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Interest in on-demand, affordable care, particularly amid the coronavirus pandemic and among younger individuals, is growing rapidly. According to a report released by the Urgent Care Association (UCA), the number of urgent care centers in the U.S. topped 9,000 as of November 2019, a 9.6% jump from one year prior.
The rapid growth within the urgent care market indicates an exponential growth in demand for consumer-oriented care. With about 89 million patient visits being handled by urgent care clinics annually, including 29% of all primary care visits in the U.S. and 15% of outpatient visits, there is ample opportunity for urgent care startups to serve the convenient care needs of patients nationwide. However, as is often the case in periods of growth, there are sure to be challenges along the way.
The fast-paced nature of the urgent care business model comes with numerous moving parts, making it difficult for even experienced entrepreneurs to avoid startup mistakes when opening a new clinic. Conversations with hundreds of clinics about how to start urgent care businesses has spotlighted the most common mistakes that directly impact startup success in this market. By leveraging this experienced counsel, current and future startups can apply lessons learned to strengthen their opportunity for urgent care success. As the old philosophy claims, “those who do not learn history are doomed to repeat it.”
Key Mistakes to Avoid When Starting an Urgent Care Business
Location, location, location.
Failing to do adequate research about the urgent care market locally and regionally often leads owners and operators to encounter several business challenges. Choosing a location that already has successful, established urgent care clinics immediately puts startups at a disadvantage when trying to break into the community. Insurers may not want to add a new clinic to their network due to market saturation, and established clinics will already have solid relationships with area companies to handle their occupational medicine. Additionally, because existing clinics have already developed a steady revenue stream, they might offer services at a loss to keep their patients returning while a new clinic opens. There are less-saturated markets out there where a new clinic could thrive; they just must be found.
Additionally, explore locations beyond the community in which you live. Hometown pride and familiarity aren’t good enough reasons to open a business there. Explore surrounding areas and look for underserved cities where patients lack access to convenient care. Opening a new urgent care in a community that needs one will boost faster growth and position your startup for success.
Being overzealous with spending too early.
The quickest way for a startup to fail is to run out of money, so avoid purchasing unneeded or prohibitively expensive items when first starting out. New clinics don’t need top-of-the-line decor, an MRI, a CT scanner, or an exorbitant practice management system suited for a statewide healthcare network. Instead, go with a mix of new, used, and refurbished equipment, be frugal with furniture and décor purchases, and recruit a staff with a broad range of credentials.
Over-delivering on these types of expenses, line items and salaries may make a clinic look more appealing, but rarely impacts patient care. New clinics often underestimate the amount of investment that’s required to start up and what they’ll need to handle unexpected scenarios down the line, so it is essential to save where appropriate and prepare to withstand the ups and downs of running a small business.
Underestimating the significance of compliance.
It is likely that soon after opening, a payer or regulatory agency like the Department of Health and Human Services (HSS) may audit a new clinic for compliance. Compliance, particularly with regards to HIPAA and coding, should be high on the priority list within the early months of a clinic’s operations. Ignoring compliance can lead to serious issues down the road as the business grows.
While the government won’t expect a startup to have the same compliance resources as a major health system, all healthcare providers must address key areas to avoid costly fines. A few actions to prevent fines include performing risk analysis after one year of business, establishing a business associate agreement (BAAS) when partnering with organizations to manage personal health information, holding annual staff trainings on HIPPA and having an incident response plan in place to identify and report privacy breaches.
Starting the contracting and credentialing process too late.
A frequent mistake that startups make are often around not knowing that the contracting and credentialing process can take 6 months or longer, and that most payers do not retroactively pay. Additionally, another commonly seen issue are payers auditing claims to ensure the provider on the claim is credentialed and is in fact the rendering provider. Most of the problems that arise from contracting and credentialing can be avoided if the process is begun several months before the opening date of the new urgent care.
On-demand care will play a major role in the future of healthcare, as patients increasingly want and need accessible, affordable, consumer-centric care experiences. New clinics, especially those in rural and underserved communities, have a golden opportunity to serve patient populations in need of on-demand options to ensure everyone can get the care that they need. By learning the space and conducting proper planning, entrepreneurs looking to open a new clinic will be better poised for success while helping expand access to quality care for the patient populations they serve.
Tammy Mallow is Senior Director of Consulting at Experity.
