By Healthcare Attorney Alex Krouse

Nurse practitioner run practices are increasing in number throughout the country. From house call businesses to family practices, nurse practitioners are establishing themselves as business owners in the healthcare industry. Working with nurse practitioners to form their own practices is an exciting experience, but also one that many nurse practitioners find intimidating.

The many rules and regulations in healthcare, even beyond the issues of owning your own business, can make for a daunting process. In addition, being a nurse practitioner creates some specific legal and regulatory issues that other providers might not have to deal with. Nevertheless, by planning ahead, you can ensure success for your organization.

If you have ever thought about forming your own practice as a nurse practitioner, checkout the 5 issues you should keep in mind when developing your business plan.

1. Collaboration and Supervision Requirements

Nurse practitioners in many states, but not all states, may have certain laws that restrict their practice related to collaboration or supervision. From the onset, you need to analyze whether such collaboration or supervision requirements will impede your ability to run a successful practice. In Indiana for example, the collaboration requirements are less stringent and nurse practitioners are able to own and operate their practices with minimal physician involvement.

However, even if your laws are less stringent, you may be put in a position in which you have to pay a physician to collaborate with you. This alone can cause headaches for practices, whether it relates to excessive fees or the availability of collaborating physicians. If addressed appropriately, these concerns can be minimized. Nevertheless, you need to have an understanding of these collaboration or supervision requirements, on both a Federal and state level, to ensure you can operate your practice efficiently and provide care to your patients.

2. Practice Type

If you have an adequate understanding of the collaboration or supervision requirements in your state, or if your state offers full practice authority for nurse practitioners, then the next issue you need to address is what your practice might look like. This has two prongs. First, you need to analyze the types of services you will offer. This could include opening up a practice focused on dermatology, house calls, urgent care, or family practice. A common trend is opening up a practice focused on holistic care. Whatever your focus area will be, you need to ensure that there is a market for the services you hope to offer. In the vast majority of cases, this is not an issue but something you should be considering.

Second will your practice consist of various providers or will you be a solo practice? The benefits of a solo practice include the ability to ensure control and autonomy. In addition, many solo practitioners experience high levels of personal satisfaction. However, a group practice offers sharing of financial risk and collaboration among other professionals.  Either practice type can be extremely successful, but it is important to understand the best practice type to ensure success in your organization.

3. Legal Entity

One of the first issues you need to analyze is what type of business structure makes sense for your organization. Often, nurse practitioners may be starting out on their own as a solo practice. In those cases, I often advise clients to think about operating as a limited liability company or a professional organization. However, if you are forming a practice with other providers such as another nurse practitioner or physician, a partnership or various forms of professional corporations may be a good option. 

Above all, forming a legal entity becomes necessary to protect your company and personal assets, while also offering various tax advantages and legitimacy to your organization. For example, most limited liability company organizations and corporations offer various tax benefits that would otherwise not be available to an individual acting as a sole proprietor without forming a legal entity. There are numerous options for legal entity formation; however it is an issue that should be addressed at the onset of your venture.

4. Insurance and Managed Care

When running a practice, the key to ensuring your organization receives income comes down to the insurance companies. Managed care contracts specifically. Nurse practitioners thinking about forming their own practices need to ensure that the managed care organizations credential nurse practitioners. In my experience, the vast majority do and this is only increasing. In short, this means nurse practitioners can participate with insurers through a contract that defines the fees you will receive for certain services.

Managed care organizations include health maintenance organizations, preferred provider organizations, Medicare, and Medicaid. Choosing which networks to participate in can be a process, but ultimately this process dictates how you will get paid for services. A growing trend for many nurse practitioners is opting out of Medicare. This is not a decision to take lightly, but on that should be analyzed on a case by case basis. Above all, you should ensure that organizations will reimburse you for services and you should actively negotiate these contracts to ensure you receive the most favorable rates.

5. Location

The location of your practice is also a central issue that you should think about. When I was working with a nurse practitioner to form her own practice, we discussed various areas in which she would create a practice location. The factors in the location come down to competition, demographics, availability of space, and economic factors such as payer mix. For example, by placing your practice location in a high income area or suburb, you will have the advantage of many privately insured patients but also more competition.

Location is also dependent on the type of practice you intend to operate. Many nurse practitioners specializing in dermatology tend to focus on high income areas in which the majority of your potential patients have ready access to insurance. On the other hand, nurse practitioners specializing in family medicine have more flexibility in that the mix of insured patients (private vs. Medicare vs. Medicaid). Regardless, nurse practitioners looking to form their own practices should focus on these various factors when analyzing their location.

Forming your own practice, or a practice with other nurse practitioners or physicians can be a rewarding process. Although it might seem daunting, by analyzing these issues from the beginning, you can ensure you make the right decision for you and your patients.


Alex Krouse is a healthcare attorney at Krieg DeVault, LLP. He regularly works with nurse practitioners across the country on healthcare law issues, in addition to counseling health systems, hospitals, and other medical providers. Please feel free to contact him by email, or connect with him on LinkedIn.

This article is for informational purposes only and should not be considered legal advice. If you have specific legal questions, please contact your attorney. In some jurisdictions, this article is considered attorney advertising. 

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3 thoughts on “5 Issues to Consider When Starting Your Own Nurse Practitioner Practice”

  • Hi

    Would like to get more information on opening a private practice. I am looking at a small practice with 2 providers.

    Any information you can give me would be appreciated. My email is k e l l a 61@aol.com and my phone number is 520-861-2731

    Thank you
    Lori Wysong

  • Rebecca Duran says:

    Good afternoon Krouse, I am a nurse practitioner and wish to start my own LLC. Is there any law restricting me from becoming and LLC and working as an independent contractor under the LLC? Thank you for your time.

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