How Much Does It Cost To Start A Medical Practice?

Doc Digital SEM Logo
Subscribe To Our Newsletter For The Latest Digital Trends.
How Much Does It Cost To Start A Medical Practice

The cost for starting a small to medium-sized medical practice in the United States can range from $100,000 to $500,000 or more. Costs vary widely based on factors such as location, specialty, practice size, and market competitiveness.

The actual cost can be significantly higher for practices in certain high-cost areas or those requiring specialized equipment or facilities.

For instance, the average cost of starting a small to medium-sized dental clinic in the United States will typically be higher than other practices, and can easily range from $250,000 to $500,000 or more.

What Influences The Actual Start-up Costs of A Medical Practice?

Launching a medical practice is a significant undertaking, and one of the most crucial aspects of the planning process is understanding the factors that influence the actual startup costs. The cost can change a lot depending on where you want to start your practice, what type of medicine you’ll focus on, how big your practice will be, and regulatory requirements. Below, we included all of the main costs associated with medical practice startups. Physicians and healthcare entrepreneurs can consider these costs to make informed decisions about launching their own medical practices.

1. Location Costs

The cost of renting or purchasing office space can vary widely depending on the location. Urban areas generally have higher costs than rural areas. You’ll need to consider factors like rent or mortgage payments, property taxes, and utilities.

A formula you can use to find out what you may be paying in office space costs is:

(Estimate of Square Space Needed) x (Average Cost of Office Space Per Square Foot Annually In Your Desired Location) = Average Monthly Office Space Cost.

In order to get how much office space you will need, you can budget for 1000 to 1500 square feet per physician.

Once you know how big your office space will need to be, you can use the average cost per square foot in your desired location to see how much you will be spending monthly to have an office space. Office spaces in Fort Lauderdale, for example, can range from $20 to $40 per square foot annually for Class A space, while Class B and Class C spaces tend to be somewhat more affordable.

An office space that is 3,000 Square feet in Fort Lauderdale that costs $30 per square foot yearly will end up costing you around $90,000 a year, or $7,500 a month!

2. Medical Equipment and Supplies Costs

Medical Supply Room

This includes examination tables, medical instruments, computers, diagnostic equipment, and other supplies necessary for your practice. The cost can range from thousands to hundreds of thousands of dollars depending on your practice. To get an idea of what medical supplies you will need, you can look at Comprehensive List of Basic Medical Supplies to get an idea of all the items you will need. Buying Medical Equipment can be a daunting task, and sometimes it may be better to rent a medical equipment versus purchasing it.

Medical practice equipment can range from $2,000 to $100,000 USD or more for speciality devices. An option to bring the costs of medical supplies down is to purchase them used. Use medical equipment can cost around 30 to 40% less than new ones. We suggest working with medical supplies to negotiate the best prices when starting your first medical start-up!

3. Staffing Costs

Another cost associated with starting a medical practice is your staffing costs. You’ll need to hire medical staff, such as nurses, medical assistants, receptionists, and possibly other healthcare professionals. The cost of salaries, benefits, and training can add up, especially in the initial first couple of months! Below we included average salaries for staff based on title and experience:

Physician

Physician salaries can vary widely based on specialty, experience, and location. In the United States, primary care physicians might earn an average annual salary of $200,000 to $250,000, while specialists may earn more.

Nurse Practitioner or Physician Assistant

Nurse practitioners and physician assistants often earn salaries in the range of $90,000 to $120,000 annually.

Registered Nurse (RN)

RN salaries can vary depending on experience and location but typically range from $60,000 to $100,000 per year.

Licensed Practical Nurse (LPN)

LPN salaries are usually in the range of $40,000 to $50,000 per year.

Medical Assistants

Medical assistant salaries can vary, but they often earn between $30,000 and $40,000 annually.

Receptionist or Front Desk Staff

The salary for receptionists or front desk staff can range from $25,000 to $40,000 per year, depending on experience and location.

Administrative Staff

Administrative staff, such as office managers, billing specialists, and medical coders, can earn salaries ranging from $40,000 to $70,000 or more, depending on their roles and responsibilities.

Support Staff

This category includes positions like medical technicians, phlebotomists, and radiologic technologists. Salaries can vary widely based on the specific role and level of certification.

Other Healthcare Professionals

Depending on the practice’s specialization, there may be additional healthcare professionals, such as physical therapists, dietitians, or social workers, each with their salary ranges. Make sure to account for their salaries as well if needed.

4. Licensing and Accreditation Costs

There may be fees associated with obtaining medical licenses, malpractice insurance, and accreditation for your practice.

Here are rough estimates of some common licensing and accreditation costs for a medical practice:

  1. State Medical License: The cost of obtaining a state medical license for a physician can range from $300 to $1,500 or more, depending on the state.
  2. Drug Enforcement Administration (DEA) Registration: DEA registration, required for prescribing controlled substances, typically costs around $731 for three years.
  3. National Provider Identifier (NPI): NPI registration is generally free.
  4. Accreditation: Accreditation fees can vary based on the accrediting body and the size of the practice. On average, the initial accreditation fee can range from $3,000 to $10,000 or more. Annual maintenance fees may also apply, ranging from $1,000 to $5,000 or more.
  5. State-specific Licenses and Permits: Costs for state-specific licenses and permits vary widely by state and practice type. These licenses and permits may range from a few hundred to several thousand dollars.
  6. Ongoing Maintenance Fees: Some accrediting bodies charge annual or periodic maintenance fees to maintain accreditation. These fees can range from $500 to $2,000 or more per year.

These are rough estimates, and actual costs can vary widely depending on the specific circumstances of your medical practice. It’s crucial to research the specific licensing and accreditation requirements in your state and consult with experts or regulatory bodies for precise cost estimates tailored to your situation.

5. Legal and Regulatory Compliance Costs

Legal fees for setting up your practice, as well as ongoing compliance with healthcare regulations and requirements, can be significant. Below are some averages and samples of legal fees that may be associated with your practice:

  1. Medical Malpractice Insurance: The cost of medical malpractice insurance can vary significantly depending on the specialty, location, and coverage level. Annual premiums can range from a few thousand dollars to tens of thousands of dollars or more.
  2. Healthcare Attorney Fees: Costs for legal services to establish and maintain legal compliance can vary based on the complexity of your practice and legal needs. Hourly rates for healthcare attorneys can range from $200 to $500 or more.
  3. HIPAA Compliance: Ensuring compliance with the Health Insurance Portability and Accountability Act (HIPAA) may involve training, security assessments, and the implementation of policies and procedures. Costs can vary, but training and assessments may range from $1,000 to $5,000 or more.
  4. Medical Billing and Coding Compliance: Compliance with coding and billing regulations may require ongoing training and audits. The cost can vary, but training and audits may range from a few hundred to a few thousand dollars annually.
  5. Credentialing and Privileging Fees: If your practice contracts with insurance companies and healthcare facilities, there may be fees associated with credentialing and privileging. Costs can range from a few hundred to a few thousand dollars per provider.
  6. Regulatory Reporting Fees: Depending on your practice and location, there may be fees associated with regulatory reporting, such as those required by state health departments or federal agencies. Costs can vary.

6. Furniture and Office Supplies Costs

Office furniture, waiting room furniture, and general office supplies need to be budgeted for. Below you can find the most common office supplies with costs associated with them.

  1. Office Furniture: This includes desks, chairs, examination tables, waiting room furniture, and cabinets. The cost can vary widely based on the quality and brand. On average, you might budget between $5,000 to $15,000 or more for office furniture.
  2. Medical Equipment Furniture: Medical equipment such as examination tables, medical stools, and specialized furniture can range from $500 to $3,000 or more per item, depending on the quality and features.
  3. Reception Area: Furniture for the reception area, including chairs, a reception desk, and a coffee table, might cost between $2,000 and $5,000 or more.
  4. Office Supplies: This includes paper, pens, office stationery, and basic administrative supplies. Budgeting around $1,000 to $2,000 per year for office supplies is a common estimate.
  5. Patient Education Materials: Costs for patient education brochures, posters, and displays can vary depending on the quantity and quality of materials. Budgeting a few hundred to a thousand dollars per year is typical.
  6. IT Equipment: Computers, printers, scanners, and other IT equipment can range from $1,000 to $3,000 or more per workstation.
  7. Medical Supplies: While not office supplies, medical practices also need various medical supplies such as gloves, gowns, masks, and exam table paper. These costs can vary based on usage but might amount to a few hundred to a few thousand dollars per month.
  8. Cleaning Supplies: Costs for cleaning supplies and janitorial services to maintain a clean and sanitary environment can vary. Budgeting several hundred dollars per month is common.

7. Marketing and Promotion Costs

When starting-up a medical practice, you will need to also budget for marketing and advertising to attract patients to your practice. Without the proper digital marketing efforts, no one will know that you opened a medical practice! Here are some general costs of hiring a professional medical marketing agency to help you grow your clinic:

  1. Website Development and Maintenance: Building and maintaining a professional website can cost anywhere from $2,000 to $10,000 or more initially, with ongoing maintenance costs ranging from a few hundred to a few thousand dollars per year.
  2. Search Engine Optimization (SEO): SEO services to improve your website’s visibility in search engines can range from $500 to $5,000 or more per month, depending on the level of competition in your area.
  3. Pay-Per-Click Advertising (PPC): Running PPC advertising campaigns on platforms like Google Ads can cost from a few hundred to a few thousand dollars per month, depending on your keywords and target audience.
  4. Social Media Advertising: Costs for running paid social media advertising campaigns on platforms like Facebook and Instagram can range from $200 to $2,000 or more per month.
  5. Content Marketing: Creating and distributing high-quality content through blogs, newsletters, and other channels can cost several hundred to a few thousand dollars per month for content creation and distribution.
  6. Email Marketing: Email marketing software costs vary and can cost you anywhere from $400-$2,000 or more a month depending on the number of subscribers. Platforms like Mailchimp or Constant Contact can cost anywhere from $10 to $50 per month, but costs will also depend on the number of subscribers you have.
  7. Print Marketing: Costs for printed materials like brochures, flyers, and direct mail campaigns can vary widely based on quantity and design, but a campaign might cost a few thousand dollars or more.
  8. Marketing Consultation: Hiring a marketing consultant or agency may involve upfront fees or ongoing retainer fees, which can range from a few hundred to several thousand dollars per month.

At Doc Digital SEM, we enjoy working with medical start-ups because we get to build the brand from zero! This allows us to strategically brand your medical practice along with creating digital platforms that integrate with all of your systems. We work hard with our medical clients to improve retention, online visibility, and overall branding! Contact One of Our Medical Marketing Experts to see how we can help you plan your digital marketing in stages to prepare for your grand opening!

8. Electronic Health Records (EHR) System

Electronic Health Record System (EHR)

Implementing an EHR system can be costly but is essential for managing patient records efficiently and meeting regulatory requirements. EHR systems typically range from $4,000 to $75,000 a year. The more comprehensive the EHR system is, the more it will cost to have this set up. Costs will mainly be associated with:

  1. Initial Setup and Implementation
  2. Software Licensing
  3. Monthly Subscription Fees
  4. Hardware Costs
  5. Training and Support
  6. Data Storage
  7. Upgrades and Maintenance
  8. Integration
  9. HIPAA Compliance and Security
  10. Customization

9. Insurance Costs

Insurance costs for a medical practice can vary widely depending on factors such as the size and type of practice, location, services offered, and coverage limits. Here are some average cost ranges for insurance types commonly required for a medical practice:

  1. Medical Malpractice Insurance: The cost of medical malpractice insurance, also known as professional liability insurance, can vary significantly based on specialty, location, and coverage limits. On average, annual premiums for medical malpractice insurance might range from $5,000 to $20,000 per physician or more.
  2. General Liability Insurance: General liability insurance, which provides coverage for non-medical-related claims, may cost a few hundred to a few thousand dollars per year, depending on the practice’s size and location.
  3. Property Insurance: Property insurance for your office space and equipment can vary based on the value of your assets and location. Premiums might range from $1,000 to $5,000 or more annually.
  4. Business Owners Policy (BOP): A BOP combines general liability and property insurance and may cost between $500 and $3,000 per year, depending on the size of your practice and coverage limits.
  5. Workers’ Compensation Insurance: If you have employees, workers’ compensation insurance costs can vary significantly based on the number of employees, their roles, and your location. Premiums might range from a few hundred to several thousand dollars per year.
  6. Cyber Liability Insurance: This insurance covers data breaches and cybersecurity risks. Costs for cyber liability insurance can vary but might range from $1,000 to $5,000 or more annually.
  7. Employment Practices Liability Insurance (EPLI): EPLI covers claims related to employment practices, such as discrimination or wrongful termination. Costs can vary but might range from $1,000 to $3,000 or more per year.
  8. Business Interruption Insurance: This insurance can help cover lost income and expenses if your practice is temporarily unable to operate due to a covered event. Costs can vary based on coverage limits and location.
  9. Health Insurance for Employees: If you offer health insurance benefits to your employees, the cost can vary significantly based on the type of plan, the number of employees, and your contributions. Costs per employee can range from a few hundred to several thousand dollars per year.
  10. Life and Disability Insurance: Offering life and disability insurance benefits to employees can vary in cost based on the type of coverage and the number of employees enrolled.
  11. Malpractice Insurance: Malpractice insurance premiums can vary significantly based on the specialty, location, and coverage level. Premiums can range from a few thousand to tens of thousands of dollars annually.

10. Utilities and Maintenance Costs

Utilities and maintenance costs for a medical practice can vary based on factors such as the size of your practice, the location, the building’s condition, and your specific needs. Here are average cost ranges for utilities and maintenance:

Utilities

  • Electricity: Electricity costs can vary widely depending on the size of your practice and the energy efficiency of your building. On average, a small to medium-sized medical practice might spend between $500 to $2,000 or more per month on electricity.
  • Water: Water costs can vary based on usage and location. Monthly water bills may range from $100 to $500 or more.
  • Natural Gas: If your practice uses natural gas for heating or other purposes, costs can vary. Monthly natural gas bills might range from $100 to $500 or more.
  • Phone and Internet: Costs for phone and internet services can vary based on the provider, the level of service, and the number of phone lines and internet connections needed. Budgeting $200 to $500 per month for phone and internet services is common.

Maintenance

  • Janitorial Services: Costs for cleaning and janitorial services can vary based on the size of your practice and the frequency of cleaning. Monthly costs might range from $300 to $1,000 or more.
  • Building Maintenance: Routine maintenance and repairs for the building, such as HVAC system maintenance, plumbing, and electrical work, can vary widely. Annual maintenance budgets may range from $1,000 to $5,000 or more.
  • Equipment Maintenance: Costs for maintaining medical equipment can vary based on the type and quantity of equipment. Budgeting several thousand dollars per year for equipment maintenance is typical.
  • Grounds Maintenance: If your practice has outdoor areas or landscaping, grounds maintenance costs can vary depending on the size and complexity of the landscaping. Monthly costs might range from $100 to $500 or more.
  • Pest Control: Pest control services may be necessary depending on your location. Costs can vary but are typically a few hundred dollars per year.

11. Technology Costs


Indeed, technology is a crucial part of running a modern medical practice. Here are average cost ranges for various technology-related expenses for a medical practice, including computers, software, and IT infrastructure:

Computers and Hardware

  • Desktop Computers: The cost of desktop computers for your practice can range from $500 to $1,500 or more per unit, depending on the specifications and brand.
  • Laptops: Laptops for healthcare providers might cost between $800 and $2,500 or more each.
  • Tablets: Tablets for clinical use may range from $400 to $1,000 or more per unit.
  • Printers and Scanners: Multifunction printers and scanners for document management can cost between $300 and $1,000 or more.
  • Servers: If you require on-premises servers for data storage and management, costs can vary widely, but budgeting several thousand dollars to tens of thousands of dollars is common.

Software

  • Electronic Health Records (EHR) Software: EHR software licensing costs vary, but an annual subscription fee can range from $1,000 to $5,000 or more per provider/user.
  • Practice Management Software: Practice management software costs can range from $1,000 to $5,000 or more per provider/user annually.
  • Medical Billing Software: Medical billing software costs vary but might range from $500 to $3,000 or more per provider/user per year.
  • Security Software: Antivirus, firewall, and cybersecurity software can cost several hundred to a few thousand dollars annually.

IT Infrastructure

  • Networking Equipment: Costs for routers, switches, and network infrastructure can vary based on the size and complexity of your practice. Budgeting several thousand dollars is typical.
  • Data Backup and Storage: Cloud-based data storage solutions may cost several hundred to a few thousand dollars per month, depending on the amount of data.
  • Telecommunications: Costs for phone systems and internet services can range from a few hundred to a few thousand dollars per month.

IT Support

  • IT Support Services: Costs for outsourced IT support or in-house IT staff can vary widely. Hourly rates for IT support might range from $75 to $200 or more.

12. Furnishings and Decor Costs

Medical Office Furniture

Furnishings and decor for a medical practice play a significant role in creating a welcoming and professional environment for patients. Here are average cost ranges for furnishings and decor:

Waiting Room Furniture

  • Chairs and Seating: Waiting room chairs and seating can range from $100 to $500 or more per chair, depending on the style and quality.
  • Coffee Tables: Coffee tables or end tables for the waiting area might cost between $100 and $300 each.

Reception Desk

  • The cost of a reception desk can vary widely based on size, design, and materials. Budgets typically range from $1,000 to $5,000 or more.

Examination Room Furniture and Equipment

  • Examination Tables: Examination tables can cost between $1,000 and $3,000 or more per table.
  • Medical Stools and Seating: Stools and seating for examination rooms may range from $100 to $500 or more per item.
  • Cabinets and Storage: Cabinets and storage solutions for medical supplies and equipment might range from $500 to $2,000 or more per unit.

Office Desks and Chairs

  • Physician’s Desk: The cost of a physician’s desk can vary widely but might range from $500 to $1,500 or more.
  • Office Chairs: Office chairs for healthcare providers might cost between $100 and $500 each.

Artwork and Decor

  • The cost of artwork, decor, and wall coverings can vary significantly depending on your preferences. Budgeting several hundred to a few thousand dollars for artwork and decor is common.

Lighting Fixtures

  • Lighting fixtures can range from a few hundred to a few thousand dollars each, depending on the style and quality.

Flooring

  • Costs for flooring materials and installation can vary widely based on the type of flooring you choose. Budgets might range from $2,000 to $10,000 or more for a typical medical office.

Window Treatments

  • Window blinds or curtains can range from $100 to $500 or more per window, depending on the size and style.

Planters and Greenery

  • Adding plants and greenery to your practice can range from a few hundred to a few thousand dollars, depending on the number and size of plants.

13. Working Capital Requirement

The specific amount of working capital required will depend on your practice’s financial structure, growth plans, and cash flow management. It’s essential to conduct a detailed financial analysis, including a cash flow projection, to determine your practice’s unique working capital needs.

To maintain financial stability, many medical practices aim to have enough working capital to cover at least three to six months of operating expenses, including salaries, rent, utilities, and supplies. However, practices with different circumstances may require more or less working capital. Consult with a financial advisor or accountant who specializes in healthcare to help you determine your practice’s specific working capital needs.

Is Opening A Medical Practice Worth It?

Opening a medical clinic can come with hefty costs, but many of the costs associated with a startup are one and done. Despite the hefty costs of staring your medical practice, the revenue generated from having a medical practice make it all worth it. On average, a private medical practice revenue per physician is around $681,322. This is an average across all specialties of care, including primary care!

Hire Doc Digital SEM For All Your Consultation Needs

When it comes to medical marketing, no one can do it better than Doc Digital SEM! Hire our Experienced Medical Marketing Agency to handle all of your branding and medical marketing strategies! We have helped hundreds of local medical practices grow their patient base month over month! Contact our team to get a FREE digital marketing analysis!

Facebook
Twitter
LinkedIn
Doc Digital SEM Logo

Let Us Help You With Your Marketing!

Subscribe To Our Newsletter For The Latest Digital Trends.

FREE Digital Marketing Analysis*

*(Valued At $1,500)

What Our Clients Are Saying

Logan Kaufman, VP of Freakin Fitness

Thanks to Doc Digital SEM, the client saw a 60% increase in foot traffic.

The team delivered tasks on time and always followed through with their objectives. They also fixed issues right away.

Overall, their resources were highly responsible, resulting in a successful partnership.

Freakin' Nutrition

Logan Kaufman, VP
5
Thomas The Train From Kaikki Store Leavings Us A Review

Doc Digital SEM helped us with our SEO rankings for our E-com store.

They guided us on how to structure our products, content, and increase our overall sales by 350%.

We are very grateful for the team at Doc Digital SEM! We highly recommend hiring them!

Kaikki Store

Clezio Rocha, CEO
5
John Chavez, CEO of Sublime Pools & Spa leaving a 5 star review for Doc Digital SEM's Marketing Services.

I was skeptical about SEO at first, and then I saw my traffic start growing month after month, especially during our busy season.

Doc Digital SEM is the real deal and they are willing to work with you where you are at. We grew our budget over time and now they handle all our PPC ads and SEO.

Sublime Pools & Spa

John Chavez, CEO
5

Contact The Marketing Doctor