Medical billing business plan for starting your own business

Do you want to start a medical billing business? Well, considering the rising costs of healthcare in the U.S. and the complexities involved in medical payments when there is 3rd party (insurance company) involved, the business can be immensely profitable.

A medical billing business facilitates patients and medical practitioners as well as health insurance companies in dealing with complex medical transactions. For this, the medical billing specialist does a range of tasks such as filing the claim and keeping up the patient’s record and medical history.

To start this business, the first step is to make a business plan for medical billing company. In case you don’t know the essentials, you can take help from here. Here we are providing a business plan for a medical billing startup, Medi Assist. If you will be raising a loan, you’ll also have to see business plan for a loan from a bank.

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Executive Summary

2.1 The Business

Medi Assist will be based in San Diego. The business will provide expert medical billing specialists to physicians, dentists, surgeons, and others in the profession. After 5 years of the launch, the business will be expanded to one more location.

2.2 Management of medical billing

To make sure that you manage your medical billing startup well, it is essential to decide everything in a medical billing company business plan. Since the business requires expertise and specialization in the domain, you must manage the functions effectively. For each case, you’ll need to arrange for commute, legal assistance, and access to data for accurate record keeping. 

To assist you we will provide the list of employees, management positions, and their spheres of authority in this medical billing business plan pdf. Though you can take help from this sample business plan for medical billing, it will be best practice to hire a business planning expert for making your business plan if you are new to the field.

2.3 Customers of medical billing

Before opening a medical billing company you must recognize groups of your target customers. The customers of Medi Assist are expected to be:

  • Medical Practitioners
  • Surgeons
  • Dentists
  • Others

2.4 Business Target

It is essential to set business targets even when you work on simple ideas like business plan for a medical laboratory or nursing business plan. It is to remain focused and directed throughout the operations of your business.

Our targets to establish our name in the market will be given in the later sections. However, our financial targets are given as below:

Medical Billing Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Medi Assist will be owned by Mariana Downey. She is an expert medical billing agent and has been working in the domain for more than 6 years.  

3.2 Why the medical billing is being started

Mariana decided to start medical billing business because of her interest and expertise in the field. Since the business requires specified knowledge and cannot be run by any layperson, Mariana found that there are more prospects of getting successful in this domain. 

3.3 How the medical billing will be started

If you are looking for what do I need to start a medical billing business, we’re providing a step-wise procedure here. 

Step1: Research & Plan

The first step is to carry out intensive research on how to start your own billing company. After that, you will have to pen down details in a business plan in a systematic manner. To assist you with this, we’re providing sample medical billing business plan in this blog.

Step2: Fund & Recruit

The next step is to incentivize your venture and manage financial resources. You’ll then need to invest your money to purchase the required equipment, rent a space, and employ the personnel.

Step3: Manage & Systemize 

After getting monetary and fiscal resources, you’ll have to devise a management structure to systemize all operations.

Step4: Exist on the Web

Next, you will have to make sure that you have a strong web presence. Today, clients are likely to search for medical billing services on the web and seek the services of only those whose websites come at the top. Thus, it is a must to ensure an online presence.

Step5: Market

Lastly, you will have to advertise your startup to reach your target audience. In this medical billing business plan example we will be listing the techniques adopted by Medi Assist to advertise their venture.

Medical Billing Business Plan - Startup Cost
Start-up Expenses 
Research and Development$10,000
Expensed Equipment$52,500
Start-up Assets$225,400
Cash Required$181,000
Start-up Inventory$35,100
Other Current Assets$225,000
Long-term Assets$211,300
Total Requirements$1,126,600
Start-up Expenses to Fund$248,800
Start-up Assets to Fund$877,800
Non-cash Assets from Start-up$1,138,300
Cash Requirements from Start-up$125,300
Additional Cash Raised$50,000
Cash Balance on Starting Date$31,300
TOTAL ASSETS$1,344,900
Liabilities and Capital 
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$62,500
Other Current Liabilities (interest-free)$0
Planned Investment$1,126,600
Investor 1$0
Investor 2$0
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$140,600
Total Funding$1,126,600

Services of medical billing

Before you start medical billing company, it is essential to search for how to start a medical billing business and read at least one medical billing service business plan. After this, you will be able to know which services are being provided by your competitors. And thus decide the services that you want to provide as you start medical billing business. In this sample business plan for medical billing, we’re providing the services provided by Medi Assist.

  • Setup Patient Record

Our medical billing experts will set up patients’ medical histories and records of all transactions related to healthcare.

  • Claim Filing

We will help file medical claims both in manual and electronic forms. 

  • Negotiating Healthcare Contracts

We’ll negotiate the medical and healthcare contracts by dealing with all three parties at a time. The three parties can be patients, medical assistance providers, and insurance companies. 

  • Upkeeping & Updating Record

We will maintain the patient’s record and update it from time to time both manually and electronically.

Marketing Analysis of medical billing

If you’re looking for how to open a medical billing company, you are on the right page. In this medical billing business plan sample we have provided full guide on how to start medical billing business. After you have gone through the initial steps, you need to undergo a thorough market analysis. Unlike cannabis business plan or reiki business plan, market analysis for medical billing can give you a tough time. It is because the business is still unknown to many and does not involve just one-time interaction. The target customers would remain in contact for a long time and hence they would prefer to see how you are more reliable and efficient than your competitors. Therefore, you need to investigate the already operating medical billing businesses, market trends, inclinations of customers, and pricing policies that can help you get through. If you are starting medical billing business from home you’ll still need to do market analysis.

5.1 Market Trends

The growth prospects of medical billing startup are encouraging. According to IBISWorld, the market size of medical billing services stands at $5 billion in the U.S. even though only 1761 such businesses are operating there. If you want to enter this enterprise, you can also make a lot within a short time.

5.2 Marketing Segmentation

Before starting medical billing business it is also essential to do market segmentation. For this, you’ll have to divide the entire population into distinct groups. In this free medical billing business plan template on how to start your own medical billing company, we’re providing the market segmentation done by Medi Assist.

Medical Billing Business Plan - Marketing Segmentation

5.2.1 Medical Practitioners

This category includes doctors and healthcare providers. They will need our services of filing claims, checking the credentials, and keeping a record of patients.

5.2.2 Surgeons

This segment will include the medics who perform minor or major surgeries.

5.2.3 Dentists

Dentists who provide teeth cleaning, healing, and maintenance services will also be our customers.

5.2.4 Others

This segment may include medics who aren’t covered in the above categories such as physiotherapists. Moreover, hospital groups and healthcare provider organizations are also included in it.

Market Analysis       
Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
Medical Practitioners36%52,50063,00075,60090,720108,86410.00%

5.3 Business Target

  • Expand our service sector to at least one more locality by the end of the first 5 years
  • Maintain a CSAT score above 90% throughout the service years
  • Capture 15% of the market share within three years of operation

5.4 Product Pricing

Our prices are a little higher than others in the same profession. But due to our expertise, Mariana’s experience in the field, and our sales strategy we still expect to get more customers than them.

Marketing Strategy of medical billing 

Before starting a medical billing company you will have to devise ways by which you want to reach out to your target customers. In this medical billing company business plan on how to start a medical billing and coding business, we are providing the sales strategy of Medi Assist.

6.1 Competitive Analysis

  • Our employees are highly specialized and experts in their domains.
  • We are offering several discounts, in the beginning, to get known.
  • Customers are our topmost priority, we are willing to go to all lengths to facilitate them.

6.2 Sales Strategy

  • We’ll offer a 50% discount to our first 50 customers.
  • We’ll offer a 20% discount on all our services in June and July.
  • We’ll advertise our startup on social media, in local newspapers, and in magazines. 

6.3 Sales Monthly

Medical Billing Business Plan - Sales Monthly

6.4 Sales Yearly

Medical Billing Business Plan - Sales Yearly

6.5 Sales Forecast

Medical Billing Business Plan - Unit Sales
Sales Forecast   
Unit SalesYear 1Year 2Year 3
Setup Patient Record1,3501,4311,517
Claim Filing1,4251,5111,601
Healthcare Contracts1,2151,2881,365
Record Upkeep1,1551,2241,298
TOTAL UNIT SALES5,1455,4545,781
Unit PricesYear 1Year 2Year 3
Setup Patient Record$400.00$464.00$538.24
Claim Filing$350.00$406.00$470.96
Healthcare Contracts$425.00$493.00$571.88
Record Upkeep$525.00$609.00$706.44
Setup Patient Record$540,000.00 $663,984.00 $816,434.73
Claim Filing$498,750.00 $613,263.00 $754,068.18
Healthcare Contracts$516,375.00 $634,934.70 $780,715.71
Record Upkeep$606,375.00 $745,598.70 $916,788.16
TOTAL SALES$2,161,500.00 $2,657,780.40 $3,268,006.78
Direct Unit CostsYear 1Year 2Year 3
Setup Patient Record$100.00$110.00$115.50
Claim Filing$110.00$121.00$127.05
Healthcare Contracts$125.00$137.50$144.38
Record Upkeep$110.00$121.00$127.05
Direct Cost of Sales   
Setup Patient Record$135,000.00 $157,410.00 $175,197.33
Claim Filing$156,750.00 $182,770.50 $203,423.57
Healthcare Contracts$151,875.00 $177,086.25 $197,097.00
Record Upkeep$127,050.00 $148,140.30 $164,880.15
Subtotal Direct Cost of Sales$570,675.00 $665,407.05 $740,598.05

Personnel plan of medical billing

The staff of medical billing business cannot comprise anyone but highly experienced and qualified professionals. In this medical billing business plan example we’re providing the list of employees of Medi Assist along with their job descriptions and expected salaries. If you’re going to make business plan medical billing you should also do the same.

7.1 Company Staff

Mariana will hire personnel for the following positions:

  • 1 Co-Manager to oversee all operations
  • 1 Financial Manager
  • 5 Medical Billing Specialists
  • 2 Accountants
  • 1 Legal Expert
  • 2 Drivers
  • 1 Web Designer 

7.2 Average Salary of Employees

 Personnel Plan   
 Year 1Year 2Year 3
Financial Manager$32,550$35,805$39,386
Billing Specialists$184,500$202,950$223,245
Legal Expert$23,000$25,300$27,830
Web Designer$23,000$25,300$27,830
Total Salaries$380,600 $418,660 $460,526

Financial Plan of medical billing

If you are going to start medical coding and billing business you must be wary of how profitable is medical billing business. Well, the business is immensely profitable and the profit margin is expected to increase more in the upcoming years.

To assess, how much you would be able to make as per your resources, investment and sales, you will be needing to create a financial plan for your business. For that, you can take help from the financial plan provided here as well as those listed in business plan for urgent care center and business plan for veterinary clinic.

8.1 Important Assumptions

 General Assumptions   
 Year 1Year 2Year 3
Plan Month123
Current Interest Rate8.12%8.20%8.26%
Long-term Interest Rate8.40%8.44%8.47%
Tax Rate24.03%24.21%24.60%

8.2 Break-even Analysis

Medical Billing Business Plan - Break-even Analysis
 Break-Even Analysis 
Monthly Units Break-even5340
Monthly Revenue Break-even$132,500
Average Per-Unit Revenue$231.00
Average Per-Unit Variable Cost$0.62
Estimated Monthly Fixed Cost$163,800

8.3 Projected Profit and Loss 

 Pro Forma Profit And Loss  
 Year 1Year 2Year 3
Sales$2,161,500 $2,657,780 $3,268,007
Direct Cost of Sales$570,675 $665,407 $740,598
TOTAL COST OF SALES$570,675 $665,407 $740,598
Gross Margin$1,590,825 $1,992,373 $2,527,409
Gross Margin %73.60%74.96%77.34%
Sales and Marketing and Other Expenses$145,000$148,000$156,000
Leased Equipment$0$0$0
Payroll Taxes$24,000$25,000$27,000
Total Operating Expenses$559,800 $602,110 $654,426
Profit Before Interest and Taxes$1,031,025$1,390,263$1,872,983
Interest Expense$0$0$0
Taxes Incurred$206,205$278,053$374,597
Net Profit$824,820$1,112,211$1,498,386
Net Profit/Sales38.16%41.85%45.85%

8.3.1 Profit Monthly

Medical Billing Business Plan - Profit Monthly

8.3.2 Profit Yearly

Medical Billing Business Plan - Profit Yearly

8.3.3 Gross Margin Monthly

Medical Billing Business Plan - Gross Margin Monthly

8.3.4 Gross Margin Yearly

Medical Billing Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Medical Billing Business Plan - Projected Cash Flow
 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations   
Cash Sales$51,000$55,080$59,486
Cash from Receivables$22,000$23,760$25,661
SUBTOTAL CASH FROM OPERATIONS$73,000 $79,570 $85,936
Additional Cash Received   
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$74,000 $79,000 $85,000
ExpendituresYear 1Year 2Year 3
Expenditures from Operations  
Cash Spending$42,000$42,000$45,000
Bill Payments$27,000$28,000$31,000
SUBTOTAL SPENT ON OPERATIONS$69,000 $70,000 $76,000
Additional Cash Spent   
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
SUBTOTAL CASH SPENT$69,000 $74,520 $80,482
Net Cash Flow$21,000$23,000$25,000
Cash Balance$27,000$30,000$33,000

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet  
AssetsYear 1Year 2Year 3
Current Assets   
Accounts Receivable$24,000$26,880$30,213
Other Current Assets$1,000$1,000$1,000
TOTAL CURRENT ASSETS$282,000 $315,840 $355,004
Long-term Assets   
Long-term Assets$10,000$10,000$10,000
Accumulated Depreciation$19,400$21,728$24,444
TOTAL LONG-TERM ASSETS$24,400 $27,328 $30,744
TOTAL ASSETS$294,000 $329,280 $370,440
Liabilities and CapitalYear 4Year 5Year 6
Current Liabilities   
Accounts Payable$18,700$20,944$23,541
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$15,000 $16,800 $18,883
Paid-in Capital$30,000$30,000$31,000
Retained Earnings$53,000$57,770$63,547
TOTAL CAPITAL$285,000 $310,650 $341,715
TOTAL LIABILITIES AND CAPITAL$300,000 $329,280 $370,440
Net Worth$293,400$319,806$351,787

8.6 Business Ratios

 Ratio Analysis    
Sales Growth7.25%8.03%8.90%3.00%
Percent of Total Assets    
Accounts Receivable9.21%10.20%11.31%9.80%
Other Current Assets2.11%2.34%2.59%2.40%
Total Current Assets149.80%151.00%152.00%158.00%
Long-term Assets11.55%11.60%11.64%12.00%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.90%4.94%4.98%4.34%
Long-term Liabilities0.00%0.00%0.00%0.00%
Total Liabilities7.59%7.65%7.72%7.38%
NET WORTH100.45%101.25%102.19%110.00%
Percent of Sales    
Gross Margin94.60%97.15%99.87%99.00%
Selling, General & Administrative Expenses93.56%96.09%98.78%97.80%
Advertising Expenses1.52%1.56%1.60%1.40%
Profit Before Interest and Taxes41.50%42.62%43.81%33.90%
Main Ratios    
Total Debt to Total Assets0.18%0.18%0.17%0.40%
Pre-tax Return on Net Worth74.08%74.89%75.00%75.00%
Pre-tax Return on Assets96.30%101.12%106.17%111.30%
Additional RatiosYear 1Year 2Year 3 
Net Profit Margin33.56%34.60%35.67%N.A.
Return on Equity55.80%57.53%59.31%N.A.
Activity Ratios    
Accounts Receivable Turnover7.77.87.8N.A.
Collection Days100100100N.A.
Inventory Turnover32.434.0235N.A.
Accounts Payable Turnover15.61616.3N.A.
Payment Days272727N.A.
Total Asset Turnover2.52.52.6N.A.
Debt Ratios    
Debt to Net Worth-0.04-0.03-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios    
Net Working Capital$244,000$257,664$272,093N.A.
Interest Coverage000N.A.
Additional Ratios    
Assets to Sales0.850.870.89N.A.
Current Debt/Total Assets1%0%0%N.A.
Acid Test2929.1229.16N.A.
Sales/Net Worth2.12.22.2N.A.
Dividend Payout000N.A.


  • Is the medical billing business profitable?

Yes, the business is profitable. You can see it from the profit generated by Medi Assist in the first 3 years of their launch as given in this sample medical billing business plan.

  • How do I start a medical billing business?

As a first step, you need to make medical billing business plan and then the later steps include executing the business plan medical billing in letter and spirit.

  • How do medical billing companies make money?

Medical billing companies make money by offering several services such as filing claims for patients, upkeeping and updating medical records, etc.

  • How do I get medical billing clients?

To get medical billing clients, you’ll need to advertise your services on social, electronic, and print media. You can explore more techniques by visiting the sales strategy section of this medical billing business plan example.

Download Medical Billing Business Plan Sample in pdf