into North America, Europe, Asia Pacific, Latin America as well as the Middle East Africa, with North America providing the most revenue for the market.
Starting a Medical Billing and Coding Business from Home – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of a medical billing business is not restricted to just large scale hospitals alone, but involves independent physicians, mid and small scale hospitals as well as private clinics. This is due to the fact that medical billing businesses help their clients not only cut cost but to also be more efficient in managing their operating margins.
Therefore, if you are looking to limit the demographics of your medical billing business to just hospitals alone, you would be seriously limiting the scope with which your business can run. You should therefore strive to make your demographics more encompassing.
List of Niche ideasWwithin the Medical Billing and Coding Business That You Can Specialize in
Because the medical billing business is one that helps hospitals and independent physicians process and investigate claims with a view to helping them get unpaid balances from their patients, can be a very tedious work especially if you are just starting out and have not clearly identified which niche you intend to work in; this is why it is important that you conduct a market research on the industry so that you are able to identify what niche you would best be able to offer your services in especially with the growing adoption of outsourcing by hospitals and independent medical practitioners. In identifying your niche, it would allow you to be able to stand out from a growing competitive industry.
Therefore, below are some of the niche areas you may decide to focus on when starting your own medical billing business;
- Policy and Claims Examination
- Claims Processing
- Claims Investigation
- Back-office, Administrative Support and Consulting
The Level of Competition in the Medical Billing Services Industry
The level of competition in the medical billing industry is mostly dependent on the location of the business, which is why to be able to effectively compete in the market, large scale operators usually look to set up in multiple locations.
Due to the sensitivity of the data being handled by medical billing businesses, it is necessary that physical contact be established so that appropriate instructions can be given. Also, most hospitals have not totally gone digital with all their data and information which means that a medical billing operator would have to go to their clients to physically extract the information they need. What most clients are however looking for when outsourcing their medical billing system is that there are less errors in their billing systems, customer information is safe and that they are in the long run able to save much more.
Due to the increasing adoption of medical billing services, there have been a growing number of entrants into the market which has led to there being stiff competition amongst the operators. The market concentration for this industry is very low as there are only very few well-known brands, however, this has not in any way diminished local competition. This means that if you intend going into this business in the United States of America, you would need to be prepared to deal with competitors.
List of Well – Known Brands in the Medical Billing Industry
According to a report by IBISWorld, the medical billing market has a very low market concentration with one major company contributing about 15 percent of the total revenue for the industry. Even though this might be the case, it doesn’t mean that there are no other well know or popular brands in the industry even though they might not be as popular as the top company. There are several factors that allow a business to be well known and this includes; quality of service, success rate and customer relationship with their clients.
Below therefore are some of the leading medical billing businesses in the United States of America;
- HMS Holdings
- McKesson Corporation
- Experian Information Solutions, Inc
- Accretive Health, Inc.
- GE Healthcare
- The SSI Group
- Cognizant Technology Solutions
- HCL Technologies
A growing number of large healthcare providers have started demanding for medical billing companies to manage their billing processes. This is because these large healthcare providers understand the economic benefits of having medical billing companies handle their billing processes as they are able to achieve more high-volume transactions whilst also maximizing their margins. This has led to a growing realization globally of the benefits of medical billing processes as standard healthcare providers in regions such as Asia Pacific and Latin America have started incorporating this as well.
The federal government has had a hand in the reason why most healthcare providers are demanding the services of medical billing companies. This is as the government provides most of the funds into the healthcare industry with the demand that healthcare systems become more efficient in order that they can fully utilize the monetary allocations. Developed countries are increasing their spending on healthcare especially as a significant portion of its population are regarded as senior citizens and also due to a rising increase in chronic diseases.
Even though the medical billing market is growing, there has been a greater need for medical billing companies to be more transparent and help their clients meet certain goals such as ROI maximization and forging a balance between expenditures and earnings as well as helping to shrink the cash conversion cycle.
All these growing responsibilities will however see the medical billing market grow by a single digit between the periods of 2016 to 2021, especially as challenges such as shifting regulations could be a growing concern for operators in this industry.
Part of what has helped the medical billing industry to grow to its current state has been the belief by healthcare firms especially small and medium scale ones that outsourcing their billing processes helped in not only cutting operational costs but also building up efficiency as well.
Another reason is the fact that healthcare organizations have not shown the necessary enthusiasm in setting up an in-house billing department and also fully training the staff that would work there, thereby leading to hospitals trusting these third parties with in-house information.
Starting Your Medical Billing Company from Scratch vs Buying a Franchise
Buying a franchise usually means agreeing to have majority of the decisions made for you such as operating activity, marketing and promotions. Every company selling a franchise usually has benefits which an entrepreneur can tap from; however, instead of getting swayed by benefits, you have to look into why getting that franchise would best work for your company so that you do not end up wasting your resources on a franchise that would not favor you in the long run.
Starting your business from scratch is one way of getting to know all about the rudiments of running a business as you would need to be involved in all the important aspects regarding the business. However, in starting from the scratch, you will be able as an entrepreneur to be in control of your business and make changes that you feel will be in the best interests of your medical billing business.
Possible Threats and Challenges You Will Face When Starting a Medical Billing Company
Every entrepreneur going into business must understand and appreciate the fact that the business will likely encounter certain threats and challenges and then have laid down plans that will combat these threats and challenges whenever they occur so that they would not be detrimental to the business.
Therefore some of the threats and challenges that you are likely to face when starting your own medical billing business are; changing government regulations, increased competition from already existing competitors, new entrants offering same services and starting up in same location and an economic downturn.
As earlier stated, there is nothing you can do about threats and challenges as an entrepreneur as they will always crop up. The best you can do is to have laid down plans and be proactive also.
Starting a Medical Billing and Coding Business from Home – Legal Matters
- Best legal entity to use for this type of business
Choosing the best legal entity for your medical billing business is very important and this is due to the fact that whatever legal entity you choose for your business will determine how far your business will go. Also, choosing a legal entity for your business determines how your business will be taxed, the ease at which you can set up the legal entity and the extent of your personal liability.
In the United States of America, there are five legal entities that you can choose from when starting your medical billing business and they are; sole proprietorship, partnership, corporation, S corporation, Limited Liability Company (LLC) or Limited Liability Partnership (LLP). Having an attorney or an accountant help you choose which legal entity would be best for your medical billing business is your best bet.
The corporation form of legal entity is one that is very complicated and hard to set up and so usually requires the input of an attorney. In the corporation, the business is seen as a separate legal entity from the owners. This is particularly useful because it protects the owners from any sort of liability to their personal assets.
A corporation can be divided into the S Corporation and the C Corporation. The S Corporation is usually more preferred by entrepreneurs because owners have liability protection and also have tax benefits as well and so they aren’t subject to double taxation like that of the C Corporation.
The Limited Liability Company (LLC) form of legal entity is one that has become the most preferred by entrepreneurs probably due to the fact that it has several advantages and yet it isn’t so difficult in terms of regulations and control. The LLC has the tax benefit of a partnership and also the owners’ liability protection of a corporation but has no shareholder limitation and owners here can be involved in the operation of the company.
Catchy Business Name Ideas Suitable for a Medical Billing Company
Choosing a suitable name for your medical billing business is very important especially as the name you choose for your business determines how your business will be perceived by the target market. It is essential therefore that you choose a name that is not only unique and memorable but also one that indicates the industry you are in.
If you are therefore considering starting your own medical billing company and are thinking of what names to consider, here are some below;
- Joe Cole Medical Billings Inc
- Prime Center Healthcare Solutions
- Future Scope Billings
- Andrew Yates Healthcare Inc
- Cast Ice Medical Billings and More
- Clinton Medical Solutions
Having insurance policies if you intend to operate any sort of business in the United States of America is a must. Having the right insurance policies protects you personally from any sort of legal issues or injuries that might arise during the course of running your business.
Therefore, before starting your medical billing business, it is essential that you find out what insurance policies you would need for your business in order to be able to set aside the right budget. It is important that you seek the services of an insurance agent or broker to help you determine what would best suit your medical billing business.
Below therefore, are some of the basic insurance policies that you should consider purchasing if you intend to start your own medical billing business in the United States of America;
- General Liability Insurance
- Property Insurance
- Business Owner’s Policy
- Errors & Omissions Insurance
- Cyber Liability Insurance
- Workers’ Compensation Insurance
- Umbrella Insurance
Intellectual Property Protection/Trademark
In every business, having the right ideas can sometimes lead to having valuable assets and with the volatility of the business environment, it has become increasingly difficult to protect these ideas without having to set up intellectual property protection. Intellectual property protection helps cover a company’s most precious assets like data, patents, trademarks, designs, domain names, copyrights and trade secrets.
However, applying for an IPP yourself can be very time consuming so it is best engage the services of an attorney who has experience in this industry to help with filing an application with the United States Patent and Trademark Office (USPTO).
Is Professional Certification Needed to Run Starting a Medical Billing and Coding Business?
Having to handle patients’ data, insurance claims and help hospitals and independent practitioners in managing and processing their bills are very important tasks and so you must be ready experience wise and also have certain certifications to not only be able to get jobs from clients but also to stand out from your competitors in the industry. This industry strongly encourages operators to get varied certifications as this will not only show commitment towards the business but will also help boost your profile.
Below therefore 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
- Instructor Certification
It is important to note that the more qualifications you attain, the easier it will be for you to secure large sized hospitals for your medical billing business.
List of Legal Documents You Need to Run a Medical Billing Company
Whatever business you intend starting in the United States of America, it is vital that you have the necessary documentations in place so that you do not run into problems with the law. The medical billings business is such a serious one and as such, if you do not have all your documentations in place, you would be at risk as you might not only be penalized financially, but you might also be banned from running the business anywhere in the United States of America.
Below therefore are some of the basic legal documents that you would need to have in place before starting your own medical billing business in the United States of America;
- Certificate of Incorporation
- Operating Agreement
- Business License, Permit and Certification
- Business Plan
- Employment Agreement
- Contract Documents
- Non-Disclosure Agreement
- Insurance Policies
- Employer Identification Number (EIN)
- Federal Tax Identification Number
Financing Your Medical Billing Company
Every entrepreneur looking to start a business needs to have the necessary funds with which to run the business till it starts to generate revenue and sustain itself and the medical billing business is no different. Sourcing for finance is always tasking for any entrepreneur, which is why it is necessary to have a business plan available that will help convince potential investors of your commitment towards the business you intend starting and why they need to invest in your business.
Below therefore are some of the financing options you can explore when seeking for start-up capital for your medical billing business;
- Use personal savings and sale of stock to form part of start-up capital
- Source for soft loans from friends and family members
- Apply for loan from bank
- Approach private investors for loan in exchange for equity or partnership deal
Choosing a Suitable Location for your Medical Billing and Coding Business
The environment which you intend to run your business from also matters a lot when it comes to choosing a suitable location for your business. If for instance your medical billing business is going to be operating from a countryside where there are two large scale hospitals and a handful of private clinics and independent physicians, and you have little to no competition, then running your business from home might not be such a bad idea.
If you are running your business from home, you will need to ensure that you carve out an office section so that you do not mix up sensitive documents or have your kid or pet mess up your office area, which could lead to you being sued. Have a cabinet to store up all your files, just as you would if it were in a commercially leased or rented facility.
If your intention however, is to lease or rent a facility, then you must engage the services of a real estate agent who has thorough knowledge about your kind of business to help you choose what will be best for your medical billings business in terms of price and nearness to the target market.
The facility you have chosen must be conspicuous, within your budget and easily accessible for your employees and clients. If you choose a place that is too far out, you will need to spend more in promoting the place to your target market.
Starting a Medical Billing and Coding Business – Technical & Manpower Details
Any entrepreneur intending to start the medical billing business will be able to start the business without much financial stress as this is a business that is not capital intensive. If you are running the business from home, better for you as you will not have to deal with office expenses and you will have almost no inventory. Most of what you will spend your expenses on will be getting the right office equipment and tools.
One of the tools that you will be required to splurge on is the medical billing software. You have to be careful in selecting the right software for your business as most of the medical billings software come with different capabilities.
If you prefer to build your own custom medical billings software, then it might be best for you to buy a bare-bones software and engage the services of an ICT or systems administrator to have it customized to your own taste. It is important that you settle for the best as this is where your whole business will be run on.
The kind of equipment and tools you would need to start and run your medical billing business effectively are; a computer system, printer, fax machine, software, modem, reference materials, phone (landline and cell), HCFA 1500 forms, postage, office supplies and stationery.
In building the right business structure for your medical billing business, it is imperative that you hire the right people who have the necessary experience and qualification. Therefore, those you would need to hire are; Chief Executive Officer (CEO), an admin and human resources manager, an accountant, a business development and marketing executive officer, ICT consultant, front desk officer and cleaner.
From the above breakdown, you would need at least 7 key staff to be able to run your medical billing business efficiently and successfully.
The Service Delivery Process of a Medical Billing Company
The medical billing process consists of a series of steps and is not very complicated as most think. The steps include; registering patients and ensuring that the patient’s financial responsibility is confirmed. This means that the patient’s insurance information is checked to see if it will cover for the expenses that will be incurred, if it won’t, the patient must agree to financing what is left from their own pocket.
Once the patient has submitted all the required documents and has checked in and out, a super bill is then created by the medical coder and sent via software to the medical billing company.
The super bill is then put into a claim form by the medical biller with the cost of the patient’s procedures. However, the total cost won’t be sent to the patient but only what was initially agreed between the patient and the provider as what will be paid till the overall cost is exhausted. The medical claim prepared must be compliant to industry standard. This is then sent to the payer (usually the insurance company) who can either agree with the claim or reject it.
Once the payer has agreed to pay, the medical biller then generates a statement for the patient which will state what portion the payer has agreed to pay for. It is after this has been done that the patient can then pay up the remaining balance.
Starting a Medical Billing and Coding Business – The Marketing Plan
- Marketing ideas and strategies
Marketing is a very essential part of any business that is out to make profit. Marketing is among the core aspects of starting a business and therefore you would have to create the right marketing strategies that will allow you compete favorably against your competitors and stand out but also allow you to penetrate your intended target market.
In creating effective marketing strategies for your business, you have to conduct a thorough market research. The information you have gathered from your target market is one that should be accurate so that you do not end up using wrong data that would affect your marketing strategies and analysis.
A market research allows you to identify your target market and their identifiable characteristics, know what it is they expect from you and what you should expect from them as well. It also allows you to gauge how your competitors are faring and how you can best them and stand out in the industry.
Having a budget for your marketing campaign is very important because it allows you not to waste resources unnecessarily in trying to get your target market to notice your services and patronize them. Below therefore are some of the platforms you can use to market your medical billing business;
- Introduce your medical billing business formally to hospitals, private clinics and independent practitioners by sending a letter and attaching a brochure containing your services, contact information and rates
- Place adverts about your medical billing business in newspapers and magazines as well as on radio and television stations
- Empower your marketing executives to help market your medical billing business to potential clients
- Encourage your loyal customers to help refer you to others
- Distribute handbills and business cards in strategic locations
- Use social media platforms such as Facebook, Twitter, LinkedIn and Google Plus to market and promote your medical billing business
Possible Competitive Strategies for Winning your Competitors
Therefore, some of the competitive strategies that you should put in place for your medical billing business are; giving your customers quality service, affordable rates, offering additional services and keeping your clients informed of trends in the industry.
Strategies to Boost Your Medical Billing Brand Awareness and Create Your Corporate Identity
Every entrepreneur that has established a business to make money knows the importance of creating strategies that would help boost the awareness of the brand and also help create a corporate identity for the business. The medical billing industry is filled with competition and it is therefore pertinent that you have laid down strategies that would enable you get the attention of your target market.
Already established businesses that know the importance of promoting their businesses do not mind spending a fortune each year to do this. If your intention is to create a business that is reckoned with nationally, then your best bet is to look for means to promote your business and create a corporate identity for your brand.
There are many publicity consultants whose services you can engage to help you craft the intended publicity strategies for your business in line with your intended goals and objectives. Below therefore are some of the platforms that you can use to promote and create a corporate identity for your medical billing business;
- Ensure that your medical billing business is in medical yellow pages as well as online directories
- Install billboards in strategic locations to create awareness for your medical billing business
- Distribute handbills and business cards in strategic locations
- Create an interactive website and use this to promote your business
- Use social media platforms such as Facebook, Linkedin, Google Plus and Twitter to promote your medical billing business
- Design a distinctive logo for your medical billing business