The healthcare industry is booming. As technology has improved and become more widely available, many companies are moving into healthcare or healthcare-adjacent fields, driven by entrepreneurs who see the value of this emerging market. This means healthcare companies are experiencing an unprecedented level of competition. Many are starting to recognize the role of the entrepreneur in healthcare and embrace their entrepreneurial education, habits and knowledge for survival.
The Ways Healthcare Entrepreneurship Is Growing
Going into the future, it appears that entrepreneurship and healthcare are linked and will continue to be connected for some time. Here are the three primary ways the two are connected, and why it matters.
Business Practices Drive the Industry
One of the biggest ways entrepreneurship and healthcare are related is that business practices are driving the industry. Healthcare MBAs and other healthcare professionals are using business concepts to get ahead, which is disrupting traditional healthcare. Market incentives are pushing experienced entrepreneurs and investors into the healthcare industry, and they are finding a welcome market, open to new ideas and technologies.
At the same time, healthcare is becoming less directed and more open as the industry embraces a patients-as-consumers mindset. Healthcare providers have to respond by marketing services — something that was virtually unheard of in the past.
New Payment Models Reward Value
Traditional clinical models, like the fee-for-service model employed over recent decades that generate revenue based on how many patients are seen, are rapidly disappearing. New population management models reward healthcare providers for keeping patients healthy, as opposed to allowing them to make money only from sick people.
Changing this focus changes the scope of treatment. Now, preventing illness is key, and avoiding unnecessary treatment is the rule. Entrepreneurs in healthcare are using this shift to introduce health-preserving measures, techniques, systems and novelties, like wearable technologies and fitness apps. This creates a universe of highly profitable products and services adjacent to healthcare that are not under the sole direction of medical professionals, health insurance companies or treatment centers.
Technology Moves Modern Healthcare
Technology is changing modern healthcare. Entrepreneurial-minded healthcare professionals are applying predictive data and analytical tools to anticipate healthcare needs in a community, ensure care is adequate and necessary, and make statistical predictions about the care that will be required next. They are also exposing and correcting inefficiencies in traditional healthcare and making new models based on what works.
Technologies used as decision-making tools are also gaining bigger roles in the healthcare industry, be it wearable technology that documents patient experiences or websites that allow patients to access their own lab work. There is also the need for integrated data solutions. Now that so much data is available about patient histories, lab work, hereditary issues, and treatment successes, a systematic solution to support decision-making is practically required.
Entrepreneurship and healthcare are linked, and the bonds between the two are growing deeper as business practices drive the healthcare industry into a wellness industry. In turn, value-oriented payment models reward that focus and technology perpetuates the cycle. In the end, entrepreneurship is moving healthcare forward, and the industry has to evolve to keep pace.
Types of Healthcare Entrepreneurship
The different types of healthcare entrepreneurship are commonly split into two groups — solo practice and group practice.
A solo practice is a practice without partners or any type of employment affiliation with an outside practice. The advantages to this type of practice include increased autonomy for practice development and a greater chance to build a closer rapport with patients. The challenges to solo practice include a greater individualized burden for both professional and financial success, difficulties stepping away from work and fewer referrals.
Group practices can be divided into two practice categories. The first is single-specialty practices, which have two or more physicians who provide the same type of care, such as gynecology or podiatry, and multispecialty practices that provide various types of care, like family medicine and pediatrics. Regardless of category, group practices share several advantages such as shared financial risks, greater flexibility of personal schedules, and greater employee benefits like group insurance rates. There are also several disadvantages, including reduced autonomy and decision-making ability, increased risk of conflict among partners, and increased risk of being more bureaucratic and policy-driven.
These groups offer healthcare entrepreneurs the opportunity to establish care delivery services built around specific aspects or concepts of care. These can include:
- Home healthcare services
- Rehabilitation centers
- Physical therapy centers
- Diabetic care centers
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Starting a Medical Practice
Like any entrepreneurial venture, starting a medical practice initially begins with a solid business plan. This plan should be rooted in strong, sensible financial strategies that consider realistic revenue and debt projections. Commonly, these projections will cover the first three to five years of your practice.
Associated Costs and Financing
When putting together this plan, it’s important to understand the costs associated with starting a practice. These costs can include initial state registering fees, obtaining malpractice insurance, renting or leasing office space, purchasing medical billing software, acquiring basic office equipment and furnishing, and spending on sales and marketing strategies. This can be a daunting figure when the numbers are added up — the costs for the first few months can range from $70,000 to over $100,000.
A business plan will serve as the foundation for controlling some of these costs and obtaining financing. This step can be tricky to navigate, but the difficulties can be somewhat mitigated by shopping your proposal around to different banks, working with a bank’s medical and dental division if they have one and keeping the estimates on your business plan conservative.
Other Considerations and Next Steps
After you’ve been approved for financing and received a loan and line of credit, the next step is to purchase the tools needed to run the business. This will include elements directly related to healthcare delivery like an electronic health record (EHR) system and those related to the business of healthcare operations like credit card processors. Additionally, it’s important to include partnerships with vendors like medical billing or background check services in this toolset.
The next step involves preparing to open. There are multiple components to doing this correctly, such as incorporation, credentialing physicians with payers, establishing policies and compliance documentation, and purchasing insurance.
Once you open, it’s important to keep evaluating your practice’s performance to make sure it’s running smoothly. This may be accomplished by hiring an office manager to keep tabs on the operation’s efficiency. It could also be achieved by hiring a consultant or accountant to keep track of your practice’s finances.
The Future Is Now
Starting your own practice is a bold and sometimes intimidating step. Yet, for those entrepreneurs in healthcare who carefully follow the steps to take their practice from an idea to reality, the ability to deliver care on their own terms is a rewarding proposition — one that can allow them to reach the ultimate goal of providing quality care to patients.
George Washington University’s Healthcare Master of Business Administration (Healthcare MBA) program can help prepare you to embark on the pursuit of your own healthcare entrepreneurial path. With core courses such as Business Essentials for Dynamic Markets, Operations Management and Finances, our program is constructed to equip you with the knowledge and skills needed for success as an entrepreneur. Learn how we can help you achieve your professional goals.