Larkpine Lending Group, a small-business funding service in Iowa City, IA, explains funding for physician practices: working capital and lines of credit while claims pay, equipment financing for diagnostic and exam equipment, and term loans for opening a private practice. Johnson County physician office counts come from Census County Business Patterns 2023.
| Physician offices in Johnson County, IA, CBP 2023 | 68 |
|---|---|
| Under five employees | 55.9% |
| Annual payroll (2023) | $57.6 million |
| Physicians without payroll (2024) | 170 |
| Structures to compare | Working capital, equipment financing |
Medical practice loans and the bills they cover
- Payroll and supplies while claims are outstanding
- Diagnostic equipment: ultrasound, ECG, lab analyzers, imaging
- Exam room furniture and IT systems
- A build-out or second office
- A buy-in or a buyout of a partner
Business loans for doctors use the same structures as any business. What differs is the cash cycle and the size of individual equipment purchases.
Working capital while claims pay
Claims take weeks to pay, and denials or recoding take longer. A practice that grows its patient volume grows its receivables first and its cash later. A line of credit drawn against that lag, repaid as payments post, is one answer; a one-time working capital loan suits a single disruption such as a billing-system change.
See the line of credit page for how draws work, and the working capital page for payroll use.
How to open a private medical practice: funding pieces
Opening a private practice combines a build-out, equipment, IT and several months of payroll before collections stabilize. Partners look at the physician's history and personal finances when the practice has none, and may ask for a business plan with projected visit volume and payer mix. Physician business loans for a start-up practice are considered by partners case by case.
Credentialing, licensing and compliance obligations are outside our scope; your attorney and practice-management adviser handle those.
Equipment for physician offices
Large diagnostic equipment is usually financed or leased on its own. Leasing suits technology that will be replaced; a loan suits equipment with a long service life. The equipment financing page covers the trade-offs, and a written quote with model, warranty and service terms is the first thing partners ask for.
Illustrative arithmetic: a slower payer
Illustration only, not an offer: a four-physician practice collects $210,000 a month. When one payer that accounts for a quarter of collections slows from 30 to 75 days, about $79,000 more sits in receivables for a month and a half. Payroll does not wait, so the gap is funded and repaid as the delayed claims clear.
Physician offices in Johnson County, IA by the numbers
Johnson County, IA had 68 offices of physicians in 2023 (NAICS 6211), with 594 paid employees and about $57.6 million in annual payroll; 38 of them (55.9%) had fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). Nonemployer Statistics 2024 counted 170 physician offices with no paid employees and about $13.4 million in receipts. Health Care and Social Assistance had the most employer establishments of any county sector, 499.
Related practice types: dental offices and chiropractic and therapy offices. Johnson County, IA figures: Iowa City, IA page.
What partners usually review for physician practices
- Collections and days in accounts receivable
- Payer mix
- Physician ownership and any buy-in agreements
- Equipment quotes
- Existing loans and leases
Questions a practice should answer before asking
- What are days in accounts receivable now, and a year ago?
- Which payers pay last, and what share of collections do they account for?
- Which equipment is leased, and when do those leases end?
- Are any physicians planning to leave or join in the next year?
- Is the practice owned by the physicians, or by a group or system?
These questions decide whether a request is a working capital bridge, an equipment purchase or a longer-term restructuring, and they are easier to answer before the partner asks.
Adding a provider or a location
A new physician or advanced practice provider adds payroll immediately and collections later, while credentialing and scheduling build up. A second office adds rent, build-out and equipment on top. Both can call for a mix of a term loan for the fixed costs and working capital for the ramp-up.
By Larkpine Lending Group · Updated