How much does it cost to start a medical practice?

Starting a medical practice costs $70,000 to $500,000. A solo primary care practice in a modest space starts around $70,000 to $150,000. A multi-physician specialty practice with advanced diagnostic equipment can reach $300,000 to $500,000. The biggest variable is whether you lease an existing medical space or build out a new one from scratch.

How long does it take to become profitable as a new medical practice?

Most new medical practices take 12 to 24 months to become profitable. Insurance credentialing alone takes 90 to 120 days, and claims take another 30 to 60 days to reimburse. Building a patient panel of 1,500 to 2,000 active patients typically takes 18 to 24 months. Having sufficient working capital to cover 6 months of expenses is critical.

Should I start a private practice or join an existing one?

Starting your own practice gives you complete control over patient care, scheduling, and income but requires significant upfront investment and business management skills. Joining an existing practice or hospital system offers guaranteed income and shared overhead but limits autonomy and typically pays less long-term. Many physicians start in employed positions to build experience and patient relationships before going independent.

Medical Practice Startup Cost Comparison

Ann Arbor, MI vs Los Angeles, CA

Ann Arbor, MI

$100,000 - $577,000

COL Index: 108

Los Angeles, CA

$147,000 - $869,000

COL Index: 166.5

Detailed Cost Comparison

Expense	Ann Arbor, MI	Los Angeles, CA	Difference
Licensing & Credentialing	$5,000 - $25,000	$5,000 - $25,000	Same
Office Space & Build-Out	$24,300 - $182,600	$50,000 - $375,000	-51%
Medical Equipment & Technology	$15,000 - $100,000	$15,000 - $100,000	Same
Malpractice & Business Insurance	$10,000 - $50,000	$10,000 - $50,000	Same
Initial Staff Hiring	$10,500 - $42,000	$13,500 - $54,000	-22%
Marketing & Patient Acquisition	$3,000 - $15,000	$3,000 - $15,000	Same
Working Capital (3-6 Months)	$32,400 - $162,000	$50,000 - $249,800	-35%
Total Estimated Cost	$100,000 - $577,000	$147,000 - $869,000	-33%

Local Market Factors

Factor	Ann Arbor	Los Angeles
Cost of Living Index	108	166.5
Commercial Rent ($/sqft/yr)	$18 - $38	$30 - $85
Labor Rate Index	1.05	1.35
Sales Tax	6%	9.5%
Minimum Wage	$10.33/hr	$16.78/hr
LLC Filing Fee	$50	$70

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