How to start a medical billing company: Key steps and strategies

Medical billing is a service in high demand, so starting a medical billing company could be a smart business move. According to the United States Bureau of Labor Statistics, employment for medical records and health information technicians — under which medical billers are classified — is expected to grow 7% from 2021 to 2031. In a Tebra study, 96% of medical billing service companies expect their organization to grow over the next year or at least remain stable. Some forecast revenue increases of over 20%.

The time that medical providers spend on administrative tasks related to generating bills and collecting payments is a major problem for them. As a result, the demand for outsourcing medical billing has steadily increased. For those aspiring to start a company in medical billing, the outlook is promising. By learning how to start a medical billing company with a strong foundation, you can set the stage for substantial growth in your patient billing business. In this article, we'll review the 9 basic steps to starting a medical billing company:

Knowing how to start a medical billing company involves making crucial decisions. The first one is selecting the right billing and payment software. The software should integrate seamlessly with electronic health records (EHR) and electronic medical records (EMR) systems used by healthcare providers. It should also allow you to get started easily, avoid technology breakdowns, and give your clients the services they need to be profitable.

A modern medical billing system often includes the following features:

An integrated EHR system significantly improves the billing process by enhancing coding accuracy, eliminating duplicate data entry, and streamlining the management of electronic superbills. Even if you serve only a single provider to start, it’s important to plan for the growth of your company. A simpler billing system will be easier to scale while still having the tools to manage multiple practices over time. It will also have a comprehensive dashboard and a one-time login. Best of all, it will be designed with electronic invoicing and billing services in mind.

Of course, medical centers expect billing companies to handle medical coding and billing. Potential customers also need practice management services as well as insurance eligibility verification and scheduling solutions. This is why it's smart to choose an online invoicing system that is compatible with add-on medical billing features, such as:

Regardless of size, when you launch a billing company in the medical industry, you must obtain a business license to operate legally within the healthcare landscape. This applies even if you run the company out of your home. A license helps to ensure compliance with regulations and instills trust among healthcare stakeholders, including health insurers and providers. Licensing also upholds standards in health care delivery and promotes transparency and accountability within the industry. It’s best to get this out of the way early on to avoid fines, fees, and regulatory challenges later. 

Types of licenses and insurance that you may need include:

Benchmarks for your medical billing company. Get an inside look at the revenue models, operations, and industry trends gathered from 250+ independent medical billing companies in our Medical Billing Benchmark Report.

Determining how much to charge for your billing services is a key part of knowing how to start a medical billing company. There are 3 main pricing models: percentage of collections, per claim, and hourly. The most common model is percentage-of-collection pricing. Among those using it, 1 in 4 medical billers charge 6% to 7% of the revenue they collect.

The following questions might be helpful for determining prices:

Your answers to the questions listed above will help shape a pricing strategy that aligns with the dynamic healthcare landscape. It must consider factors such as medical innovation and patient demand to ensure sustainable patient revenue cycle management. You might also benefit from keeping abreast of healthcare payment startups and looking at their pricing decisions, competitiveness, and adaptability.

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Knowing how to start a medical billing company also requires selecting the appropriate professional assistance. Numerous back-end processes are essential. You'll need insurance policies, legal counsel for contracts, and accounting services. It's also smart to build contacts with reliable collection firms to whom you can direct customers with overdue accounts. Additionally, integrating electronic health record vendors and healthcare applications can enhance medical information provision and streamline processes. Collaborating with clinical decision support startups and patient support programs can further optimize operations.

Understanding legal prerequisites is vital when initiating a medical billing company.

An attorney can help with:

An accountant can help with:

Another pivotal aspect of knowing how to start a business involves establishing connections within the industry. Let's review some key associations that can significantly benefit a medical billing business.

Additionally, associations like the Chamber of Commerce and the Better Business Bureau can be helpful to people starting a new business. Collaborating with health startups, digital health companies, and hospital partners can provide valuable insights and opportunities for growth. Partnering with these entities can give you networking opportunities in the healthcare market, help to build your firm's reputation, and provide access to valuable resources.

Customer acquisition is crucial to the success of any new medical billing company. You may have locked down every other aspect of establishing your business, but you need at least 1 customer to get things off the ground. To get started with your medical billing company's marketing, you’ll need the following:

Search for conferences that cater to healthcare executives, primary care providers, and professionals in the health industry. Pick one that seems promising and attend as a registrant — or rent a booth to display your new company and the services you offer. Create social media pages on different platforms to engage clients through digital marketing, focusing on automated invoicing and healthcare technology. Make sure that all your marketing materials emphasize your particular expertise, such as patient records, healthcare strategy, and engagement with primary care providers.

Once you get your first client, prioritize exceptional service to drive referral programs and success in the healthcare industry.

Many medical billing companies find success through differentiation, meaning they stand out by offering unique and valuable services or features. This could involve specializing in a particular medical field, providing exceptional customer service, implementing cutting-edge technology, or developing innovative billing solutions tailored to the healthcare software development and medical device industry. Ultimately, differentiation allows medical billing companies to carve a niche in the market, attract specific clientele, and build a competitive edge.

Eventually, you can expand your client base by cultivating strong relationships with medical practices and healthcare providers. To demonstrate expertise in billing processes and showcase your negotiation skills, make sure to offer competitive pricing tailored to invoices and healthcare delivery needs. Building trust and delivering exceptional service will position your company as a preferred choice in the healthcare industry, fostering growth and attracting new clients.

Now it's time to focus on securing your first client. This requires designing a simple client onboarding process.

The majority of medical practices have already done 60% to 80% of their research before contacting medical billing companies they may want to partner with. They have already researched you online, perusing your website, Facebook, and LinkedIn. But your real chance to make a good first impression comes during the discovery call.

Make onboarding easy and highlight your industry expertise by preparing detailed answers to expected client questions. Prepare a standard practice set-up form for your initial meetings with practice managers. This will allow you to gather all the onboarding information you need at one time. The form should cover all the information needed to set up with your clearinghouse and payers, including:

The most important piece of paperwork to prepare is your contract. A standard medical billing company contract covers:

Learn how you enroll, submit, track, and reconcile claims — all from one platform. Book a free demo with Tebra today.

Integrating services like practice management, marketing, and patient engagement into your core offerings allows you to present your company as a one-stop solution for practices. A benchmark report by Tebra — The state of the US medical billing industry — identified the most popular services among high-growth companies:

Your company’s online reputation will significantly affect your client acquisition abilities. Audit your reputation by looking for mentions and profiles of your company on the internet. Leverage positive reviews to get referrals, and address negative reviews as quickly as possible. Schedule feedback meetings at least once a year with the main contact at your client's practice. These communications can help you address issues in real-time and make your company more successful as you grow.

These 9 steps can help you jumpstart your medical billing company, set up your workflow for success, and give you the tools you need to grow over time. But if you really want to stay ahead of the curve, it helps to see what high-growth companies are doing by accessing Tebra's State of the US Medical Billing Industry report. This report makes it easier to gain insights into revenue models, operations, and industry trends, providing you with the information you need to learn how to start a medical billing company.