At A Glance
- Beyond having a medical license, a general business or professional license is also essential for the legal operation of your practice in your locality
- Local health departments or similar regulatory bodies might require permits to ensure the practice aligns with local health and safety regulations
- Depending on the location and services, a practice may need zoning, building, and special permits
Starting your own medical practice typically involves obtaining different types of business permits and healthcare licenses. As with most aspects of opening a private medical practice, the specific requirements will vary depending on the size, specialty, and location of your practice, so it’s always a good idea to check local regulations and consult with an attorney to ensure that you’re fully compliant.
Here are some common permits and licenses that you may need when starting a medical practice.
A medical license
Your medical license is a fundamental requirement for practicing medicine and providing telehealth services legally in your jurisdiction, so if you haven’t already applied in the state in which you plan to practice (or if your state is not part of the Interstate Medical Licensure Compact), now is the time to do so.
If you are applying for your license for the first time, or applying for a license from a new state, research the exact licensing requirements, including application fees and renewal intervals. The Federation of State Medical Boards (FSMB) provides a comprehensive list of contact information for each state medical board, as well as resources to make the process easier. It’s important to find out if the state in which you are applying has separate boards for medicine and osteopathy and is a member of the Interstate Medical Licensure Compact. The process can take many months to complete, so the sooner you start, the better.
A business license
Your medical license isn’t the only type of license required to open your practice. You’ll likely need a general business or professional license specific to operating a medical practice from your local government or municipality.
Why do I need a business license for my medical practice?
While the primary purpose of your practice is to provide healthcare services, it’s still a business in the eyes of the law. Obtaining a general business license is important for many reasons, including:
- Legal compliance: A general business license ensures that your practice operates legally and complies with local, state, and federal regulations. It allows your practice to conduct business activities within the designated jurisdiction. Your business must be properly incorporated and registered with the state to operate legally.
- Identification and taxation: A business license provides a unique identifier for your practice, making it easier for regulatory authorities to track and identify the entity for tax and legal purposes. It also ensures that the practice is appropriately taxed based on its commercial activities.
- Patient protection: A business license offers a level of consumer protection by ensuring that your practice adheres to certain standards and regulations. It provides transparency and accountability for your patients and the public and helps safeguard your patients by ensuring that your practice meets certain safety, health, and operational requirements.
- Liability and insurance: Some insurance providers may require a business license before they will agree to cover the medical practice. Having a license in place can make it simpler to obtain liability insurance and other business-related coverage.
- Legal recourse: Operating without a required business license can lead to legal penalties and fines. A valid license protects your practice’s interests and access to legal recourse if needed.
Research the specific licensing requirements in your location and comply with all applicable laws and regulations.
State or local health department permits
Depending on your location, you may need to obtain a permit or license from your state, county, or city health department, or a similar regulatory body. These permits ensure that your medical practice complies with local health and safety regulations. The requirements vary by location, but will likely include the following:
- Business information: Provide detailed information about your medical practice, including its name, address, ownership structure, and contact details.
- Licensing and credentials: Submit documentation of your medical licenses and the professional credentials for all healthcare providers at your practice.
- Facility inspection: The health department may inspect your practice's physical facility to ensure compliance with health and safety standards, including infection control, sanitation, and accessibility.
- Infection control plan: Develop and present an infection control plan that outlines procedures for preventing and managing infections within the practice.
- Clinical protocols and policies: Provide documentation of clinical protocols, policies, and procedures for patient care, medication management, and emergency response.
- Training and competency: Demonstrate that your staff have received proper training and are competent to perform their assigned duties.
- Recordkeeping: Demonstrate that you’ve established a system for accurate and organized recordkeeping, including patient medical records, incident reports, and medication logs.
- Emergency preparedness: Develop a comprehensive plan for responding to medical emergencies and natural disasters.
- Quality assurance: Implement a quality assurance program to monitor and evaluate the quality of patient care and identify areas for improvement.
- Insurance: Show proof of malpractice and liability insurance coverage to protect your practice and patients in case of potential legal claims. Malpractice insurance has several components, including coverage for the individual providers within the practice and global coverage for the practice itself.
- Compliance with regulations: The health department will ensure that you comply with state and federal regulations, including HIPAA for patient data protection.
Thoroughly research and consult with an attorney with healthcare experience to make sure you understand the specific requirements set forth by your state or local health department and work with an accountant familiar with healthcare and medical practice management. Engaging with your local health department in the early stages of planning for your medical practice can help streamline the permit application and approval process.
Business tax registration
You'll need to register your medical practice with the appropriate tax authorities to fulfill your employment and payroll tax obligations. This means obtaining an employer identification number (EIN).
How do I apply for an EIN for my medical practice?
Applying for an EIN for your practice is a straightforward process. It’s free of charge and can be completed online. Here's are the steps you need to follow to apply for an EIN:
- Determine eligibility: You can apply for an EIN if you are the owner or responsible party of a medical practice that is structured as a sole proprietorship, partnership, corporation, or limited liability company (LLC). Most practices incorporate as an LLC or a PLLC and some practices create an entity taxed as an S-corporation by filing IRS form 2552. The advantages of an S-corporation designation include heightened credibility, pass-through taxation, and cash accounting, among others.
- Access the IRS website: Visit the Internal Revenue Service (IRS) website at www.irs.gov.
- Navigate to the EIN application page: Find the "apply for an employer identification number (EIN) online" link on the IRS website. This will take you to the online application form.
- Complete the application: Fill out the online application, providing information about the type of business entity, the reason for applying for an EIN, the legal name of your business, its mailing address, and the responsible party's details.
- Review and submit: Double-check all the information for accuracy, and then submit the application electronically.
- Receive your EIN: Applications are usually processed quickly and the IRS will then issue an EIN to you. You can print or download the confirmation notice with the assigned EIN for your records.
Note that an EIN is used for federal tax purposes, and some states may also require a separate state tax identification number for state tax reporting. Be sure to check with your state's taxing authority to determine what you need for your practice.
“Be sure to check with your state's taxing authority to determine what you need for your practice. ”
Zoning and building permits
Ensure that your medical practice location complies with local zoning regulations. For instance, if the office space for your new practice is not turnkey and you plan to modify the premises, you will likely need to obtain a building permit before doing so.
A building permit is legal authorization from a local government authority that allows your business to construct, renovate, or make significant changes to buildings or structures. It ensures that your construction project complies with safety codes, zoning regulations, and building standards from the local building department or other relevant agencies.
Typically, obtaining a building permit involves submitting detailed plans and specifications of the proposed construction, paying fees, and undergoing inspections at various stages of the project to verify compliance. Failing to obtain the required permits or violating its terms can result in penalties, fines, or even halting the construction until compliance is achieved.
Additionally, depending on the speciality and services offered, some medical offices may require special permits for specific reasons such as the delivery or radiation for X-rays, gasses for anesthesia, or other medical services such as medical waste.
What’s a fictitious name permit and does my medical practice need one?
If your medical practice is legally registered as "Jane Doe Medical Associates, LLC," but you want to operate and advertise as "Peach Tree Plaza Family Medical Group," you will need to obtain a fictitious name permit.
A fictitious name permit, also known as a doing business as (DBA) permit or trade name permit, is legally required for businesses that operate under a name different from their legal business name. The registration process allows your medical practice to use a fictitious name for operations without changing the name of your legal entity.
Fictitious name permits ensure transparency and protect patients, while also allowing practice owners some latitude in the goals and marketing strategy of the medical practice. They make it clear to the public that you are operating under an alternate name while maintaining the legal identity of the business entity. This is important for many reasons. For instance, patients often object when they receive a bill from an entity with a different name unless they know about it beforehand.
The requirements for a fictitious name permit may vary depending on your location and jurisdiction. In most cases, applicants must file a DBA registration with the appropriate local or state government agency and pay a registration fee. This process typically involves verifying that the chosen fictitious name is not already in use by another registered business in the area.
It's important to note that a fictitious name permit only allows the business to operate under the alternate name; it does not change the legal structure or liability of the business entity. As such, the legal responsibilities, tax obligations, and any licensing or permits associated with the original business name apply when operating under the fictitious name
Do I need a permit to conduct lab tests at my medical practice?
The Centers for Medicare and Medicaid Services (CMS) regulates all clinical non-research laboratory testing performed on humans in the US through the Clinical Laboratory Improvement Amendments (CLIA). Unless you are planning to order lab testing from an outside laboratory for every single test, you’ll likely need to obtain CLIA certification or a waiver. While CLIA is a federal program, CMS relies on state agencies to process CLIA applications and renewals and to conduct oversight and maintain CLIA laboratories’ certification records, so work with the appropriate agency to ensure compliance.
CLIA certification vs. CLIA waiver
CLIA certification and CLIA waiver are different categories under the CLIA program, and depending on the laboratory services your practice offers, you will need to obtain one or the other.
A CLIA certificate is required for laboratories that perform moderate- and high-complexity testing or conduct a wide range of complex tests, including advanced diagnostic tests and tests that require specialized equipment and technical expertise. To obtain a CLIA certificate, the lab must meet specific quality control and proficiency testing requirements, demonstrate proper training and competency of personnel, and adhere to stringent CMS standards. A laboratory with a CLIA certificate is subject to regular inspections to ensure ongoing compliance with CLIA regulations.
A CLIA waiver is granted to laboratories that perform simple, waived tests. Waived tests generally have a low risk of error and can be performed with minimal chances of producing incorrect results, so that there is a low risk of harm to patients if performed incorrectly.
Examples of waived tests include certain rapid diagnostic tests, such as influenza or strep, urine dipsticks, and other simple point-of-care tests. Laboratories with a CLIA waiver are subject to fewer regulatory requirements, yet they still must comply with basic quality control and record-keeping guidelines to maintain the waiver status.
Carefully assess the types of laboratory tests you intend to perform and determine whether you need a CLIA certificate or can operate under a CLIA waiver. The complexity of the tests offered will dictate the appropriate CLIA category and the associated regulatory requirements. Obtaining the correct certification ensures that the laboratory meets the necessary standards for quality, accuracy, and patient safety in the testing processes.
Occupational Safety and Health Administration (OSHA) requirements
Occupational Safety and Health Administration (OSHA) requirements apply to many healthcare employers. These OSHA regulations ensure a safe and healthy working environment for employees and patients. Your practice should require designated staff members and providers to participate in recognized OSHA courses for certification. Additionally, many states require providers to complete OSHA, fire safety, and other continuing education courses to satisfy medical or nursing licensing requirements.
OSHA requirements may vary depending on the speciality, size, and services offered by your medical practice. Here are some key OSHA requirements:
- Bloodborne pathogens standard: The bloodborne pathogens standard protects employees from exposure to bloodborne pathogens such as HIV, Hepatitis B, and Hepatitis C. Your practice must have an exposure control plan in place, provide training to employees on bloodborne pathogens, offer appropriate personal protective equipment (PPE), and ensure proper disposal of medical waste. Display written protocols directing staff what to do in the case of an inadvertent or accidental exposure.
- Hazard communication standard: The hazard communication standard requires medical practices to have a written hazard communication program that includes safety data sheets (SDS) for hazardous chemicals used in the workplace. Employees must receive training on the safe handling, storage, and disposal of hazardous chemicals.
- Personal protective equipment (PPE): Medical practices must provide and train employees on PPE, such as gloves, masks, gowns, and eye protection, to prevent exposure to infectious materials.
- Emergency action plan: Outline procedures for an emergency such as a fire, natural disaster, or medical emergency. Ensure that your employees receive training on the plan and know their role, and that evacuation routes and exits are clearly marked.
- Fire safety: Demonstrate compliance with fire safety regulations, including fire extinguisher placement, smoke detectors, and fire escape plans. Your facility may need to be inspected by the local fire marshall.
- Workplace violence prevention: Develop a workplace violence prevention program to address and mitigate potential risks and threats of violence against employees and patients. These prevention policies overlap with personal liability in the practice. For example, all providers should see patients with another member of the medical staff in the room.
- Medical records and recordkeeping: Maintain records of safety training, incidents, and inspections as required by OSHA.
- Infection control: Implement infection control measures to prevent the spread of communicable diseases, maintain a clean environment, and follow proper sterilization and disinfection protocols. Proper cleaning includes equipment and supplies. If your practice has an autoclave or other sterilization equipment, all staff should be trained appropriately.
- Employee training: Conduct regular safety training for all employees, covering OSHA requirements, workplace hazards, and safety procedures.
Review OSHA guidelines, seek professional advice if necessary, and ensure ongoing compliance with new or changing regulations to promote a safe and healthy workplace environment for your team. To streamline the process and ensure compliance, designate an individual on the team who is in charge of maintaining these records.
Protect your patients and your practice with proper permits
Obtaining proper permits for your medical practice requires considerable time and effort, but it’s absolutely essential to operating a safe medical practice. By complying with all licensing and permit requirements, you protect your patients from harm and protect your practice from liability and malfeasance.
While it may take time to complete all the permitting requirements and may even delay the opening of your practices, it’s important to demonstrate that you take your legal and ethical obligations seriously and are committed to safeguarding your patients' health and building trust within the community.
You Might Also Be Interested In
Optimize your independent practice for growth. Get actionable strategies to create a superior patient experience, retain patients, and support your staff while growing your medical practice sustainably and profitably.