Medical Practice Startup Costs 2026: How Much Does It Really Cost?

Starting a medical practice costs between $70,000 and $500,000+ depending on your specialty, location, and practice size. A solo psychiatry practice operating via telehealth can launch for under $50,000, while a multi-physician orthopedic clinic with imaging may require over $500,000.

This guide provides a detailed, line-by-line budget breakdown based on 2026 market data — covering everything from office lease and medical equipment to EHR and AI documentation tools, staffing, insurance, and the operating reserves you'll need while building your patient panel.

Updated February 202640+ Line Items8 Specialties Compared

Quick Summary: Total Costs by Practice Type

Solo (Low-Cost)

$50K – $100K

Telehealth-first, minimal equipment, subleased space

Solo (Standard)

$100K – $200K

Leased office, standard equipment, 2-3 staff

Group Practice

$250K – $500K+

Multi-provider, full build-out, specialized equipment

Source: Estimates based on AMA practice management data, MGMA benchmarking reports, and industry vendor pricing as of 2026.

Detailed Budget Breakdown by Category

Office Space & Build-Out

Item	Low	High	Notes
Office lease (first + last + security)	$6,000	$24,000	Varies dramatically by city/region
Leasehold improvements / build-out	$20,000	$60,000	Exam rooms, reception, ADA compliance
Furniture (waiting room, desks, chairs)	$5,000	$20,000	Buy used to save 40-60%
Signage and branding	$1,000	$5,000	Exterior + interior + wayfinding

Medical Equipment

Item	Low	High	Notes
Exam tables	$1,500	$5,000	Per table; need 2-4 minimum
Diagnostic equipment (otoscope, ophthalmoscope, BP)	$2,000	$8,000	Basic diagnostic set
EKG machine	$1,500	$5,000	If cardiology/primary care
Lab equipment (basic)	$3,000	$15,000	Point-of-care testing
Specialty equipment	$5,000	$150,000	Imaging, procedure-specific, varies widely
Medical supplies (initial stock)	$2,000	$8,000	Consumables, PPE, medications

Technology & Software

Item	Low	High	Notes
EHR system (first year)	$3,000	$15,000	Cloud-based vs on-premise
Practice management software	$1,200	$6,000	Scheduling, billing, reporting
AI documentation tools	$600	$3,600	AI scribe (e.g., PatientNotes $50/mo)
Computers and tablets	$3,000	$10,000	3-6 workstations + tablets for rooms
Phone system (VoIP)	$500	$2,000	Cloud phone with auto-attendant
Internet and networking	$500	$2,000	Business-grade with redundancy
Website and patient portal	$1,000	$5,000	HIPAA-compliant hosting

Professional & Legal Fees

Item	Low	High	Notes
Business entity formation (LLC/PLLC/PC)	$500	$2,000	Attorney + filing fees
Medical license and DEA registration	$500	$1,500	Varies by state
Malpractice insurance (first year)	$5,000	$25,000	Specialty-dependent; OB/GYN highest
General liability insurance	$1,000	$3,000	Property + general liability
Credentialing services	$1,000	$5,000	Insurance panel enrollment
Accounting setup	$1,000	$3,000	Bookkeeping, tax planning, payroll
HIPAA compliance program	$1,000	$5,000	Policies, training, risk assessment

Marketing & Patient Acquisition

Item	Low	High	Notes
Logo and brand identity	$500	$3,000	Professional design package
Google Business Profile + local SEO	$0	$2,000	Free to set up; SEO optional
Initial advertising (Google Ads, social)	$1,000	$5,000	First 3 months of digital ads
Printed materials	$500	$2,000	Business cards, brochures, referral pads

Staffing (First 3 Months)

Item	Low	High	Notes
Medical assistant (1 FTE)	$9,000	$15,000	$36K-$60K/year salary range
Front desk / receptionist (1 FTE)	$8,000	$12,000	$32K-$48K/year salary range
Billing specialist (part-time or outsourced)	$3,000	$9,000	Outsourced billing: 4-8% of collections
Payroll taxes and benefits	$4,000	$10,000	15-25% on top of salary

Operating Reserves

Item	Low	High	Notes
3-6 months operating expenses	$30,000	$100,000	Critical: insurance payments lag 30-90 days
Personal living expenses (6 months)	$20,000	$50,000	If leaving employed position

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Startup Costs by Specialty

Your medical specialty is the single biggest factor in startup costs. Equipment-heavy specialties like orthopedics and dermatology require significantly more capital than office-based or telehealth practices.

Specialty	Startup Range	Time to Breakeven	Notes
Solo Primary Care	$70K – $120K	6-12 months to breakeven	Lowest barrier to entry
Solo Internal Medicine	$80K – $150K	8-14 months to breakeven	Similar to primary care
Psychiatry / Behavioral Health	$50K – $100K	3-8 months to breakeven	Low equipment needs; telehealth option
Pediatrics	$90K – $180K	10-18 months to breakeven	Child-friendly build-out adds cost
Dermatology	$150K – $300K	12-24 months to breakeven	Specialized equipment + procedures
Orthopedics	$200K – $400K	18-30 months to breakeven	Imaging + procedure equipment
OB/GYN	$200K – $350K	18-30 months to breakeven	High malpractice + ultrasound
Multi-Physician Group	$300K – $500K+	18-36 months to breakeven	Scales but higher fixed costs

10 Ways to Reduce Your Startup Costs

1. Start with a sublease or shared space

Subleasing from an established practice cuts build-out costs to near zero and gives you instant foot traffic. Many retiring physicians offer favorable sublease terms.

2. Use cloud-based EHR (avoid on-premise servers)

Cloud EHR systems like athenahealth, DrChrono, or Practice Fusion cost $300-$800/month with no server hardware. On-premise systems can cost $15,000-$50,000 upfront.

3. Replace your scribe with AI documentation

AI scribes save $35,000+/year compared to human scribes. Tools like PatientNotes generate SOAP notes from your conversations for $50/month.

4. Lease (don't buy) expensive equipment

Equipment leasing preserves cash and payments are tax-deductible. Most medical equipment leases require $0-$2,000 down.

5. Buy used furniture and non-clinical equipment

Medical office liquidation sales offer exam room furniture, waiting room chairs, and desks at 40-70% off retail.

6. Outsource billing initially

Outsourced billing at 4-8% of collections is more cost-effective than a full-time billing employee ($40K-$55K/year) until you hit 15-20 patients/day.

7. Start part-time while building your panel

Keep a part-time employed position for the first 6-12 months to maintain income while your practice grows. Reduces the personal savings needed.

8. Negotiate your lease aggressively

Ask for 2-3 months free rent, a tenant improvement (TI) allowance of $20-$40/sqft, and a graduated rent schedule that starts low and increases over 3-5 years.

9. Use telehealth to reduce physical space needs

Offering telehealth for follow-ups and routine visits means you need fewer exam rooms. One fewer exam room saves $5,000-$15,000 in build-out costs.

10. Join a GPO (Group Purchasing Organization)

GPOs like Provista or Premier negotiate bulk pricing on supplies and equipment. Typical savings: 10-25% on medical supplies.

Funding Your New Practice

Most physicians use a combination of sources to fund their startup. According to the U.S. Small Business Administration, medical practices have some of the highest loan approval rates due to stable revenue projections.

Funding Source	Typical Amount	Pros	Cons
SBA 7(a) Loan	$50K–$5M	Low rates (7-9%), long terms (10-25 yrs)	Slow approval (30-90 days), extensive paperwork
Medical Practice Loan	$100K–$500K	Designed for physicians, fast approval	Higher rates (8-12%), shorter terms
Equipment Financing	$10K–$200K	Equipment serves as collateral, tax benefits	Only covers equipment, not operating costs
Business Line of Credit	$25K–$150K	Flexible, pay interest only on what you use	Variable rates, may require collateral
Personal Savings	Varies	No debt, no interest, full control	Personal financial risk
Physician Recruiter Incentives	$10K–$100K	Hospital/health system may fund your startup	May come with referral obligations

Pre-Launch Checklist & Timeline

Plan for 6-12 months from the decision to open to seeing your first patient. Here's a typical timeline for a new medical practice:

6-12 Months Before Opening

✓Develop business plan and financial projections
✓Secure financing (SBA loan, practice loan, savings)
✓Choose legal structure (LLC, PLLC, PC) and file
✓Begin insurance credentialing (takes 90-180 days)
✓Scout locations and negotiate lease

3-6 Months Before Opening

✓Sign lease and begin build-out
✓Order medical equipment and furniture
✓Select and implement EHR system
✓Set up AI documentation tools
✓Hire initial staff (MA, receptionist)
✓Obtain malpractice and business insurance

1-3 Months Before Opening

✓Complete build-out and equipment installation
✓Train staff on EHR, billing, and office procedures
✓Set up phone system and website
✓Launch marketing (Google Business Profile, local ads)
✓Establish supply vendor accounts
✓Conduct HIPAA compliance training

Launch Month

✓Soft opening with limited scheduling
✓Verify insurance credentialing is complete
✓Begin patient scheduling and outreach
✓Monitor cash flow and adjust staffing

Frequently Asked Questions

How much does it cost to start a medical practice?

Starting a medical practice costs between $70,000 and $500,000+ depending on specialty, location, and practice size. A solo primary care practice can launch for $70,000-$100,000, while a multi-physician specialty practice with imaging equipment may require $300,000-$500,000+. Major cost categories include office space ($2,000-$8,000/month), medical equipment ($10,000-$150,000), EHR/technology ($5,000-$25,000), staffing ($80,000-$200,000/year), and professional fees ($5,000-$15,000).

How much does it cost to open a medical clinic?

Opening a medical clinic typically costs $100,000-$250,000 for a small to mid-size facility. This includes leasehold improvements ($20,000-$60,000), medical equipment ($15,000-$100,000), furniture and fixtures ($5,000-$20,000), EHR system ($5,000-$15,000 first year), initial staffing and training ($20,000-$50,000), and 3-6 months of operating reserves ($30,000-$60,000).

What is the capital budget for a small healthcare clinic?

A capital budget for a small healthcare clinic should account for: build-out/renovation ($20,000-$60,000), medical equipment ($15,000-$75,000), IT infrastructure and EHR ($10,000-$25,000), furniture ($5,000-$15,000), and signage/branding ($2,000-$5,000). Most lenders recommend having 6-12 months of operating expenses in reserve, which adds $50,000-$120,000 to the capital requirement.

How long until a new medical practice becomes profitable?

Most new medical practices reach profitability within 12-24 months of opening. Primary care practices may break even faster (6-12 months) due to lower overhead, while specialty practices with expensive equipment may take 18-36 months. Key factors include patient volume growth, payer mix, operational efficiency, and overhead control. Having adequate cash reserves for the first 6-12 months is critical.

Should I buy or lease medical equipment when starting a practice?

Most new practices should lease major equipment to preserve cash flow. Leasing typically requires $0-$5,000 down versus the full purchase price, and lease payments are tax-deductible as business expenses. Consider buying smaller items under $5,000 and leasing expensive equipment like imaging machines, procedure tables, and diagnostic systems. Equipment financing through medical lending companies often offers favorable terms for new practices.

What are the ongoing monthly costs of running a medical practice?

Monthly operating costs for a small medical practice typically run $15,000-$40,000 and include: rent/lease ($2,000-$8,000), staff salaries ($8,000-$20,000), medical supplies ($1,000-$3,000), EHR/technology subscriptions ($500-$2,000), malpractice insurance ($500-$2,000), utilities ($500-$1,000), billing services ($1,000-$3,000), and marketing ($500-$2,000). Overhead ratios typically range from 55-70% of revenue.

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