Written by Madison Wellman, Business Opportunity Specialist, RCAP Solutions

Most Americans are aware that healthcare is big business. We are all familiar with the hospital networks, health insurers, and pharmaceutical firms that exist within our healthcare system – and the large amount of money they generate. McKinsey and Company estimates that earnings in the Healthcare Services and Technology (HST) sector will grow by 8.2 percent for the first half of the 2020s, reaching a projected profit pool of $70 billion by 2025. There is an immense amount of opportunity for an entrepreneur in the HST space; but what should a non-clinical professional know before taking the plunge? Below are my five tips for anyone looking to start a healthcare technology and services business.

1. A Good Attorney – Every small business should have some legal representation, but in some industries, it is more important than others. In healthcare, a qualified attorney who understands both federal and commercial payers is a MUST – bonus points if the firm also has a staff compliance officer. Some additional thoughts on attorneys: make sure they are using agreements that are tailored to your business – not templates, make sure conflicts are settled in your state, and finally, avoid arbitration if possible. Arbitration is great for preserving relationships but poor for holding bad actors who want to skip out on their obligations accountable.
2. NDA & BAA – If your business handles sensitive patient data or works directly with clinicians and providers you will need a proper Non-disclosure Agreement (NDA) and Business Associate Agreement (BAA). The NDA is self-explanatory, but the BAA allows your business to view HIPPA protected patient data. The importance of having your own version of these documents and having the providers sign your NDA/BAA, not the other way around, cannot be overstated. This can help you side-step future unnecessary litigation or Medicare compliance issues.
3. HIPPA Compliant Tools – Any software your business uses will have to comply with federal patient privacy regulations. Luckily, there’s a wide variety of HIPPA compliant business software on the market and some well-known business applications, such as Dropbox, have HIPPA compliant versions. Also, your payment processor must be SOC1 compliant. SOC1 is too complicated to explain here, but your Medicare attorney should be able to break it down for you.
4. Policy Protects You – Set standard policies and procedures for every activity your business engages in and every task you will ask your employees to do. Make sure you have employee contracts that clearly detail employee conduct, clearly define poor conduct, and clearly state consequences for failing to meet those standards. Having these procedures written down will help you avoid and defend against lawsuits.
5. Don’t Be your own Bookkeeper – Typically insurance companies and Medicare can take up to 90 days to reimburse for a procedure. This lethargic pay schedule results in large accounts receivable and unique tax pitfalls for healthcare businesses. A professional accountant with healthcare sector experience will help you maintain healthy cashflow and be prepared for tax season.

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