Project: How to Start a Medical Billing Business
Modern Medical Management, LLC
The following is a proposal to start a medical billing business. This opportunity has arisen as a result of my employer, Dr. Herbert Rosen’s decision to outsource his medical billing needs. As he has been satisfied with the quality of my work over the past two years, he has asked me to handle his billing and will introduce me to additional doctors who have similar objectives at Columbia Presbyterian where he currently practices. First, I have decided to name my company Modern Medical Management, LLC (MMM). Hereafter, please find the details of my objectives, the company's mission and my vision for the future. My immediate goals are:
1. Create the necessary infrastructure to service the volume generated by Dr. Rosen’s office 2. Follow up on Dr. Rosen’s introductions
3. Identify additional prospects
4. Bring in new clients
5. Manage the day to day business
Because medical billing is an important link between the physicians, patients and insurance companies, MMM will thrive to ensure excellent customer service.
Dr. Rosen’s average annual billing volume is 2,400 forms per year (an average of 10 billed consultations per day and he works 5 days a week during 48 weeks per year). I intend to offer him preferential pricing of $7 per form for the first three years as he has provided me with this opportunity. All other clients will be billed at an average of $8.50 per form. I assumed that it will take me six months to add my first additional client and another client three months later. I also assumed that I will add two additional clients in the second year and three in the third year. Finally, I assumed that each client has the same average amount of billing activity (forms written) as Dr. Rosen.
Once the business is running with enough revenue to allow me to hire employees (assumed to take nine months), I will be primarily responsible for marketing the company's services by calling prospects and following up with proposals.
I plan to hire my first employee after the first nine months of operations and the second one at the beginning of the third year: Cost per employee including benefits:
$42,000 per annum
Professional services will be required in order to file income tax returns: Accounting & Tax Preparation
$1,200 per annum
I plan to rent an office space for $1,500 per month
Over the course of the first month, I intend to develop a website.
MMM will acquire basic office equipment such as a computer, multifunction printer, copier, scanner and facsimile as well as a telephone system. The medical software for billing will be the largest investment ($1,800). I also will need coding books (ICD-9 and CPT), and some furniture (desk, table, chairs, filing cabinets and office supplies). I will also subscribe to an internet and telephone plan. Finally, initial working capital of $8,000 will be required in order to provide for the deposit for the office lease as well as cover all offices expenses until Dr. Rosen starts paying MMM for the services rendered. As a result, I have determined that I will need a capital of at least $12,350 to start the business. I will obtain this amount by making a withdrawal from my savings account. The investments are assumed to be amortized over five years. The tables below detail the company's forecast investments, revenues, expenses and profit.
800 per unit
Multi-function Fax, Scanner, Copier & Printer
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