Private practice checklist: the 10 requirements, and why you need an AI employee

A private practice checklist usually ends at opening day, which is the point where the real administrative work begins. Everything on the list before that day is a one-time hurdle: a license, an identifier, a business entity, an insurance policy, a set of contracts with payers. Everything after it is recurring work that arrives every single day, and it is the recurring work that has pushed so many clinicians out of independent practice. The American Medical Association's Physician Practice Benchmark Survey found that the share of physicians working in private practice fell from 60.1 percent in 2012 to 42.2 percent in 2024, and the reasons physicians gave for selling included inadequate payment rates, costly resources, and burdensome regulatory and administrative requirements. This post walks through the ten requirements every new practice has to meet, with the official source for each, and then makes the case for the item that most lists still leave out.

The private practice checklist at a glance

The ten items below are the minimum requirements for starting a private practice in the United States, whether you are a physician opening a primary care office, a nurse practitioner starting a chronic care clinic, or a therapist going out on your own. The first nine have been on every checklist for years. The tenth is new, and it exists because the first nine create more ongoing work than a small team can comfortably absorb.

Each requirement is explained below. Rules vary by state and by profession, so treat this as a map of what to check, and confirm the details with your licensing board, your accountant and your attorney before you commit to a date.

Legal foundations: license, NPI and business entity

1. A state license in good standing

Nothing else on the list matters until your professional license is active in the state where your patients will be located at the time of the visit. That last phrase matters for telehealth, because the patient's location generally determines which state's rules apply. Your state licensing board publishes the requirements for independent practice, including any supervision hours, collaborative practice agreements for nurse practitioners and physician assistants, and continuing education deadlines. Put the renewal date in a calendar that more than one person can see, because a lapsed license stops both care and billing on the same day.

2. A National Provider Identifier

The National Provider Identifier, or NPI, is a ten-digit number that identifies you on claims, prescriptions and referrals. It is free, and you apply for it through the federal National Plan and Provider Enumeration System. Individual clinicians receive a Type 1 NPI. If you form a group or a legal entity that will bill under its own name, the organization needs its own Type 2 NPI as well. Payers will not start a credentialing application without one, so this is usually the first form a new practice owner fills in.

3. A business entity, an EIN and a bank account

Most practices form a legal entity so that the business, and not the owner personally, holds the lease, the contracts and the liabilities. The right structure depends on your state, since many states require licensed professionals to use a professional corporation or a professional limited liability company, and the Small Business Administration's guide to choosing a business structure explains how each option affects taxes and personal liability. Once the entity exists you need an Employer Identification Number, which the IRS issues online at no cost. The IRS is direct on this point, stating that "you never have to pay a fee for an EIN" on its EIN application page, and an approved application is issued immediately. With the EIN in hand you can open a business bank account, which keeps practice revenue separate from personal money and makes payer enrollment far simpler.

Protection: malpractice insurance and HIPAA compliance

4. Malpractice and business insurance

Professional liability insurance, commonly called malpractice insurance, protects you against claims arising from the care you provide. Payers ask for proof of it during credentialing, and most will not finish an application without a current certificate. A new practice should also look at general liability cover for the premises, cyber liability cover for a data breach, and workers' compensation if it has employees, which most states require. Ask each insurer what limits the payers you plan to join expect, because those expectations differ by plan and by specialty.

5. HIPAA compliance

A practice that bills insurance electronically is a covered entity under HIPAA, and the obligations begin on the first day. The Security Rule requires every covered entity to carry out a risk analysis, which the Department of Health and Human Services describes in its guidance on risk analysis as an accurate and thorough assessment of the risks to the confidentiality, integrity and availability of electronic patient information. You also need written privacy and security policies, staff training, and a Notice of Privacy Practices to give to patients.

The part new owners most often miss is the business associate agreement. Any vendor that handles patient information on your behalf, including your EHR, your billing service, your email provider and any software that reads or writes patient records, is a business associate, and HHS explains in its business associates guidance that a covered entity must have a written contract with each one before sharing that information.

Getting paid: EHR, billing and payer credentialing

6. An EHR and a way to bill

An electronic health record holds your notes, orders and patient history, and in most small practices it is also where scheduling and billing happen. Choose it with care, because the EHR you start with is hard to leave. The practices we speak with often stay on a system that no longer fits them for years, simply because moving the records looks too daunting to begin. One of our partners was in exactly that position before moving more than 400 patients from IntakeQ to TherapyNotes in days, and if you are already on the wrong system, our EHR data migration service exists for that reason. On the billing side you need a way to submit claims, post payments and work denials, whether that is your EHR's own billing module, a clearinghouse, or an outside billing service.

7. Payer credentialing and enrollment

Credentialing is the process by which an insurer verifies your license, training and liability cover before it will contract with you. It is the step that decides when revenue can start, and it is slower than new owners expect. Most commercial payers pull your information from the CAQH Provider Data Portal, and Relias puts the typical credentialing timeline at three to six months from start to finish. Medicare and Medicaid run their own separate enrollment processes, with Medicare enrollment handled through the federal PECOS system.

Credentialing is also not finished once it is approved. The portal is designed to require providers to confirm that their profile is still accurate every 120 days, as the American Dental Association explains in its credentialing service guide, and a profile that is not re-attested in time becomes inactive for the plans that rely on it. A missed re-attestation can stall every pending application at once, and nobody in a busy practice has "check the credentialing portal" at the top of their list.

Daily operations: patient paperwork and the front office

8. Patient paperwork that holds up

Before the first visit a patient should receive and sign an informed consent form, your Notice of Privacy Practices, a financial policy that explains fees and cancellations, and, where relevant, a telehealth consent. There is also a federal requirement that many small practices overlook. Under the No Surprises Act, a patient who is uninsured or who chooses not to use insurance is entitled to a good faith estimate of expected charges, and the Centers for Medicare and Medicaid Services sets out the deadlines in its good faith estimate guide: within one business day when care is scheduled three to nine business days ahead, and within three business days when it is scheduled ten or more days ahead. Every one of those documents has to be sent, tracked, chased when it does not come back, and filed in the right chart.

9. A front office, however small

Somebody has to answer new inquiries, schedule appointments, check each patient's insurance coverage before the visit, send reminders, and follow up with the people who asked about care and then went quiet. In a new practice that somebody is usually the owner, working in the evening after the last patient has left. In an established one it is a front desk team, and that team is the hardest part of the practice to keep staffed. In an MGMA Stat poll from May 2025, 29 percent of medical practices said staff turnover had risen over the previous year, and medical assistants and front-office staff were the roles most often named as turnover hotspots.

Why the checklist never really ends

Look back over the nine items and notice how few of them are finished once they are done. The license renews. The malpractice certificate expires and has to be sent to every payer again. The risk analysis has to be revisited when your systems change. The credentialing profile has to be re-attested every 120 days. Every new patient restarts the paperwork in item eight, and every new inquiry restarts the work in item nine.

None of these tasks is difficult. Each takes a few minutes, and that is exactly why the total is so easy to underestimate. Consider a single new patient at a small chronic care practice. The inquiry arrives by email and has to be read and answered. The patient's details are typed into a tracking sheet so that nobody loses sight of them. The same details are typed again into the EHR to create the chart. Their insurance is checked on a payer website, and the result is typed into the chart a third time. The intake forms are sent, and somebody has to notice on Thursday that they have not come back. The clinician has to be told. The appointment has to be confirmed the day before.

That is seven small jobs across five different systems for one patient, and the systems do not share anything with one another, so a person becomes the connection between them. Multiply it by every inquiry in a week and you have a part-time job that consists entirely of moving information from one screen to another. The cost is visible at national scale as well. The 2024 CAQH Index put the annual cost of routine administrative tasks in United States healthcare at 90 billion dollars, and estimated that 20 billion dollars of it could be saved by moving the remaining manual work to electronic processes.

A larger organization absorbs this work by hiring for it. A private practice cannot, which is why the work lands on the owner, and why administrative burden appears among the reasons physicians give for selling their practices. The honest reading of the checklist is that items one to nine are the cost of entry, and the recurring work they generate is the cost of staying open.

10. Why a private practice needs an AI employee

The tenth item on a modern private practice checklist is an AI employee, and it helps to be precise about what that means. It is not a chatbot on your website, and it is not a phone system that answers calls and then hands your staff a transcript. An AI employee is software that carries out administrative work from start to finish across the systems you already use, in the way a trained member of staff would: it reads the inquiry, records the patient where your team tracks them, creates the chart, checks the coverage, sends the forms, notices when they are late, and writes down what it did so that a person can review it.

The difference from another piece of software is where the work ends up. A new tool adds one more screen that somebody has to keep in step with the others. An AI employee removes the copying between the screens you already have, which is the part that was consuming the hours.

What it takes off the list

• New patient administration. Every inquiry is read as it arrives, logged once, and turned into a scheduled patient in your EHR without anyone retyping it.
• Insurance checks. Coverage is verified before the visit and the answer is recorded in the chart, so the conversation about cost happens before the appointment instead of after the claim is denied.
• Paperwork follow-up. Consent forms, intake packets and good faith estimates are sent on time, and the ones that have not come back are chased.
• Tracking. Which patients are waiting, which clinician each one belongs to, and who has been answered are kept current without a spreadsheet that falls behind in a busy week.
• Evenings and weekends. Inquiries that arrive after hours are handled when they arrive, so Monday starts from a complete list.

What it looks like in a real practice

MyWellbeing, a New York therapy group, was spending its week on exactly the work described above. Each new patient arrived as several emails, and each one had to be copied by hand into a tracking sheet and into the EHR. After handing that front office work to Vybz Health, the practice reports more than ten staff hours saved every week and about 5,000 dollars a month in operating costs, along with weekends that no longer have to be covered. The tasks did not change. What changed is that the team stopped being the link between its own systems.

Questions to ask before you hire one

Because an AI employee will handle patient information, it belongs on the checklist with the same scrutiny as any other vendor, and a short list of questions will separate a real one from a relabelled chatbot.

1. Will you sign a business associate agreement before we share any patient information?
2. After a new inquiry is handled, what has changed in my EHR and my tracking sheet, and can I see a record of every step?
3. Does it work with the EHR, inbox and calendar I already use, or do I have to replace something first?
4. What happens when it is unsure, and how does a person get asked?
5. Who sets it up, and who adjusts it when my practice changes?

How to use this checklist

If you are starting a private practice, work through items one to seven in order, because each one makes the next possible: the license allows the NPI, the entity allows the EIN and the bank account, and those together allow credentialing, which takes the longest and should therefore begin as early as possible. Prepare the paperwork in item eight while you wait for payers to respond.

If you are already open, use the list as an audit. Check the renewal dates on your license and malpractice policy, confirm that every vendor has signed a business associate agreement, look at when your credentialing profile was last re-attested, and then count the hours your team spends each week on items eight and nine. That last number is the one that tells you whether item ten belongs on your list this year. The results other organizations have measured are collected in our case studies, covering practices that have already handed that work over.

Also read

• Mental health clinics need an AI employee, not another AI receptionist: why a tool that only answers the phone leaves most of the work where it was.
• Patient intake automation: what Luna does the moment an intake arrives: a step-by-step look at the new patient work described in items eight and nine.
• Real-time insurance eligibility verification: a simple secret to more clients: how checking coverage before the visit changes whether an inquiry books.