Tips for Starting a Successful Dermatology Practice

Among all the medical specialties, dermatology is one of the most fruitful and easiest to manage. The market is currently in a boom, not just in the USA but all around the world. That’s why more and more dermatologist are now opting to start their own practice. However, not everything is bright and shiny, and you will see why in this blog.

What people don’t realize is that even though dermatology is a profitable business, its success depends on careful planning, smart investments, and most importantly, a deep understanding of the medical and business fundamentals. 

You need more than just clinical expertise to bring in revenue. That’s why we have created this guide. This is not going to be a step-by-step guide to open your practice; rather, we aim to provide you with the thought process of opening a dermatology practice and running it. So, let’s start. 

The Market Opportunity

As we said, dermatology is one of the most profitable medical specialties if you know how to run it. Don’t take our word for it. Data shows that the derma market generates about $7.7 billion every year in the USA, and is continuously growing at a good rate. All this growth comes from an interconnected web of factors and market dynamics.

Now, dermatology itself is divided into two types, and the financial performance greatly differs between practice types. To put this in perspective and give an idea, here are some numbers. Medical dermatology practices achieve a median revenue of $1.3 million per physician, while cosmetic dermatology practices reach $1.8 million. That is a lot of difference. 

The current market dynamics of the country heavily favor new practices. How? Well, according to data that we found online on numerous platforms, currently, only 11,865 dermatologists provide services in the country. This creates a big supply shortage. This makes new dermatology practices very important for patients and gives you less competition. 

Develop a Comprehensive Business Plan

Every business starts with a plan, and starting a practice is no exception. The plan lays the foundation for any future business decisions. So, a good plan is very important at the beginning. 

You should start your work with financial projections. This way, you will know what to expect in the long term. Keeping this in mind, you should account for both the startup costs and ongoing operational expenses of at least 1 year. 

The most vital part of creating this plan is to first analyze the local competitors and what they are offering. For this, do some on-ground and online research. Look for things like the number of existing dermatology practices in the area, their specialities, patients’ demographics, and any service gaps that other practices are not covering. 

As a next step, define your services very clearly. You don’t want to offer everything, nor should you just be limited to a single service. You can go with medical dermatology or cosmetics, or you can even combine both. Honestly, this is the better choice. 

Secure Your Location and Facility Early

Location is also of prime importance. A good location means more patients, which means more revenue. So, start looking for a good place at least 6 months before the opening date. Once you start your practice, you will realize how important it is. 

But how to select a good location for your clinic? Well, the most basic way is to consider the patient demographics. Medical dermatology practices benefit from proximity to primary care physicians and easy access for elderly patients. On the other hand, cosmetic practices are more suited for affluent areas with better parking and attractive surroundings. Yes! You have to think this deeply. 

Get Insurance Credentialing Early

This might shock you, but you should start working on credentialing even before the location selection. Not only does credentialing take time, but it also drains a lot of money from your pocket. Without proper credentialing, you can’t operate properly, and even if you try to operate somehow, you will not be able to receive full payment for your services. 

A simple solution for credentialing is to get insurance credentialing services from third-party companies. These companies have a lot of experience in getting your physicians credentialed easily and know the payer requirements. This helps your applications move faster without any errors or delays.

Develop a strategic approach to insurance selection rather than applying to every available plan. Research which insurers cover the largest patient populations in your area, offer reasonable reimbursement rates, and align with your referral sources.

Master the Financials

Malpractice insurance is one of the biggest expenses that you will encounter after opening your practice. There is no single price tag to put on this, but it ranges somewhere between $7,500 – $50,000 annually.

Now, not only do you have to think about the internal expenses, you have to consider legal problems, licensing fees, and permit costs for your area. These vary for every location. Consult with attorneys who are experienced in healthcare law to ensure compliance.

Also, don’t make the mistake of doing medical billing with in-house teams. Many practices fail just because of this single mistake. Always acquire dermatology billing services from third-party companies. 

Wrapping Up

Let’s wrap up everything we have discussed in this guide. 

If you are a dermatologist or want to start a practice, you can tap into a lot of revenue. However, doing so will require very careful planning. And in this guide, we have told you all the things that you should include in your planning. 

Start with market research and required material, and then move on to getting your physicians credentialed, and try to outsource your operations as much as possible.