Many physicians dream of opening up their own medical practice—for some, part of the thrill of entering the medical profession was due to an entrepreneurial spirit. And as Dr. Jim Dahle has pointed out numerous times throughout the years, owning your own job can be a lucrative (and burnout-preventing) decision. For him, he’d rather be the employER instead of the employEE.
Starting, building, owning, and eventually selling a practice aren’t necessarily easy steps. It takes time, energy, and focus. But if you can become a successful practice-owner, the rewards of being your own boss could be immense.
Below are a number of practice management resources that can be utilized when you’re looking to open a practice, run a practice, or sell a practice.
Once you've decided to open up your own medical practice, there are a few different options that can make sense, depending on your specific situation. These include a solo practice, a group practice, a hospital-owned practice, a federally qualified health center, or an academic health center.
One of the first things that you'll want to do on your journey to starting your own medical practice is to come up with a business plan. Whether you’re trying to raise capital from outside investors or self-funding, having a written business plan can help you as you start up your practice by identifying strengths, weaknesses, and areas of concern.
There are also several different legal structures for your medical practice. Choosing the right one will depend on your specific financial and personal situation, and they could include a sole proprietorship, a general partnership, a limited partnership, a C corporation, an S corporation, or an LLC. Choosing the right business entity for your medical practice is an important decision but not an irrevocable one. Having the wrong business entity can cause you to pay significantly more in taxes or open you up to unneeded liability. Which makes it so important that your business starts off on the right foot.
As you move forward with your own medical practice, one of the most important considerations you'll have is how your office is set up and where your practice will be located. As with most real estate, the location is vital. You'll want to make sure it is convenient for as many potential clients as possible. If your practice is affiliated with a hospital or university, you'll likely want to be close to those institutions.
Think about how many square feet you'll need, what the prevailing lease rates are, and what your hours of operation should be. Plus, you’ll need to determine if the space can be rented or purchased. Many physicians make more money from selling the practice real estate than the practice itself. There are also some unique tax opportunities available by having a separate company lease the space to the practice.
While taking different forms of private and public medical insurance is important to the success of a medical practice, you also need to have insurance FOR your medical practice. Personal malpractice insurance likely won't be enough to cover the various types of liability to which you may be exposed. In addition, depending on how your practice is formed and if you have any employees, you may need to get worker's compensation insurance, health insurance, dental insurance, vision insurance, life insurance, disability insurance, and/or business interruption insurance. An overall umbrella insurance policy is also probably a good idea.
There are many different types and sizes of medical practice that you might be thinking of, and each requires a different level of staffing. But even the smallest type of medical practice (a sole proprietorship where you are on your own) is going to require a certain level of staffing. After all, you'll need someone to answer the phones and manage customers while you are seeing patients. The larger your practice grows, the more staffing you will need, and finding, hiring, and keeping good staff is paramount to the success of your medical practice. You will need to develop and follow policies to ensure compliance with laws, best practices, and efficient staff turnover.
Our mission is to empower dental professionals to achieve their fullest potential through tailored consulting services that enhance practice management, improve patient care, and yield financial independence. Our ultimate goal is to get you beyond the op. Why? Hefty student loan burdens, increased demands from patients, and higher expectations from the workforce are just a few of the major challenges facing dentists. Too many dentists struggle without access to colleagues or experts who can help. That's why we are here.
We are a full-service management organization supporting private medical practices for over 30 years. We handle all core administrative operations, including billing and collections, contracting and credentialing, accounting and financial review, and comprehensive HR administration—staffing, payroll, benefits, 401(k), workers’ compensation, onboarding, compliance, etc.
By managing the business side of medicine, we allow physicians to focus on what matters most: delivering high-quality patient care with less stress. Our services empower physicians to remain independent business owners while reclaiming valuable time to enjoy a healthier, more balanced life.
Turn Unpaid Insurance Claims Into Recovered Revenue—We Handle Everything Before Time Runs Out – Medical Revenue Recovery Group, is dedicated to one mission: advocating for medical practices to help maximize revenue from unpaid claims and recover the funds rightfully owed from insurance companies. No upfront fees. No extra work for your team. No hassle.
Wisdom is full-service dental billing company that helps practices thrive financially—without the overhead. By pairing practices with expert billers who work like an extension of your team, Wisdom takes on the heavy lifting of insurance verification, claims scrubbing, and payment collection. The result: cleaner claims, faster reimbursements, and fewer dollars left on the table.
Dental practices using Wisdom see increased revenue, reduced administrative labor costs, and a significant drop in overdue A/R—all while maintaining a smooth patient experience. For practice owners, that means more financial clarity and peace of mind that operations are being handled with precision and care.
Whether you’re looking to outsource billing entirely or need expert support to grow your practice, Wisdom offers a modern, efficient way to strengthen your bottom line and support your team. Let your staff focus on patient care while Wisdom ensures the business side performs just as well.
Fill out the Advertising Partner Application. Contact the Director of Sales at [email protected] with any questions. Expect the application to be available to readers if you are approved and purchase a listing. We'll get back to you with an approval decision and pricing.
If you start a medical practice and nobody has ever heard of you, do you even have a medical practice? While you may have gone to medical school and not business school, that doesn't mean that you can avoid marketing and advertising. Putting your name out to potential customers and patients is key to building and growing your practice. If you don't plan to do the marketing yourself, make sure that you have staff onboard that can help get out the word.
If you are affiliated with a hospital or other physician network, that may provide some of your marketing, but you may want to consider additional forms of advertising to make sure that you have a healthy pipeline of new customers coming in. Social media is probably going to be key to getting the name of your practice out in the real world.
One of the most important tasks for most practices is to ensure you will actually get paid. Most patients in the US do not pay their medical providers directly; they pay via a third-party payor like private insurance, Tricare, Medicare, or Medicaid. You will need to register with and/or contract with each of these entities. If you choose to work with these payors, you will also need to deal with denials and requests for additional information, as well as pre-authorizations. Some doctors have decided not to bother and simply charge the patients directly. This makes for a more transparent pricing model, although it's one generally used by only the most medically literate and well-to-do patients.
Fill out the Advertising Partner Application. Contact the Director of Sales at [email protected] with any questions. Expect the application to be available to readers if you are approved and purchase a listing. We'll get back to you with an approval decision and pricing.
Here at The White Coat Investor, we are big fans of ownership, whether it is ownership-type investments like stocks and real estate, owning your own home, or owning ancillary medical businesses like ambulatory surgical or dialysis centers. Sometimes the best investment a physician ever makes is in their own practice and/or its associated real estate.
Practice owners often have higher income, but they also take on substantially more risk and hassle. Ownership is clearly not for everyone. Seventy-five percent of physicians these days are employees, not owners. Practice ownership offers autonomy and upside that employment rarely matches, but it also introduces business risk, administrative burden, and responsibility that many physicians underestimate.
Practice ownership gives physicians decision-making authority over operations, compensation structure, and long-term financial strategy.
Key advantages include:
Dentists have long understood this advantage—which is why private ownership, while also becoming less common in dentistry, is still more common than it is in medicine.
Practice ownership is not passive income. It replaces employment risk (the risk of being fired) with business risk (the risk of losing money), and many physicians underestimate how different those risks feel in real life.
Here are some other potential cons:
When you own a practice, you’re not just a doctor anymore; you’re a small business owner. Expect 10%-20% of your professional time to be filled by the “business owner” role, not the clinical role.
Practice ownership is best suited for physicians who want long-term control, wish to learn business fundamentals, and have the ability to tolerate uncertainty. It is a poor fit for those who prioritize guaranteed income and minimal administrative responsibility. You will need to learn cash-flow management, contracting, staffing, and compliance in ways that employees never will. You will have the ability to build equity and long-term optionality, but you will need to get used to making decisions with incomplete information and then later making adjustments. You will need to learn to both delegate and take responsibility since the buck will always stop with you.
Those who anticipate leaving the geographic area within just a few years are poor candidates for ownership, as are those who value guaranteed income and predictable schedules. Those who detest administrative hassles may also prefer an employee job. Managing employees can be one of the most challenging aspects of running your own practice. If you are like most docs, you never received any management training, so you will need to learn this on the fly. If that bothers you, perhaps it’s best to remain an employee. For these physicians, employed roles, partnership tracks within larger groups, or hybrid arrangements may provide a better balance of stability and autonomy without assuming full business risk.
Many physicians are frustrated by the influence of private equity in medicine. Practice ownership does not solve every problem, but it preserves physician control over clinical and operational decisions. Even though ownership is not for everyone, physician-owned practices allow the physician maximal autonomy, which can be leveraged into optimal patient care.
The cost to start a medical practice varies widely by specialty, location, and business model. A solo primary care practice may be launched for a fraction of the cost of a procedural or equipment-heavy specialty. Regardless of model, underestimating startup costs is one of the most common early mistakes.
Most practices incur several categories of upfront and early operating expenses, including:
Real-world startup numbers and lessons learned are covered in the Medical Practice Startup and First-Year Review of a Medical Practice Start-Up posts.
Startup costs depend heavily on the chosen practice model. Lean or micro-practice models focus on minimizing overhead through smaller spaces, fewer staff, streamlined services, and simplified technology. These practices require less upfront capital, and they can reach break-even more quickly. But they may trade scale for simplicity. Traditional or concierge practice models often involve larger spaces, more staff, higher service levels, and greater upfront investment. These models may offer more predictable revenue per patient, but they carry higher fixed costs and greater financial risk early in the process.
New practices rarely generate stable income immediately. Common first-year realities include slower-than-expected patient volume growth, delayed reimbursements from insurers, higher staffing and operational costs than anticipated, and uneven monthly cash flow even after the practice starts performing well. It is best to plan for 6-12 months of working capital, conservative personal spending assumptions, and regular cash flow review—not just profit-and-loss statements.
Technology decisions directly affect efficiency, overhead, patient experience, and physician workload. The wrong systems create ongoing friction that is expensive and difficult to unwind, while the right ones quietly support growth and operational stability.
Most medical practices rely on several core software systems, each serving a distinct function:
Not every practice needs enterprise-level systems at launch. Software should match the practice’s size, complexity, and growth plans.
Physicians should assess practice management software based on real business outcomes and how it affects cash flow, efficiency, and staff workload—not just how it looks in a demo. Don’t just look at the upfront cost; consider the total cost of ownership, including:
Your systems need to communicate with each other and scale up without requiring a complete replacement as the practice grows. The point of software is to reduce manual work, not increase it. Your staff should not have to work around spreadsheets or side processes.
Be careful when purchasing vendor support. Keep support contracts short and demand high-quality support or move on to the next vendor. Scheduling ease, communication, and online presence directly influence reviews and referrals.
Technology mistakes are expensive because they compound quietly over time. Once software is embedded into daily workflows, switching costs—financial and operational—are high. Avoid these errors:
Thoughtful software selection early on reduces overhead, improves patient experience, and prevents avoidable operational stress as the practice grows.
Sustainable growth comes from increasing the number of patients, but it also comes from improving revenue per patient and tightening operations so added volume does not overwhelm the practice.
Consider these techniques:
Effective revenue growth focuses on improving how care is delivered and reimbursed, not simply increasing volume.
SEE GROWTH EXPERTS
Marketing supports growth, but it rarely compensates for poor access, slow scheduling, or inconsistent patient experience. Your practice needs to be visible and accessible. Patients need to find the practice easily, understand services clearly, and schedule without friction. Complex intake processes suppress demand. Help prospective patients to find you trustworthy and credible. Reviews, referrals, and clear communication matter more than aggressive advertising. Reputation compounds over time.
Marketing efforts should prioritize geographic visibility rather than broad or unfocused outreach. Many practices underperform because they neglect basic marketing fundamentals or invest in tactics that do not match their practice model.
Growth without operational discipline increases stress rather than profitability. Standardize workflows with clear processes to reduce errors, training time, and variability. Staff leanly and efficiently, so you align staff roles with actual demand. Use your systems and software to reduce manual work. Prioritize stability and margin, and then scale. Operational efficiency allows growth to improve income and sustainability rather than simply increasing workload. Many of these principles are detailed further in this Lean Private Practice post.
One of the most underappreciated advantages of practice ownership is the ability to design retirement plans and tax strategies that meaningfully accelerate wealth building. Compared to employed physicians, practice owners have far more flexibility but also far more responsibility to get this right. Unfortunately, too many new practice owners make the same retirement account mistakes over and over again. Recognize that non-discrimination testing for non-highly compensated employees often severely limits how much the practice owner can put into their own retirement accounts.
Medical practices can choose from several retirement plan structures, depending on size, profitability, and workforce composition. Common options include SIMPLE IRAs, SEP-IRAs, 401(k)s, or no plan at all. A qualified but fairly priced retirement account expert can do a study of your practice and help you decide which plan to use.
Recognize that once you have employees, putting a retirement plan in place is no longer a DIY project. Also keep in mind that if you elect to use a SIMPLE or SEP-IRA in your practice, your ability to do a personal Backdoor Roth IRA each year will be limited. If you wish to save a great deal of money in a tax-deferred way, you might consider a cash balance plan on top of a 401(k)/profit-sharing plan to balance owner benefits with staff costs.
The optimal plan depends on practice profitability, staff demographics, owner age, and long-term goals. There is no single “best” plan for all practices.
A practice retirement plan should be evaluated as a business tool, not just a tax shelter. While tax deferral matters, the plan also affects cash flow, staffing costs, administrative burden, partner dynamics, and long-term flexibility. A well-designed plan balances owner benefit with employee cost; fits the practice’s size and profitability; and adapts as revenue, staffing, and ownership change over time. Plans that look optimal for a single tax year often become expensive or restrictive if they are too complex or misaligned with how the practice actually operates.
Consider the total costs to the practice, including:
High contributions are only beneficial if they are not completely offset (or more than offset) by massive required staff contributions, along with complexity and administrative burden. Try to maintain flexibility as your practice evolves.
Poorly designed retirement plans quietly erode returns through unnecessary fees and inefficient structures. Cost control is a critical, ongoing responsibility for practice owners. Investing costs must come from investing returns. There is no other place they can come from. Be careful with Asset Under Management (AUM) fees. They can quickly escalate as plan assets grow.
Pay attention to the expense ratio of funds in the plan and be aware of the total cost of plan fees, where they are going, and who is paying them (the practice owner vs. the plan participants). You have a fiduciary duty to employees with regard to retirement plans. Make sure you’re not opening yourself up to a lawsuit by offering a lousy retirement plan.
Practice valuation matters long before a sale. It affects partnership buy-ins and buy-outs, financing decisions, retirement timing, and negotiating leverage. Physicians who understand how value is created and destroyed are better positioned to make strategic decisions throughout ownership.
Practice value influences several high-stakes moments in a physician’s career:
Most medical practices are valued using one or more of the following approaches:
In practice, valuations often blend these methods. Understanding the assumptions behind each approach matters more than the final number
Practice value is driven less by raw revenue and more by stability, efficiency, and how easily the practice can function without the current owner. Practices with consistent and predictable cash flow, diversified payer and referral sources, controlled overhead, and well-documented operations tend to be more valuable because they are easier to understand and transition.
Limiting dependence on a single physician and having favorable control over real estate can further strengthen value. In contrast, practices that rely heavily on one owner’s production, struggle with staffing instability, carry high fixed costs, lack clear financial reporting, or have unfavorable leases or contracts tend to be less attractive to buyers. Ultimately, practices that are simple to operate, resilient to change, and transferable hold the most value, regardless of specialty.
Every medical practice eventually reaches an endpoint. Whether that involves selling the practice, transitioning ownership, or closing entirely, exit planning should be treated as a core part of practice management rather than a last-minute decision. The structure and timing of an exit can materially affect both financial outcomes and stress levels.
Selling a medical practice typically occurs through one of several pathways: an internal sale to associates or partners, an external sale to another physician group, or a sale to a hospital system or private equity-backed organization. Each option involves different tradeoffs related to price, control, transition expectations, and post-sale obligations.
Internal sales often preserve culture and continuity but may limit valuation. External sales can provide broader buyer pools but introduce more complexity and negotiation. Sales to private equity may offer higher upfront pricing but often come with employment agreements, performance targets, and reduced autonomy.
Closing a medical practice is distinct from selling one, and it requires its own planning. Physicians must address patient notification, medical record retention, lease obligations, staffing transitions, vendor contracts, and regulatory compliance. Poorly planned closures create unnecessary legal and administrative risk and often cost more than expected. Advance planning allows physicians to wind down operations methodically, protect patients, and avoid rushed decisions.
Taxes are often one of the largest costs of exiting a medical practice, but they are frequently addressed too late. How a transaction is structured, how assets are allocated between goodwill and hard assets, the timing of a sale or closure, and coordination with retirement plans all materially affect after-tax proceeds. Without advance planning, physicians may give up a significant portion of their practice value unnecessarily. Thoughtful tax planning can meaningfully improve outcomes and better align an exit with long-term financial goals.
Many physicians enter practice ownership expecting it to offer more freedom than employment, only to discover that business ownership introduces a distinct set of challenges. Some of the most common and impactful mistakes do not stem from bad intentions but rather from misaligned expectations and avoidable oversights.
One frequent error is underestimating the business environment in which physicians operate. Many assume that clinical success will automatically translate into business success, only to find that payer dynamics, consolidation among hospitals and insurers, and broader market forces often shape practice performance more than clinical excellence alone. Physicians who do not understand how market structure affects contract terms, referral patterns, and competitive positioning are more likely to be surprised by pressure on revenue and limited negotiating leverage.
Another common mistake is failing to monitor and manage financial performance over time. Practices that do not regularly review key performance indicators such as net collections, days in accounts receivable, payer mix, and overhead ratios are slow to recognize declining performance. Early warning signs often appear years before cash flow stress becomes obvious, yet many practices do not track them consistently.
Other persistent operational errors include underinvesting in practice management infrastructure, underpricing services relative to cost, poorly executed staffing strategies, and unclear governance structures that lead to inconsistent decision-making. These issues often compound because they go unexamined until they materially affect the practice’s stability or value.
Avoiding these mistakes begins with treating practice management as a discipline separate from clinical care, one that requires ongoing measurement, accountability, and deliberate effort rather than the assumption that strong patient care alone will carry the business.
