Medical Billing Business Plan
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Below is a template to help you create each section of your Medical Billing business plan.
Executive Summary
Business Overview
TriMountain Medical Billing is a startup business located in Denver, Colorado. The company is founded by two friends, Nancy Linninger and Lacy Patton, both of whom have over 10 years of experience in the medical billing industry. They were team members in a large medical billing firm that was part of a national chain business and each has garnered a reputation for accuracy, excellent customer service, and offering the extra effort sometimes needed to assist in complex billing circumstances. Both Nancy and Lacy have been award recipients by associations for outstanding service to physician groups and individual physicians within their sphere of service and both partners have been awarded for their consistent care and devotion to “getting the job done correctly.”
With their outstanding reputations to carry their new business forward, the partners are talking with former customers about joining their new business and they are also gathering information to join industry events and citywide associations that will help spread the word of their new business.
Product Offering
The following are the services that TriMountain Medical Billing will provide:
- End-to-end revenue cycle management services
- Patient data entry
- Insurance verification
- Coding
- Claim submission
- Denial management
- Payment posting
- Reporting
- Day to day client management
Customer Focus
TriMountain Medical Billing will primarily target the offices of physicians and various other healthcare providers. Secondarily, they will target the specialty and often unique billing needs of offices of cardiology, orthopedics, dermatology, and radiology.
Management Team
TriMountain Medical Billing is a startup company formed as a legal partnership. The partners, Nancy Linninger and Lacy Patton, carry an extensive background portfolio of accomplishments and awards within the medical billing industry. They are each known for stellar performance in complex medical billing issues and for their outstanding customer service in each medical billing case received. The partners have over 10 years of billing experience combined and have already determined from former clients that they will move to the new company as soon as it is open for business.
Nancy Linninger holds a bachelor of arts degree in Accounting, which she acquired from the University of Colorado. Her medical billing experience began before she attended the university, having started working at a small medical billing office while she was in high school.
Lacy Patton holds a bachelor of arts degree in Business, which she acquired from the College of the Redwoods. Her medical billing experience consisted of six years at her former employment, where as a Medical Billing Clerk III, she learned all aspects of medical billing, along with customer service and management of the newest software available for use in medical billing.
Success Factors
TriMountain Medical Billing will be able to achieve success by offering the following competitive advantages:
- Friendly, knowledgeable, and highly-qualified team of TriMountain Medical Billing.
- Exceptional customer service is the highest priority for the team at TriMountain Medical Billing and the staff will be trained to meet or exceed this service level.
- All billing is open to communication and discussion, with mediation set for any disputes that may arise. The phrase, “The customer is always right,” is one that TriMountain Medical Billing takes seriously.
- Comprehensive menu of services and an accurate and complete record and descriptions for the records that are delivered to the [physician groups every month.
- TriMountain Medical Billing offers the best pricing in the city. Their pricing structure is the most cost-effective when compared to the competition.
Download the Medical Billing business plan template (including a customizable financial model) to your computer here <–
Financial Highlights
TriMountain Medical Billing is seeking $200,000 in debt financing to launch its TriMountain Medical Billing offices. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and marketing costs. The breakout of the funding is below:
- Office space build-out: $20,000
- Office equipment, supplies, and materials: $10,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $10,000
- Working capital: $10,000
The following graph outlines the financial projections for TriMountain Medical Billing.
Company Overview
Who is TriMountain Medical Billing?
TriMountain Medical Billing is a newly established, full-service medical billing business in Denver, Colorado. TriMountain Medical Billing will be the most reliable, cost-effective, and efficient choice for healthcare providers in Denver and the surrounding communities. TriMountain Medical Billing will provide a comprehensive menu of medical billing services for any physicians group or clinic to utilize. Their full-service approach includes a comprehensive array of services and the latest software to support them.
TriMountain Medical Billing will be able to manage every client with speed and accuracy. The team of professionals are highly qualified and experienced in medical billing and, more importantly, in customer service that is superior to all others. TriMountain Medical Billing removes all the headaches and issues of medical billing and ensures a reliable, fast and efficient medical billing system will support every client’s customer service needs.
TriMountain Medical Billing History
TriMountain Medical Billing is a startup company formed as a legal partnership. The partners, Nancy Linninger and Lacy Patton, carry an extensive background portfolio of accomplishments and awards within the medical billing industry. They are each known for stellar performance in complex medical billing issues and for their outstanding customer service in each medical billing case received. The partners have over 10 years of billing experience combined and have already determined from former clients that they will move to the new company as soon as it is open for business.
Since incorporation, TriMountain Medical Billing has achieved the following milestones:
- Registered TriMountain Medical Billing, LLC to transact business in the state of Colorado.
- Has a contract in place for a 10,000 square foot office at one of the midtown buildings
- Reached out to numerous contacts to include TriMountain Medical Billing as new partners in billing.
- Began recruiting a staff of two and three office personnel to work at TriMountain Medical Billing.
TriMountain Medical Billing Services
The following will be the services TriMountain Medical Billing will provide:
- End-to-end revenue cycle management services
- Patient data entry
- Insurance verification
- Coding
- Claim submission
- Denial management
- Payment posting
- Reporting
- Day to day client management
Industry Analysis
The medical billing industry is expected to surge in growth over the next five years to over $24 billion. The fast rate of growth will be driven by the increasing demand to outsource billing from healthcare providers to medical billing companies who specialize in services and accuracy. This allows practitioners to focus on patients rather than on billing. Additionally, the growth in the industry will be exponentially fast as a result of governmental programs and policies that are currently in motion to change. More services by medical billing companies, especially with the use of AI, will be required.
Costs will likely be reduced as AI is integrated into medical billing systems and input becomes less timely, which will lower costs. Additionally, costs will be reduced as software and other formats and systems continue to evolve to make time-consuming tasks easier and more efficient for medical billing processes and their requirements.
Download the Medical Billing business plan template (including a customizable financial model) to your computer here <–
Customer Analysis
Demographic Profile of Target Market
TriMountain Medical Billing will target the offices of physicians and various other healthcare providers. Secondarily, they will target the specialty and often unique billing needs of offices of cardiology, orthopedics, dermatology, and radiology.
The precise demographics for TriMountain Medical Billing are:
| Total | Percent | |
|---|---|---|
| Total population | 1,680,988 | 100% |
| Male | 838,675 | 49.9% |
| Female | 842,313 | 50.1% |
| 20 to 24 years | 114,872 | 6.8% |
| 25 to 34 years | 273,588 | 16.3% |
| 35 to 44 years | 235,946 | 14.0% |
| 45 to 54 years | 210,256 | 12.5% |
| 55 to 59 years | 105,057 | 6.2% |
| 60 to 64 years | 87,484 | 5.2% |
| 65 to 74 years | 116,878 | 7.0% |
| 75 to 84 years | 52,524 | 3.1% |
Customer Segmentation
TriMountain Medical Billing will primarily target the following customer profiles:
- Physician offices
- Medical groups that service physicians
- Specialty medical groups, such as cardiology, orthopedics, dermatology and radiology, each of which has unique medical billing requirements
Competitive Analysis
Direct and Indirect Competitors
TriMountain Medical Billing will face competition from other companies with similar business profiles. A description of each competitor company is below.
MedBill of Colorado
MedBill of Colorado is owned by a physician’s group located in Provo, Utah. The focus of the medical billing company is on medical coding and the documentation that must accurately accompany coding. MedBill of Colorado offers physician groups an assurance that medical records are coded accurately and in compliance with coding guidelines, which is crucial for accurate billing and reimbursement.
The physician’s group that owns MedBill of Colorado is currently seeking a sizable loan in order to obtain software and AI-assisted programs that will speed the billing process for certain physician groups and individual clients. The cutting-edge technology, when placed into use, will reduce the time and effort spent in accurately coding.
Colorado Medical Claim Services
The Colorado Medical Claim Services group has a primary focus on claims submission, tracking, and follow-up. They work to speed the processing of claims, which ensure physician groups receive timely payments. They also work to accurately reduce claim denials, which removes the time-consuming tasks from the physician’s group. Colorado Medical Claim Services also works to maximize reimbursements for healthcare providers by cross-checking and verifying expenditures and allowable reimbursements.
Colorado Medical Claim Services was started in 2019 by a physician, Neil Baker, who saw the opportunity to garner profit in a fast-rising area of medical billing. The coding portion of the service is just the beginning for the Colorado Medical Claim Services business.
Denver Doctors Collection Group
Denver Doctors Collection Group has a primary concentration on accurate patient billing and the collection due to doctors as a result of those billings. The six employees within the company handle patient statements, payment plans, and collections to ensure that patients pay their bills promptly. If patients are unable to pay, the Denver Doctors Collection Group sets up efficient and effective repayment programs that ensure doctors are able to maintain a reasonable cash flow even as repayment plans often take a longer period of time to collect. The owner of the company, Dan Dorsee, started the company in 1999 and has maintained the company through sustained growth within this segment of medical billing.
Download the Medical Billing business plan template (including a customizable financial model) to your computer here <–
Competitive Advantage
TriMountain Medical Billing will be able to offer the following advantages over their competition:
- Friendly, knowledgeable, and highly-qualified team of TriMountain Medical Billing.
- Exceptional customer service is the highest priority for the team at TriMountain Medical Billing and the staff will be trained to meet or exceed this service level.
- All billing is open to communication and discussion, with mediation set for any disputes that may arise. The phrase, “The customer is always right,” is one that TriMountain Medical Billing takes seriously.
- Comprehensive menu of services and an accurate and complete record and descriptions for the records that are delivered to the [physician groups every month.
- TriMountain Medical Billing offers the best pricing in the city. Their pricing structure is the most cost-effective when compared to the competition.
Marketing Plan
Brand & Value Proposition
TriMountain Medical Billing will offer the unique value proposition to its clientele:
- Highly-qualified team of skilled employees who believe customer service is the highest priority for the team at TriMountain Medical Billing.
- The staff of TriMountain Medical Billing are fully trained to meet and exceed the requirements of each physician group in accuracy and reliability of their work.
- Billing questions are always open to communication and discussion, with mediation set for any disputes that may arise. The phrase, “The customer is always right,” is one that TriMountain Medical Billing takes seriously.
- Compared to other medical billing companies in the area, TriMountain Medical Billing offers comprehensive services at lower rates than other providers.
Promotions Strategy
The promotions strategy for TriMountain Medical Billing is as follows:
Word of Mouth/Referrals
Nancy Linninger and Tracy Patton have built up an extensive list of contacts over the years by providing exceptional service and expertise to former medical billing clients. The contacts and clients will follow them to their new company and help spread the word of TriMountain Medical Billing.
Professional Associations and Networking
National trade shows and regional networking events will be attended and the new company will be offered in sales and business development efforts. Physician conferences and medical coding conferences will be attended, as well, with similar goals.
Print Advertising
Printed brochures will be offered to all physician groups and clinics within the Denver region. Discounted pricing for one-year contracts will be offered during the first month of business. From time to time, additional messaging will be sent to physician groups to consider the services of TriMountain Medical Billing.
Website/SEO Marketing
TriMountain Medical Billing will fully utilize their website. The website will be well organized, informative, and list all the services that TriMountain Medical Billing provides. The website will also list their contact information. The website will engage in SEO marketing tactics so that anytime someone types in the Google or Bing search engine “medical billing company” or “medical billing near me,” TriMountain Medical Billing will be listed at the top of the search results.
Pricing
The pricing of TriMountain Medical Billing will be moderate and on par with competitors so customers feel they receive excellent value when purchasing their services.
Operations Plan
The following will be the operations plan for TriMountain Medical Billing.
Operation Functions:
- Nancy Linninger will be the owner and president of the company. She will oversee all business development and manage the accounting needs of the company.
- Nancy Linninger will seek investor funding to fully develop two additional locations of the company within outlying regions of Denver in areas of fastest population growth.
- Tracy Patton will direct programs and oversee client relations with resolution or conflict negotiation needs. She will also manage non-payment issues and repayment plans.
- Tracy Patton will be the owner and vice president of the company. She will assume the role of administrative director, overseeing all staff and operations within the company. She will also direct the software programs and other innovations within the company.
- Daniel Peterson will be the senior manager of billing processes. He will work directly with staff to train, conduct checks, supervise accuracy and oversee client relations.
Download the Medical Billing business plan template (including a customizable financial model) to your computer here <–
Milestones:
TriMountain Medical Billing will have the following milestones completed in the next six months.
- 5/1/202X – Finalize contract to lease office space
- 5/15/202X – Finalize personnel and staff employment contracts for the TriMountain Medical Billing
- 6/1/202X – Finalize contracts for TriMountain Medical Billing clients
- 6/15/202X – Begin networking at industry events
- 6/22/202X – Begin moving into the TriMountain Medical Billing office
- 7/1/202X – TriMountain Medical Billing opens its doors for business
Management Team
TriMountain Medical Billing is a startup company formed as a legal partnership. The partners, Nancy Linninger and Lacy Patton, carry an extensive background portfolio of accomplishments and awards within the medical billing industry. They are each known for stellar performance in complex medical billing issues and for their outstanding customer service in each medical billing case received. The partners have over 10 years of billing experience combined and have already determined from former clients that they will move to the new company as soon as it is open for business.
Nancy Linninger holds a bachelor of arts degree in Accounting, which she acquired from the University of Colorado. Her medical billing experience began before she attended the university, having started working at a small medical billing office while she was in high school.
Lacy Patton holds a bachelor of arts degree in Business, which she acquired from the College of the Redwoods. Her medical billing experience consisted of six years at her former employment, where as a Medical Billing Clerk III, she learned all aspects of medical billing, along with customer service and management of the newest software available for use in medical billing.
Daniel Peterson has been recruited as the senior manager of billing processes. He will work directly with staff to train, conduct checks, supervise accuracy and oversee client relations.
Financial Plan
Key Revenue & Costs
The revenue drivers for TriMountain Medical Billing are the fees they will charge to physicians and specialty medical groups for their services. .
The cost drivers will be the overhead costs required in order to staff at TriMountain Medical Billing. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.
Funding Requirements and Use of Funds
TriMountain Medical Billing is seeking $200,000 in debt financing to launch its TriMountain Medical Billing offices. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and marketing costs. The breakout of the funding is below:
- Office space build-out: $20,000
- Office equipment, supplies, and materials: $10,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $10,000
- Working capital: $10,000
Download the Medical Billing business plan template (including a customizable financial model) to your computer here <–
Key Assumptions
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Number of clients per Month: 100
- Average revenue per Month: $150,500
- Office Lease per Year: $100,000
Financial Projections
Income Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
| Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
| Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
| Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
| Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
| Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
| EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
| Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
| PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
| NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
Balance Sheet
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
| Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
| Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
| Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
| Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
| TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
| Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
| Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
Cash Flow Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | ||||||
| Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
| Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
| CASH FLOW FROM INVESTMENTS | ||||||
| Investment | ($180,950) | $0 | $0 | $0 | $0 | |
| Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
| CASH FLOW FROM FINANCING | ||||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 | |
| Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
| Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
| Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
Medical Billing Business Plan FAQs
What Is a Medical Billing Business Plan?
A medical billing business plan is a plan to start and/or grow your medical billing business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
What are the Main Types of Medical Billing Businesses?
There are a number of different kinds of medical billing businesses, some examples include: Light, Full Service, and Boutique.
How Do You Get Funding for Your Medical Billing Business Plan?
Medical Billing businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Medical Billing Business?
Starting a medical billing business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
- Develop A Medical Billing Business Plan - The first step in starting a business is to create a detailed medical billing business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
- Choose Your Legal Structure - It's important to select an appropriate legal entity for your medical billing business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your medical billing business is in compliance with local laws.
- Register Your Medical Billing Business - Once you have chosen a legal structure, the next step is to register your medical billing business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
- Identify Financing Options - It’s likely that you’ll need some capital to start your medical billing business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
- Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
- Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
- Acquire Necessary Medical Billing Equipment & Supplies - In order to start your medical billing business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
- Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your medical billing business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful medical billing business: