How to start a clinic business and build it to last

Starting a clinic is a rewarding venture that blends medical expertise with business savvy. The industry is a multi-billion dollar market with consistent demand for care from families, patients with chronic conditions, and for routine check-ups.

This guide will take you through the practical steps of validating your concept, securing funding, obtaining licenses, and selecting a location to help you launch a successful clinic business in the U.S.

Step 1: Validate your clinic concept and map your finances

Define your patient base

Start by researching local demographics with U.S. Census Bureau data to understand community needs. You can also conduct simple online surveys to gauge interest in specific services like family practice, urgent care, or specialized treatments in your target neighborhoods.

Analyze the competition

Next, map out competing clinics within a 5-10 mile radius. Note their services, hours, and patient reviews. For deeper insights, databases like Definitive Healthcare offer detailed profiles on local healthcare providers, though they often require a subscription.

Estimate your startup costs

Your initial investment will vary, but a budget between $100,000 and $400,000 is a realistic start. A frequent misstep is choosing an Electronic Health Record (EHR) system that cannot grow with your practice, which leads to expensive replacements later.

Here is a typical breakdown of initial expenses:

• Medical Equipment: $50,000 - $150,000
• EHR Software: $15,000 - $70,000 (first year)
• Lease Deposit & Build-Out: $10,000 - $100,000+
• Licensing & Legal Fees: $5,000 - $20,000

Here are 3 immediate steps to take:

• Download demographic data for your top three potential zip codes.
• Create a spreadsheet that lists 5-10 local competitors and their primary services.
• Get preliminary quotes for a scalable EHR system and one major piece of equipment.

Step 2: Secure your legal structure and licenses

Choose your business entity

Most clinics operate as a Limited Liability Company (LLC) or S Corporation to protect personal assets. An LLC is often simpler to manage. Some states require a Professional Corporation (PC) for medical practices. Consult a healthcare attorney to select the right structure for your tax situation.

Navigate licensing and permits

With your business entity formed, you can tackle licensing. This process has multiple layers. Many new owners underestimate the timeline for insurance credentialing, which can take 90-120 days. Start this process as soon as you have your business details finalized to avoid revenue delays.

You will need several key permits from federal, state, and local agencies.

• DEA Registration: Required to prescribe controlled substances. The application costs $888 and is valid for three years.
• State Facility License: Issued by your state’s Department of Health. This can take 3-6 months to process.
• CLIA Waiver: Needed for onsite lab tests like glucose monitoring. This costs about $200 for a two-year certificate.

Here are 3 immediate steps to take:

• Schedule a consultation with a healthcare attorney to finalize your business structure.
• Begin the application for your state’s facility license.
• Apply for your business EIN and DEA registration number online.

Step 3: Set up your insurance and manage risk

Protecting your clinic from liability is non-negotiable. You will need several types of insurance. Budgeting for these policies is a key part of your financial planning, as annual premiums can range from $7,000 to over $30,000 depending on your specialty and location.

Here are the core policies you will need:

• Professional Liability (Malpractice): Covers claims of negligence. A standard policy is $1 million per claim, with a $3 million aggregate limit.
• General Liability: Protects against patient injuries on-site, like a slip and fall. Coverage often mirrors your malpractice limits.
• Property Insurance: Covers your building and expensive medical equipment from fire, theft, or damage.
• Workers’ Compensation: Mandatory if you have employees. It covers lost wages and medical costs for work-related injuries.

Many new owners get tripped up by the difference between "claims-made" and "occurrence" malpractice policies. An occurrence policy offers more protection but costs more. Discuss this trade-off with a specialized broker from providers like The Doctors Company, MedPro Group, or Coverys.

Also, consider adding cyber liability coverage. This protects you from the high costs associated with a patient data breach, which standard policies may not cover.

Here are 3 immediate steps to take:

• Request quotes from three insurance brokers who specialize in medical practices.
• Ask your potential agent to model the cost difference between claims-made and occurrence policies.
• Inquire about adding a cyber liability rider to your general liability policy.

Step 4: Choose your location and equip your clinic

Find the right space

Aim for a space between 1,500 and 2,500 square feet for a small practice with two to three exam rooms. Check with your city’s planning department for properties zoned for medical use. Prioritize ground-floor locations with ample parking to ensure patient accessibility.

When you negotiate a lease, ask for a Tenant Improvement (TI) allowance. This landlord contribution helps cover build-out costs like adding sinks to exam rooms. Many new owners do not realize this is negotiable and miss out on significant savings.

Purchase your medical equipment

With your space secured, you can outfit it. You might consider refurbished equipment from reputable vendors to save 30-50%, especially for non-diagnostic items. Always confirm the warranty and service agreements before you commit to a purchase.

Here are some of the core items you will need to budget for:

• Exam Tables: $1,000 - $5,000 each
• Autoclave (Sterilizer): $3,000 - $8,000
• EKG Machine: $2,000 - $6,000
• Diagnostic Set: $500 - $1,500

Suppliers like Henry Schein and McKesson offer startup packages for new clinics. They can help you create a comprehensive list based on your specialty and typically do not have strict minimum orders for an initial setup.

Here are 3 immediate steps to take:

• Contact the local zoning board about three potential properties.
• Ask a commercial real estate agent about typical Tenant Improvement allowances.
• Request a startup equipment package quote from a major medical supplier.

Step 5: Set up your payment processing

Your clinic's financial health depends on collecting payments efficiently. Make it a firm policy to collect co-pays and known patient balances at the time of service. Many new practices stumble by delaying this, which creates significant accounts receivable challenges down the road.

Your EHR system may have a built-in payment processor. You should also explore standalone options. For clinics that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone.

At just 1.99% per transaction with no hidden costs or extra hardware, it is a cost-effective choice. This rate is quite competitive, as other processors often charge between 2.5% and 3.5%. It is particularly useful for quickly processing co-pays at the front desk.

Using it is straightforward:

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done.

Here are 3 immediate steps to take:

• Draft a formal payment policy for collecting patient fees at check-in.
• Compare the transaction fees of your EHR’s integrated payment system with standalone options.
• Download the JIM app to test its interface and see how it fits your workflow.

Step 6: Secure funding and manage your finances

Explore your funding options

Most new clinics use a combination of personal funds and loans. The SBA 7(a) loan is a popular choice. It offers up to $5 million, though most startup clinics secure between $250,000 and $500,000. Expect interest rates around Prime + 2.75%.

You will need a credit score over 700 and a detailed business plan. Also, approach large banks like Bank of America or Chase. They have dedicated healthcare practice financing divisions that understand your business model better than a general lender.

While less common for for-profit startups, you might look into grants from the Health Resources and Services Administration (HRSA). These are highly competitive and often target clinics in underserved areas, but are worth exploring.

Plan for your first six months

With funding in mind, map out your working capital. You should have enough cash to cover at least six months of operating expenses. This could range from $75,000 to $150,000. Many owners focus only on startup costs and run out of cash before insurance payments begin to flow.

This financial cushion covers payroll, rent, and supplies while you wait for insurance credentialing and reimbursements. A delay in payments is normal, so this reserve prevents early financial strain and allows you to focus on patient care.

Here are 3 immediate steps to take:

• Contact the healthcare financing divisions at two national banks to discuss loan options.
• Review the requirements for an SBA 7(a) loan on the official SBA website.
• Calculate your estimated operating expenses for six months to define your working capital target.

Step 7: Hire your team and set up operations

Build your core team

Your first hires will likely be a Medical Assistant (MA) and a Front Desk Coordinator. An MA handles clinical duties like taking vitals and prepping rooms. A Front Desk Coordinator manages appointments, check-ins, and collects payments. These roles are the backbone of your daily workflow.

For salaries, budget around $35,000-$50,000 for a certified MA and $30,000-$45,000 for front desk staff. You might be tempted to hire an underqualified MA to save money, but this move often creates compliance headaches. Always verify certifications like the CMA or RMA.

Streamline your daily workflow

With your team in place, you need a system to manage operations. Your EHR software, such as Kareo or Practice Fusion, often includes practice management features. An integrated system helps you avoid the hassle of separate platforms for scheduling and billing.

As you project revenue, a good financial target is to keep total staff salaries at or below 20-25% of gross collections. This ratio helps ensure your practice remains profitable. Also, ensure all staff complete HIPAA training before they interact with patients.

Here are 3 immediate steps to take:

• Draft job descriptions for a Medical Assistant and a Front Desk Coordinator.
• Check your state board’s website for MA certification requirements.
• Schedule demos with two EHR providers that offer integrated practice management.

Step 8: Market your clinic and attract patients

Establish your digital footprint

Your first patients will likely find you online. Claim and fully optimize your Google Business Profile. This ensures you appear in local map searches. A complete profile with photos, hours, and services can significantly increase calls and direction requests from potential patients.

Next, create a professional website. It does not need to be complex. It just needs to clearly state your services, accepted insurance, location, and contact information. This is your digital front door and a primary source of credibility for new patients.

Engage your local community

You can also use direct mail to target specific neighborhoods. A postcard campaign to nearby zip codes can be effective. A response rate of 1-2% is standard, so plan your budget accordingly. Focus your message on a specific service or a "now accepting new patients" announcement.

Many new owners overlook the power of local search. They spread their marketing budget too thin across many channels. Instead, you might focus your initial $1,000-$2,000 monthly budget on mastering Google Ads and local SEO before you explore other avenues.

Track your Patient Acquisition Cost (CAC). This metric shows how much you spend to get one new patient. A typical CAC is $100-$300. If a channel's CAC is too high, reallocate those funds to a better-performing one.

Here are 3 immediate steps to take:

• Claim and complete your Google Business Profile with photos and service details.
• Outline the five essential pages for your clinic’s website: Home, Services, About Us, Insurance, and Contact.
• Request a quote from a local printer for a 5,000-piece direct mail postcard campaign.

Step 9: Set your pricing and billing strategy

Choose your pricing model

Your pricing model dictates how you generate revenue. Most clinics use a fee-for-service model where you bill for each visit and procedure. Some are moving to Direct Primary Care (DPC), which involves a flat monthly membership fee, often between $75 and $150 per patient.

To set your prices, start with the Medicare Physician Fee Schedule for your region as a baseline. Then, research what local competitors charge for common services. A self-pay new patient visit (CPT code 99204) might range from $150 to $300, depending on your market.

Establish a clear billing process

A frequent misstep for new clinics is a weak collections process. This can quickly lead to cash flow problems. A healthy practice should target a net collection rate above 95%, meaning you successfully collect nearly all that you are contractually owed from insurers and patients.

For patients who pay out-of-pocket, you should provide a "superbill." This is a detailed receipt with all the necessary service (CPT) and diagnosis (ICD-10) codes. Patients can then use this document to submit a claim to their own insurance company for potential reimbursement.

Here are 3 immediate steps to take:

• Download the Medicare Physician Fee Schedule for your locality to use as a pricing baseline.
• Call three competing clinics to inquire about their self-pay price for a new patient visit.
• Create a template for a patient superbill that includes your practice information and fields for CPT and ICD-10 codes.

Step 10: Maintain quality and scale your practice

Track your clinic’s performance

To maintain quality, you should monitor a few key metrics. Use your EHR to track patient wait times, with a goal of keeping them under 15 minutes. You can also send simple post-visit surveys to measure patient satisfaction, aiming for a rate of 90% or higher.

On the financial side, keep a close eye on your net collection rate. This figure shows how much you collect versus what you are contractually owed. A healthy practice should consistently achieve a rate above 95%, which reflects a strong billing operation.

Plan your next phase of growth

With performance data in hand, you can make informed decisions about scaling. A common benchmark for hiring another provider is when your current one consistently sees 18-20 patients per day. This prevents burnout and maintains care quality.

Many new owners think about expansion too early. A good time to consider a second location is after your patient panel grows to 2,000-2,500 active patients and you have a consistent waitlist for new appointments. This ensures demand can support the investment.

For a long-term quality goal, you might look into accreditation from organizations like The Joint Commission or the AAAHC. While a complex process, it formally validates your commitment to high standards of patient care and safety.

Here are 3 immediate steps to take:

• Set up a monthly dashboard to track average patient wait times and your net collection rate.
• Calculate your lead provider’s average daily patient volume from the past month.
• Review the basic accreditation standards on The Joint Commission’s website.

Your clinic launch is a marathon of details, from licenses to location. The most important part of your practice, however, will always be the patient experience. That builds the trust that ensures long-term success. You have the map, now go build your practice.

Keep your operations smooth, especially when you collect payments. A simple solution like JIM turns your phone into a card reader for a flat 1.99% fee, with no extra hardware. It helps you get paid easily from the start. Download JIM and see for yourself.