How to start a medical billing company

Medical billing is a service in high demand, so setting up a new billing company is a smart business move. According to the US 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. This rate exceeds the national average for all occupations, which is 5%.

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%.

This projected outlook is partially explained by the growing complexity of the healthcare reimbursement landscape. The time that medical practices 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 looking to establish a medical billing business, the future is bright. If you get started with a firm foundation, you can position your billing company for growth.

All new business ventures have a few issues in common, and a medical billing business is no exception. You want the right tools, relevant services, and ways to stand out. 

Medical billing company software selection is one of the most important decisions you’ll make when starting your small business. 

Your software should be a central platform where virtually all your operations are executed and controlled. Choosing one with all the necessary capabilities (and more) will help you to satisfy your clients and avoid problems down the line. 

First, the software should provide end-to-end claims management and the entire patient collections process accurately, with minimal effort from you. It should also accept multiple payment types, especially secure digital payments, as these are increasingly popular with patients. 

Next, many practice owners expect billing companies to handle not just bare-bones medical billing, but also practice management services and processes like scheduling and insurance eligibility verification. The top add-on medical billing services today are:

The best medical billing software may support some or all these add-on services. 

Finally, you won’t always have 1, 2, or 3 clients. The software you choose should help you scale quickly as you grow. The last thing you want is for your tool to become slow, unusable, or restricted as you attract more clients. 

Regardless of your size when you launch, you need to obtain a business license to run a medical billing company. It’s also best to get this out of the way early on to avoid fines, fees, and regulatory challenges later. 

However, before you apply for a license, be sure to conduct thorough research on your state and local requirements. 

Deciding what to charge can feel overwhelming. However, the way you price your services will determine how much money you can reinvest in customer acquisition and grow your business.

That said, there are 3 main pricing models: percentage of collections, per claim, and hourly. The most popular model, by far, is the percentage-of-collections pricing, and of those who use it, 1 in 4 medical billers charge 6% to 7% of collected revenue.

Some additional questions to ask yourself are:

There are multiple back-end processes involved in running a billing company that don’t have anything to do with billing itself. You’ll need insurance policies and coverage, legal counsel to draft and review your contracts and policies, and accounting services, just to name a few.

Furthermore, an accounting service can help you choose your business structure, manage your company’s books, and handle your taxes.

To accelerate startup time and streamline your operations, it’s often helpful to partner with trusted professionals or reputable companies that offer these services — preferably with experience in the medical billing industry.

It can also help to form relationships with reputable collections agencies to which you can refer clients for collections that exceed 120 days.

If you lack the right kind of support and access to information, it’s easy to make avoidable mistakes. Established associations and organizations can help by providing you with sound guidance and access to valuable resources. Some of the industry’s top associations include:

These associations also offer networking opportunities and host training sessions. They all have varying membership fees that are typically charged annually.

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 one customer to get things off the ground. 

Perhaps the best way to start is through differentiation. There are 2 methods to stand out as a new medical biller:

Next, aim to make medical practices aware of your company and its services. You will need to employ marketing strategies to achieve this, with the first being to build a professional website.

Then, create social media pages on different platforms that you can leverage for engagement. In addition, seek out a reputation management system that asks your customers for reviews and displays them on your website.

You can also create print marketing collateral like brochures, leaflets, and flyers to distribute to physicians and practices. Make sure to engage with practices, rather than simply dropping off your materials.

Select a conference to attend as a registrant — or rent a booth to display your new company and the services you’re offering. The website, social media pages, and marketing materials should all contain open, up-to-date contact information through which interested clients can reach your company.

Once you land your first client, others will likely follow.

Make sure your client onboarding process and tools are ready before you seek new clients. That way, there’s no delay between potential clients showing committed interest in using your services — and when they sign on the dotted line. 

You should have contract templates that cover terms and conditions, party responsibilities, and termination provisions, among other things. You also need forms to collect requisite and essential practice information from new clients. 

Finally, consider drafting an onboarding document that covers expected client questions, such as what your background is, if you belong to any associations, all the services you offer, and what standard reports and client-biller communication structures you have in place.

Once your billing company is operational, the next point of focus is growth and expansion.

Your company’s online reputation significantly affects your client acquisition ability. 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. 

Of course, it pays to garner feedback before a client posts it online. Schedule feedback meetings at least once a year with the main contact at your client's practice. These communications can help you address issues on a real-time basis — and make your company more successful as you grow.

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. And the software you choose is integral to your ability to make these business-growing additions.

But are there services that do better than others? Here are some of the most popular services among high-growth companies:

The best way to launch a successful business is to research current strategies and review what high-growth billers are up to. We did that research for you. 

Read all the opportunities and challenges that over 250 independent billing companies are experiencing in Tebra’s “The State of the US Medical Billing Industry” Report.