Understanding The Profitability Of Starting A Healthcare Business

Juliet D'cruz

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Understanding The Profitability Of Starting A Healthcare Business

This is the United States of America. And in the United States, everything has a price tag. It does not matter if it’s water, education, or life-saving medicine. If someone needs it, then someone is going to make a profit by withholding it until people are willing to pay for it.

And here is the thing you have to remember about this: It is the way things are. If you are looking into how to start a healthcare business, you are going to hear a lot of talk about how things “should be”. But we do not live in the world that “should be”. We live in the world that is.

If you do not make money off of healthcare, then someone will. So, let’s talk about how that works. What is involved in a healthcare business? And how can it be made profitable?

What Does a Healthcare Business Require?

Pop quiz: What sort of license do you need to open a healthcare business? 

The answer is: None. Or rather, it is not exactly a license. We will explain. To begin with, one of the things that makes a healthcare business a good startup is the lack of licensing required to perform healthcare. This lowers the liability of the company, making it easier to get a loan

Industries that require licensing on the part of business means that the business itself cannot be sued for any mistakes made by its employees. Now, the employees will need licenses. Or at least, they will if you want to say that you have licensed employees able to do certain things.

But that means that if they make a mistake, then that is on them.

Your business does need to be registered to Medicare and/or Medicaid, but this is more a matter of getting paid than being qualified to do anything.

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What Makes a Healthcare Business Profitable?

Many people, both those on the inside of the healthcare industry and those on the outside, think of healthcare as the business of curing people’s diseases. This is untrue both from a business standpoint, as well as a practical standpoint of anyone who actually practices medicine.

Healthcare is the business of “treating” illness, not curing it. This is why it became so attractive to capitalists in the first place. Medical treatment involves actions being taken over and over again to achieve a goal. That is quite similar to the description of work being done.

And since there is basically work being done, then that means there is value to be extracted from it. The healthcare business is profitable because it means you can make people pay for the help they receive in order to stay healthy (or, in some cases, alive at all).

And because treatments take tons of time (sometimes years), then you can see returns over a long period. Prices can be easily adjusted to inflation since it is all based in necessity. If a person has to choose between groceries or loan payments or medicine, they’ll buy medicine.

Know Your Niche

This is not to say that all healthcare businesses are the same, however. An addiction recovery center is a very different kind of healthcare facility than a nursing home. And beyond that, a hospital will be leagues different since it can (and often will) contain multitudes of departments.

If you are just starting out though, then you will need to find a niche. Rather than trying to hit it big with a hospital, start small and high impact. This is especially true if you got a loan to start the business. Unless you have the money to manage the loan before you make a profit, you do not want to swing big and try to build a whole new hospital that won’t see profits for years.

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Hire the Right Staff

This is related to knowing your niche. Obviously, you want the best staff you can get for the lowest price available. And remember, this does not always mean medical professionals.

Medical professionals are important, but you do not need as many as you think you do. In fact, one innovation that a lot of businesses over the last ten years have employed is using their medical professionals as staff trainers and coordinators rather than as actual workers.

This does two things for you: First, it allows you to hire fewer medical professionals while still getting the marketing benefit of them. And second, it means that there is another layer of safety between you and liability. Now, most mistakes made by your business will be the result of people who are untrained or barely trained, as well as not being medical professionals.

Should anything uniquely bad happen, then the medical professional that trained them can be perceived as more liable than you are for failing to train them properly.

Find the Right Clients

Most healthcare startups are hospice care because of old people. Old people need constant help and have more money than your average consumer. But the real advantage of hospice and retirement care is the face that new elderly people are being made every day.

The only time you can expect to run out of clients is if the world ends.

Understand Insurance

A lot of money will be made at the negotiating table between you and medical insurance companies. The more you understand about insurance, the more money you can make.


It would be an exaggeration to say that the healthcare industry was safe. It has issues with recessions and is prone to cataclysmic issues should any of your employees make miskes.

But part of the advantage of it is that there are lots to make while passing the buck. This does not just mean you make money while staying safe. It also means you keep your reputation clean for the next time you want to open a business like it, whether you succeed or fail.

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