How Much Does It Cost to Start a Medical Practice in 2025?

Starting your own medical practice is exciting and ambitious for you, and it’s a way to improve the lives of your community and the people you serve. 

It offers autonomy, the ability to shape patient care according to your vision, and the opportunity to build a thriving business. However, starting a practice requires significant financial investment and careful planning to ensure long-term growth. 

Together, we’ll break down the key costs involved in opening a medical practice and offer some lower-cost options for new business owners on a budget.

[signup]

Initial Considerations Before Starting a Medical Practice

Before determining the “how” of building a medical practice, it’s important to understand why, what, who, and where:

• Why do you want to build your own medical practice?
• What kind of practice do you want to build? 
• Who do you want to serve, and how will you serve them?
• Where will you build your practice?

Some practical considerations as you begin to plan your dream practice include: 

Market Analysis and Business Planning

Before opening your practice, it’s important to perform a detailed market analysis. This helps you determine how much money you’ll need and whether your practice can succeed in the chosen location. 

To do this, study the types of patients in the area, identify the local healthcare needs, and examine other medical practices nearby to understand what services are already being offered to the community, and which are most popular. 

As you envision your practice, a detailed business plan will be necessary for estimating costs and securing financing. Your plan should include:

• Projected revenue
• Expected patient volume
• Startup costs
• A growth plan, and a marketing plan that supports that
• A timeline for opening 

This document not only guides your decisions but also helps when presenting your ideas to potential lenders or investors.

Choosing the Type of Practice

The type of practice you choose impacts your startup costs and day-to-day operations. Consider these options:

• Solo Practice: full control over operations, but higher initial costs and administrative burden.
• Group Practice: shared costs and responsibilities but less decision-making authority.
• Partnership: shared resources and profits, with clear agreements needed on decision-making. While a group practice is typically larger and can be owned by multiple people including doctors and employees, and may be run by a board of directors, a partnership is typically smaller, with fewer healthcare providers who share decision-making.
• Concierge or Direct Primary Care: lower overhead and offers predictable income, but success depends on strong patient relationships.

Additionally, it’s important to know what type of care you will offer. Will you offer in-person care, telehealth, or a combination of the two?

Each model has its pros and cons, so select one that aligns with your goals, financial situation, local market conditions, and complies with state laws governing medical practice ownership and structure.

Regulatory and Compliance Requirements

Healthcare practices must adhere to strict federal and state regulations. Plan for costs related to compliance with the Health Insurance Portability and Accountability Act (HIPAA), Occupational Safety and Health Administration (OSHA) standards, the Americans with Disabilities Act (ADA), and local health department requirements.

These expenses may include staff training, compliance audits, specialized software to protect patient data, and modifications to ensure accessibility for patients with disabilities.

Location and Real Estate

The location of your practice directly influences its success and startup costs. Urban locations often come with higher rents but larger patient pools, while rural areas may offer lower costs but require creative marketing to attract patients. 

Decide whether renting or purchasing property makes more sense for your long-term goals. Renovation needs, accessibility, and space for growth should also factor into your decision.

Essential Startup Costs for a Medical Practice

Regardless of what type of practice you plan to start, some startup costs will be inevitable.

Licensing and Legal Fees

Starting a practice involves numerous legal and licensing costs, such as:

• Medical licenses and DEA registration
• State-specific certifications: state-specific certifications are the special licenses and approvals that each state requires for a medical practice to legally operate and follow local healthcare rules. For example, one state might need an extra permit for prescribing pain medications, while another might require a specific license to use X-ray machines.
• Consulting fees for healthcare attorneys to ensure compliance with laws like Stark Law and Anti-Kickback Statutes, to outline HIPAA compliance, and to review important clinic paperwork such as clinic policies and consent to treatment documents.

These costs can range from $5,000 to $15,000, depending on your location and specialty.

Medical Equipment and Supplies

The cost of medical equipment depends on your specialty, and on what services you will offer your patients. Specialists such as surgeons may need significantly more for advanced tools. 

To reduce startup costs, consider leasing equipment or purchasing refurbished items.

Common equipment and supply needs include:

• Examination tables and chairs
• Diagnostic tools (e.g., stethoscopes, blood pressure monitors)
• Consumable supplies like gloves and syringes

Building and Office Setup Costs

Creating a brick-and-mortar practice also involves overhead. By eliminating the need for many of these supplies, telehealth practices can drastically reduce your initial investment.

Construction and Renovation

If your practice space needs renovations, plan for compliance with the Americans with Disabilities Act (ADA), including accessibility modifications such as ramps, elevators, and accessible restrooms. Also, consider soundproofing and exam room setup. Costs depend on the extent of the work and legal compliance requirements.

Furniture and Office Equipment

Outfitting your office with furniture and equipment is another expense. Budget for:

• Comfortable waiting room seating
• Staff desks and chairs
• Computers, phones, and printers for administrative work

Look for cost-effective options, such as buying gently used furniture or sourcing from specialized healthcare suppliers.

Security and Safety

Ensure your practice is secure, both physically and digitally. This includes installing security systems like cameras and alarms and implementing cybersecurity measures to protect patient data. Budgeting for IT support and regular security audits is necessary in today’s healthcare climate. 

Operational Costs in the First Year

Planning ahead for operational costs in the first year is necessary to help you focus on sustainable business growth while delivering exceptional patient care.

Staffing and Payroll

Hiring skilled staff is essential for running your practice smoothly. Costs include salaries, payroll taxes, and benefits. 

Key roles to consider hiring include:

• Medical staff: nurses, physician assistants, medical assistants
• Administrative staff: receptionists, billing specialists
• IT support: to manage technology systems

Many companies now offer specialized services such as phone and messaging support, administrative tasks like faxing and filing, billing and coding services, and human resources (HR) management. 

Partnering with these service providers instead of hiring full-time employees can be a more affordable option for new practice owners looking to reduce costs while maintaining efficient operations.

Billing, Credentialing, and Insurance Reimbursements

Another important question is whether you will establish a cash-based practice, or whether you will accept insurance. For either type of practice, billing personnel is essential. 

For cash-based practices, having administrative staff who can keep track of invoices and receivables ensures that unpaid patient balances do not slip through the cracks. 

For insurance-based practices, credentialing with insurance companies is necessary. This process can take 3–6 months and may involve application fees or the need for credentialing services. Additionally, if you plan to accept Medicare or Medicaid, you must enroll with the Centers for Medicare & Medicaid Services (CMS) and comply with their specific regulations. 

Efficient billing is key to maintaining cash flow, so consider investing in practice management software and billing personnel to streamline the process and ensure compliance with all billing regulations.

Utilities and Maintenance

Ongoing expenses like electricity, water, internet, and cleaning services are necessary to keep your practice operational. Additionally, routine maintenance for equipment and facilities should be factored into your budget.

Technology and Software Expenses

Technology and software are now considered essential tools for a successful medical practice. 

Electronic Health Records (EHR) System

An EHR system is a cornerstone of modern medical practices. These systems improve efficiency, streamline documentation, and enhance patient care. Costs can vary widely; consider your needs regarding medical charting and documentation, insurance and billing, patient communication, forms and documents, prescribing, laboratory or imaging orders. 

Ensure that the EHR system you select complies with HIPAA and other federal and state privacy laws to protect patient health information.

Choose the platform that will work best for you in the future with a busy practice, as changing EHR systems later can be challenging.

Telemedicine Setup

Telemedicine is increasingly essential for providing convenient care to patients. When setting up telemedicine services, ensure the platform you choose is secure and HIPAA-compliant to protect patient privacy. 

Additionally, be aware of state laws governing telemedicine, including licensing requirements for practicing across state lines and informed consent regulations. A telemedicine platform typically carries ongoing subscription fees, although your EHR system may offer this as part of a package. Be sure to market your telehealth services to maximize their value.

Marketing and Advertising Costs

Marketing and advertising are essential expenditures when growing your business. 

Branding and Website Development

Creating a professional brand is critical for attracting patients. Budget $2,000 to $10,000 for website development, including features like online appointment scheduling, patient education blogs, patient testimonials (with proper patient consent), and secure, HIPAA-compliant communication portals.

Professional branding, such as logo design, can cost $500 to $2,000 or more. Ensure that all marketing materials and online content comply with the Federal Trade Commission (FTC) guidelines and state medical board regulations to avoid misleading or unsubstantiated claims.

Advertising Strategies

Promoting your practice requires a mix of advertising channels. Ensure all advertising complies with FTC guidelines and state medical board regulations to avoid false or misleading claims. Costs can include:

Online ads: these help drive motivated traffic directly to your website

Traditional media: this may include magazine or newspaper ads, as well as TV or radio ads

Community outreach: hosting local events or partnering with businesses and local charities can help get your practice’s name out into the community

New businesses on a budget can also use free or low-cost tools like social media to build brand awareness and establish expertise while adhering to professional standards and legal requirements.

Proper Marketing Plan Development

Developing a clear marketing plan is foundational to maximizing your budget. 

Start by identifying your target audience and choosing channels that align with their preferences. Set measurable goals such as attracting a specific number of new patients per month, and track the success of your marketing efforts using tools like Google Analytics.

Many new business owners will invest in a marketing expert to help them build an effective marketing plan.

When to Consider Hiring a Medical Practice Marketing Expert

If your marketing efforts aren’t yielding results or you’re launching a new practice in a competitive area, consider hiring a medical marketing expert. They can help refine your strategy, manage campaigns, and ensure effective use of your budget. 

Additionally, a marketing expert familiar with healthcare regulations can help ensure that all marketing activities comply with HIPAA, FTC guidelines, and state medical board regulations.

Insurance and Risk Management

For your business’s security and your peace of mind, investing in the appropriate insurance and risk management are essential. 

Malpractice Insurance

Malpractice insurance is essential for protecting you and your practice against lawsuits. Premiums vary by specialty, ranging from $3,000 to $50,000 annually.

General Business Insurance

Other necessary policies include:

• General liability insurance
• Property insurance
• Workers’ compensation insurance (as required by state law)
• Cybersecurity Insurance

As healthcare becomes more digital, cybersecurity insurance protects against breaches and helps ensure compliance with data protection laws like HIPAA. It is important to consult with insurance professionals to obtain appropriate coverage that meets legal requirements and protects your practice.

[signup]

Key Takeaways

Starting your own medical practice is an exciting goal that gives you the freedom to shape patient care and build a successful business. However, the costs to start can vary a lot depending on the type of practice you choose, where you set it up, and other important factors like equipment and legal fees. 

Carefully planning and understanding these different costs, along with ensuring compliance with all relevant federal and state laws and regulations, are essential to ensure your practice grows and thrives in the long run.