How to start a credentialing business: A founder's guide

Launching a credentialing business is a rewarding venture that combines meticulous organization and regulatory knowledge with sharp business savvy. The market for these services is already worth billions, with consistent demand from hospitals, private clinics, insurance networks, and telehealth providers.

This guide will take you through the practical steps of validating your concept, securing funding, and defining your service packages to help you launch a successful credentialing business in the U.S.

Step 1: Validate your business concept and create a plan

Start by researching your local market. You can survey small medical practices or allied health professionals to understand their specific credentialing pain points. Reviewing reports from the National Association Medical Staff Services (NAMSS) also provides valuable data on industry trends and benchmarks.

Next, identify your direct competitors. Use LinkedIn to search for "credentialing specialist" or "provider enrollment" in your target area. This helps you see who is already active and what services they offer. Many new owners skip this, missing a chance to find an underserved niche.

Estimate your startup costs

Initial expenses typically range from $1,500 to $5,000. A frequent mistake is underestimating software costs, so it is wise to budget carefully. Your primary expenses will include:

• Business Formation (LLC): $100 to $500, depending on your state's filing fees.
• Credentialing Software: $150 to $400 per month. Platforms like Modio or Medallion are common starting points.
• Errors & Omissions Insurance: $600 to $1,500 annually. This protects you from liability and is a must-have.
• Website & Marketing: $500 to $2,000 for a professional online presence.

Here are 3 immediate steps to take:

• Interview two potential clients about their credentialing challenges.
• Compare the features and pricing of two different credentialing software platforms.
• Get a quote for Errors & Omissions insurance from an agent who understands healthcare services.

Step 2: Establish your legal structure and obtain licenses

Choosing the right business structure is a foundational step. You might want to consider forming a Limited Liability Company (LLC). This protects your personal assets from business debts and allows for pass-through taxation, avoiding the double taxation common with C Corporations.

A frequent misstep is operating as a sole proprietor. This structure offers no liability protection, putting your personal finances at risk if your business is sued. The small cost to form an LLC is a worthwhile investment for peace of mind.

You do not need a special “credentialing license.” Your focus will be on standard business registrations. While no single body governs credentialing companies, your work must align with standards from the National Committee for Quality Assurance (NCQA). You will also work extensively with the Council for Affordable Quality Healthcare (CAQH) ProView platform.

• LLC Formation: File with your state’s Secretary of State. Costs range from $50 to $500, with processing times from a few days to two weeks.
• Employer Identification Number (EIN): Obtain this for free from the IRS website. It is required for opening a business bank account and filing taxes.
• Local Business License: Check with your city or county clerk. This permit typically costs between $50 and $100 annually.

Here are 3 immediate steps to take:

• File your LLC formation documents with your state's Secretary of State.
• Apply for a free Employer Identification Number (EIN) on the IRS website.
• Contact your local city or county office to inquire about a business operating license.

Step 3: Secure insurance and manage risk

Start with Errors & Omissions (E&O) insurance. This policy is your shield. It covers financial losses to a client if your work contains an error, such as a missed deadline that delays a provider’s start date.

A typical E&O policy provides $1 million in coverage, with annual premiums between $600 and $1,500. Some new owners only purchase this policy, which leaves them exposed to other risks.

Key insurance policies

To fully protect your business, you should consider a few other policies. Each one addresses a different type of risk you will face.

• General Liability: This covers claims of bodily injury or property damage. A $1 million policy usually costs $300 to $700 per year.
• Cyber Liability: Since you handle sensitive provider data via platforms like CAQH, this is important. It covers costs related to data breaches. Premiums often start around $500 annually.
• Workers’ Compensation: If you plan to hire employees, this is legally required in most states. It covers medical costs and lost wages for work-related injuries.

When you look for an agent, find one who specializes in healthcare services. General agents may not grasp the specific liabilities of credentialing. You can get quotes from providers like HPSO, Berxi, or Insureon who know this field well.

Here are 3 immediate steps to take:

• Request a quote for a $1 million Errors & Omissions insurance policy.
• Ask an agent about a package that includes General and Cyber Liability.
• Contact a specialist provider like HPSO to compare their rates and coverage.

Step 4: Set up your workspace and technology

Most credentialing businesses start from a home office, which keeps overhead low. You do not need a commercial space. A dedicated room of about 100 square feet is plenty. Since you will not have client foot traffic, standard residential zoning is almost always sufficient.

Your core technology stack

Your business runs on technology, so this is where you should invest wisely. A slow computer or unreliable internet can directly impact your revenue. Some new owners try to use a personal laptop, which poses a security risk with protected health information (PHI).

You should budget for a dedicated setup. Here is a typical breakdown of what you will need:

• Business-Grade Laptop: $800 to $1,500. Look for one with at least 16GB of RAM.
• High-Quality Scanner/Printer: $150 to $300. You will scan many documents.
• Secure Cloud Storage: $12 to $20 per month for platforms like Microsoft 365 or Google Workspace.
• Paper Shredder: $50 to $100. This is for securely destroying any printed sensitive documents.

If you decide on a commercial office, negotiate a short-term lease of one to two years. This gives you flexibility as you grow. Also, ask about a tenant improvement allowance to help cover costs for things like installing dedicated internet lines.

Here are 3 immediate steps to take:

• Price a business-grade laptop with security features like biometric login.
• Compare the business plans for Google Workspace and Microsoft 365.
• Purchase a cross-cut paper shredder for secure document disposal.

Step 5: Set up your payment processing

Establish clear payment terms from day one. For project-based work like initial credentialing, it is standard to require a 50% deposit upfront. The final balance is then due upon completion. For ongoing services like re-credentialing, a monthly retainer works well.

Offer multiple payment options. Many new business owners just rely on checks, which can delay cash flow. You should also accept ACH bank transfers and credit cards. This makes it easier for clients to pay you promptly and improves your financial stability.

When you choose a payment solution, look for one with low transaction fees and the ability to send invoices. Some solutions also offer recurring billing, which automates monthly retainer payments and saves you administrative time. This feature is worth considering.

For credentialing businesses 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 - just tap and done. It is particularly useful when you meet a new client to sign a contract and want to collect the initial deposit immediately.

At just 1.99% per transaction with no hidden costs or extra hardware needed, its rate is very competitive. Many other payment solutions have rates that can climb to 3% or more, often with additional monthly fees.

• 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 - no waiting for bank transfers.

Here are 3 immediate steps to take:

• Decide on your payment terms, such as requiring a 50% deposit for new projects.
• Research payment solutions that allow you to send invoices and set up recurring billing.
• Download the JIM app to see how it works for in-person payments.

Step 6: Fund your business and manage finances

Since startup costs are low, you likely will not need a large bank loan. Most founders use personal savings, a business credit card, or an SBA Microloan. These loans offer up to $50,000 and are more accessible for new businesses than traditional financing.

Interest rates for SBA Microloans typically range from 8% to 13%. You can also look into grants like the Amber Grant for women-owned businesses. While competitive, they provide funds you do not have to repay. This makes them an attractive option.

Plan your first six months of cash flow

You should budget for at least $3,000 to $6,000 in working capital. This amount covers your first six months of expenses like software subscriptions and insurance before client payments create a steady income stream. A frequent oversight happens when owners mix personal and business funds.

This practice complicates tax season and can pierce the liability protection of your LLC. Open a dedicated business checking account as soon as your EIN is issued. It keeps your finances clean and projects a professional image to clients.

Here are 3 immediate steps to take:

• Open a dedicated business checking account for your LLC.
• Research SBA Microloan lenders in your area through the SBA website.
• Create a six-month budget to forecast your operating expenses.

Step 7: Staff your business and set up operations

Plan your first hire, which will likely be a Credentialing Specialist. This person handles provider applications, follows up with payors, and tracks expirations. Expect a salary of $45,000 to $65,000, depending on experience. A frequent misstep is hiring a general admin, which often leads to costly errors.

Look for candidates with at least two years of direct credentialing experience. While not always required, certifications from the National Association Medical Staff Services (NAMSS) signal expertise. The Certified Provider Credentialing Specialist (CPCS) is a key credential to look for or sponsor.

Build your operational workflow

Document every step of your process, from client intake to final approval. You can manage tasks with project management platforms like Asana or Trello. This creates a repeatable system that ensures no deadlines are missed and simplifies onboarding for new staff.

As a solo owner, you can typically manage between $100,000 and $150,000 in annual revenue. Once you exceed that, it is time to hire. A good benchmark is to add one full-time specialist for every additional $150,000 to $200,000 in revenue.

Here are 3 immediate steps to take:

• Draft a job description for a Credentialing Specialist.
• Review the CPCS certification requirements on the NAMSS website.
• Outline your standard operating procedure for a new provider enrollment project.

Step 8: Market your services and acquire clients

Your first clients will likely come from direct outreach. LinkedIn is your primary platform here. Search for “Practice Manager” or “Office Manager” at private clinics in your area and send a personalized connection request that mentions a specific credentialing challenge.

Many new owners build a website and wait for calls, but this rarely works. Proactive outreach is what lands your first contracts. A generic message gets ignored, so tailor your pitch to the practice type, whether it is dental, physical therapy, or primary care.

Develop your marketing assets

Create a simple one-page PDF that details your service packages and pricing. This document is easy to attach in a follow-up email. A professional website with your contact information and service details also builds trust with prospective clients.

You might also consider joining your local Medical Group Management Association (MGMA) chapter. Attending their meetings puts you in a room with dozens of potential clients. For your first year, aim for a customer acquisition cost (CAC) under $500 per client.

Here are 3 immediate steps to take:

• Draft a short, personalized LinkedIn connection message for practice managers.
• Create a one-page PDF that clearly outlines your service packages.
• Look up your local MGMA chapter and find the date of its next meeting.

Step 9: Price your services and create packages

You have two primary ways to price your services. For initial credentialing, charge on a per-provider, per-payor basis. A typical rate is $300 to $600 for each application. For ongoing work like re-credentialing, a monthly retainer of $50 to $100 per provider is standard.

Define your service packages

Bundle your services into clear packages. An "Initial Enrollment" package could include CAQH profile setup and applications to five major payors for a flat fee of $2,000. A "Maintenance" package might offer monthly monitoring and re-credentialing for a set retainer.

Many new owners underprice their services because they only account for application submission time. Remember that follow-up calls and issue resolution can consume over half your hours. Factor this time into your rates to maintain a healthy profit margin of around 60-70%.

Set your rates with confidence

Competitor pricing is rarely public. You might want to call other credentialing services and pose as a small practice manager to request a quote. This gives you direct insight into market rates. Also, review their websites to see what their packages include.

Here are 3 immediate steps to take:

• Set a price for an initial credentialing project for one provider with five insurance panels.
• Outline two service packages: one for initial enrollment and one for ongoing maintenance.
• Call two local competitors to inquire about their pricing for a single physician practice.

Step 10: Implement quality control and scale your operations

To ensure consistent service, you should track key performance metrics. Aim for an application error rate below 2%. You can also measure the average turnaround time from submission to approval, which should ideally be between 90 and 120 days for most payors.

A frequent oversight is not documenting these metrics. Without this data, you cannot identify process bottlenecks or demonstrate your value to potential clients. Your processes should align with National Committee for Quality Assurance (NCQA) standards, even if you are not formally certified.

When to scale your business

Once you have a steady client base, you can plan for growth. The benchmark for hiring your first credentialing specialist is when you approach $150,000 in annual revenue. At this point, managing the workload alone becomes difficult and can affect quality.

While project management platforms like Trello or Asana work well initially, scaling often requires more robust software. You might want to revisit dedicated credentialing platforms like Modio or Medallion to manage a larger volume of providers and automate expiration tracking.

Here are 3 immediate steps to take:

• Set a target for your application error rate to be under 2%.
• Create a simple spreadsheet to track the turnaround time for each application.
• Review your revenue forecast to determine when you might hit the $150,000 hiring benchmark.

Your credentialing business is a journey of precision and persistence. Remember, your real value shines in the follow-up with payors, a detail many overlook. You have the steps laid out, so go ahead and begin your venture with confidence. Good luck on the road ahead.

And when you secure your first client, make payment simple. JIM lets you accept card payments directly on your smartphone, with no extra hardware needed, for a flat 1.99% fee. This helps you manage cash flow from day one. Download JIM to get started.