A Medical Practice Gets Paid Late, by Someone Else, at a Rate You Did Not Set
Most business plans assume you sell something and get paid for it. A healthcare practice sells a visit, bills a third party, waits 30 to 90 days, and collects a contracted rate that is often a fraction of what it charged. A professional business plan writer who models a clinic like a retail store will produce projections that look fine and run out of cash in month four. Dr. Paul Borosky, DBA, MBA has written more than 1,000 business plans over 14 years, and healthcare plans are built differently from the first line.
Last Updated: 10/25/2026 · Reviewed by Dr. Paul Borosky, DBA, MBA
A healthcare business plan is a cash flow plan first. The lender needs to see three things a general plan does not carry: the payer mix and the contracted rate for each payer, the credentialing timeline before insurers will pay you at all, and the collection lag between the visit and the deposit. Get those three right and the rest of the plan is standard. Get them wrong and the practice is profitable on paper and broke in the bank.
What Makes a Healthcare Plan Different
Payer mix and contracted rates
A visit billed at $200 does not collect $200. Medicare pays its fee schedule, Medicaid pays less, each commercial plan pays its contracted rate, and self-pay collects whatever you can. The model has to project visits by payer and apply each payer's rate, not an average charge. A plan that uses the charge master as revenue overstates collections, often badly.
Credentialing lag
Insurers will not pay a new provider until that provider is credentialed and enrolled with each payer. That process commonly takes 90 to 180 days and sometimes longer. A practice can open, see patients and bill, and collect almost nothing from insurance for a quarter. The plan has to fund that gap, and the lender has to see that it is funded.
Days in accounts receivable
Even once credentialed, claims take time to pay and some get denied and reworked. Days in A/R of 30 to 50 is a common target for a well-run practice. The cash flow statement has to show revenue earned in month one arriving in month two and three, with a denial and write-off percentage, not landing in the bank on the day of the visit.
Ask any writer who quotes a healthcare plan how they handle credentialing in the cash flow. If the answer is a blank look, the model will show cash the practice will not have.
Where the Money Goes Before the First Patient
Build-out and equipment
Exam rooms, plumbing, medical-grade finishes, and the equipment list for your specialty. These are usually the largest use of funds and the part lenders can secure.
Working capital for the credentialing gap
Payroll, rent and malpractice premiums for the months between opening and the first insurance deposits. This is the line most self-written healthcare plans leave out, and the one that sinks them.
Systems and compliance
Electronic health records, practice management and billing software, HIPAA compliance, and often a billing service or in-house biller. Billing is not overhead in a practice. It is how revenue happens.
Licensing and enrollment
State licensure, DEA registration where applicable, NPI, and payer enrollment. Low dollar cost, high calendar cost. The timeline belongs in the plan.
What the Lender Tests in a Practice Plan
Collections, not charges, carry the loan
Say a two-provider primary care practice projects 7,000 visits in year two at an average charge of $180, which is $1.26 million in gross charges. If the blended collection rate across the payer mix is 55 percent, collections are about $693,000. That is the revenue line. Not $1.26 million.
If the loan is $500,000 at roughly 9.5 percent over 10 years, the payment is about $6,470 a month, about $77,600 a year, and at 1.25 times coverage the lender needs about $97,000 in cash available for debt service after provider compensation. The model has to get there from $693,000 in collections, arriving 45 days after the visits, with the first 120 days of insurance revenue near zero while credentialing finishes. That is the plan a professional business plan writer builds for a practice. See the SBA loan page for how lenders test the coverage number.
Practices and Facilities This Applies To
Primary care, dental, chiropractic, physical therapy, mental health and behavioral health practices, urgent care, med spas and aesthetic clinics, home health agencies, and specialty practices. The payer mix and the credentialing timeline change by specialty. A cash-pay med spa has almost no credentialing lag and a very different plan from a Medicaid-heavy behavioral health clinic. Both still have to prove collections, not charges.
Dr. Paul writes each plan from your specialty's payer mix and your market, builds the model himself, and delivers in 7 days or less from the point he has your numbers. Pick the plan size that matches your loan on the plans and prices page, or call first. If you are already open and the problem is cash rather than the plan, business consulting is the right starting point.
Healthcare Business Plan Questions
What is different about a healthcare business plan?
Three things. Revenue is projected by payer at each payer's contracted rate, not at the charge. The cash flow has to fund the credentialing period, commonly 90 to 180 days, when insurers will not yet pay a new provider. And collections arrive 30 to 50 days or more after the visit, with a denial and write-off percentage. A general business plan carries none of these and overstates cash.
Do I need a business plan to open a medical or dental practice?
If you are borrowing to open, yes. Practice lenders and SBA lenders want to see the payer mix, the credentialing timeline, the working capital that covers it, and projections that carry the loan from collections. If you are self-funding, the plan is still the fastest way to find out whether the practice survives the first six months.
Can Dr. Paul write a healthcare business plan in 7 days?
Yes, from the point he has your specialty, your expected payer mix, your build-out and equipment costs and your loan amount. He builds the model himself, including the credentialing gap and the collection lag. If your lender or landlord has a date, say so on the first call.
Dr. Paul Borosky, DBA, MBA
Dr. Paul Borosky holds a DBA from National University and an MBA with a focus in Finance from Webster University. For 14+ years he has helped 1,000+ owners turn ideas into funded businesses, supporting $100M+ in funded projects. He is the founder of Quality Business Plan, creator of the Organize-Plan-Grow™ Strategy, author of more than 25 business books, and publisher of over 1,000 business videos on YouTube. He writes every plan personally, builds every financial model himself, and answers his own phone.
A Practice Plan Built on Collections, Not Charges
Payer mix, credentialing lag and days in A/R built into the model from the first line. Pick the plan size that matches your loan and Dr. Paul calls you.
See Plans and PricesCollection rates, credentialing timelines, A/R days and loan terms above are illustrations of common practice at the time of publishing and vary by specialty, payer and market. Your payers' contracts and your lender's requirements govern.