Finding Your Niche: How to Start an IT Consulting Business for Healthcare

Why Healthcare?

If you're an IT consulting small business owner, you might be wondering why healthcare is worth your focus. After all, recent regulatory shifts and financial pressures (including those from the insurance industry) have caused upheaval in the last few years, and the industry doesn't feel as stable as it once was.

The answer is simple, though. The general IT consulting industry is crowded, but healthcare IT consulting is not (at least, not yet). The market has grown exponentially in recent years, thanks to federal compliance mandates, post-COVID telehealth trends, and the push for healthcare facilities to modernize their data infrastructure. Many of these projects are complex enough that facilities need outside help from an independent consultant. Plus, the stakes are high enough in terms of compliance that businesses are usually willing to pay more for someone with this area of expertise.

If you're an entrepreneur willing to put in the work required (getting certified, learning the regulatory landscape, etc.), the profitability potential is huge. Retainer contracts for medical practices can easily run from a few thousand dollars to $10,000 or more per month, depending on the level of professional services needed. And projects with large hospital system projects can demand well beyond that. Compare those numbers to the hourly rate most general IT consultants will earn, and it's easy to see why specializing in healthcare is a smart move if you're thinking about why and how to start an IT consulting business.

1. Decide What Type of Consulting You'll Do

Step one of how to start an IT consulting business is deciding what your business will actually do.

Healthcare IT is a broad field, so you'll want to get even more specific about your area of expertise before diving into a business plan or even settling on a business name. The clearer your value proposition, the easier it is to market your new business, price out services, conduct market research, and deliver those stellar consulting services to your new clients.

There are three particularly popular types of consulting in healthcare IT.

HIPAA compliance and cloud migration involves helping facilities move existing patient data and records into HIPAA-compliant clouds without creating additional exposure to liability for your client. HIPAA compliance is strictly regulated, so this is an incredibly important and high-pressure niche. To excel in this area, you should become proficient in systems like Microsoft Azure, Amazon Web Services (AWS) GovCloud, and Google Cloud Healthcare API.

Telehealth infrastructure means designing and deploying workflows to help healthcare businesses launch things like real-time video, remote patient monitoring, and integrated scheduling. These services are particularly valuable to practices that began expanding their telehealth offerings during the COVID-19 pandemic but never properly formalized it all.

Data analytics and EHR optimization helps healthcare facilities get more functionality out of their electronic health record systems. The right systems can also streamline clinical workflows and improve their general efficiency.

If you're still deciding how to start an IT consultant firm, pick one area of expertise and target audience as your day one focus to start. While you can always expand your consulting company later or change your marketing plan down the line, it's often more valuable (to the ideal client) if you specialize in a particular pain point that they need solved. You've probably heard the phrase, “Jack of all trades, master of none” before? That's the thought process here.

2. Rack Up the Right Certifications

Understanding how to start an IT consulting business means knowing that your promises and business proposal isn't enough. You need to show that you have the credentials to actually help your big clients successfully solve their problems.

The right certifications show that you understand compliance requirements, can be trusted with protected health information, and won't create legal exposure for an organization. Essentially, they're trust signals showing that you know what you're talking about, you've done the foundational work, and you can be trusted.

Some certifications worth prioritizing as you decide how to start your IT consultancy include:

• Certified Associate in Healthcare Information and Management Systems (CAHIMS): This entry-level certification is good starting point for new consultants and sole proprietorships transitioning into healthcare IT.

• Certified Professional in Health Informatics and Information Management (CPHIMS): This is a more advanced certification that's broadly recognized across the consulting industry.

• Certified HIPAA Professional (CHP) or a HIPAA Compliance certification: While there isn't a single “HIPAA Compliance certification” to obtain, getting one of these is essential if offering HIPAA compliance consulting is part of your business structure.

• CompTIA Healthcare IT Technician: This cert is useful for smaller practice clients or if you plan to do independent consultant work, giving you the knowledge necessary for managing and troubleshooting IT systems in medical and clinical settings.

• AWS Healthcare Competency or Microsoft Azure Healthcare: If cloud migration is a service you plan to offer with your business, getting a certification from that specific platform gives you more credibility with potential enterprise clients.

Spend a few months earning various certifications before you start actively pursuing full-time contracts. Since that often means a lag before your successful consulting business starts earning money, some new consultants start this credential process while still employed by their existing job. While that will keep you busy, it also keeps your cash flow stable while you learn how to start an IT consulting business and build up your own clientele.

3. Set Up Your Business the Right Way

How you start your IT consulting business (meaning its general structure) will affect everything from your taxes to your liability exposure and even how potential clients will perceive you. So, be sure you've done the research from the beginning.

Most healthcare IT consultants operate as either a sole proprietor or a limited liability company (LLC). There are some important differences to note between the two, though.

A sole proprietorship is easier to set up and has no separate tax filing requirements, so it can feel less daunting for new startups. However, sole proprietorships also offer no liability protection. If a client later sues you, claiming that your work caused a HIPAA breach or other compliance failure, your personal assets could be on the line.

Forming an LLC is a bit more involved and costs more to set up, but separates your personal and business liability. For that reason, it's often the right structure for consulting firms working in regulated industries like healthcare.

Other business setup tasks you should complete as part of the “how to start an IT consulting business” process include:

• Opening a (dedicated) business bank account to keep personal and business funds separate.

• Registering your business name with your state, making sure it's available and doesn't infringe on any existing consulting company names.

• Getting an EIN from the IRS, which you'll need for invoicing and taxes.

• Purchasing professional errors and omissions (E&O) insurance before signing your first client.

• Setting up simple invoicing software from day one, so you can avoid manual invoicing problems down the line.

• Building contract templates specific to healthcare consulting, including data handling and confidentiality clauses.

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4. Research Your Target Market

Before you ever approach a potential client, spend some time doing real market research. Talk to practice managers, hospital IT directors, or healthcare administrators if you can to see what their biggest pain points are. If possible, find out what their current IT vendor is getting wrong, to see how you can offer even better services with your own consulting business.

This also serves sharpens your value proposition and gives you examples of the language your ideal clients actually use, which is an important part of how to start an IT consultant business that actually takes off. Use this to fine-tune your future outreach efforts so they feel less generic.

Speaking of outreach, some areas to focus if you're seeking healthcare IT clients include:

• Optimize your profile so it highlights your area of expertise. Then, be sure to post consistently and connect with healthcare administrators when you can, engaging with them before you ever send a pitch.

• An SEO-optimized website. Your website might gain you search traffic (and clients) or it might just be somewhere for interested practices to land. Spend some time sprucing it up with your service descriptions and a few pieces of content (think guides, case study templates, and the like). These can demonstrate your knowledge to potential clients and make them feel more confident about signing a contract.

• HIMSS events and local healthcare associations. If you want to break into the healthcare industry, spend time in the places where those ideal clients gather in person. Not sure how to start an IT consultant business and find clients? Just go rub elbows, make small talk, hear about the issues and trends in the industry, and start promoting your services.

• Referrals from adjacent professionals. Healthcare attorneys, medical billing consultants, human resources and practice managers… they're all part of the same target market. It can help if you cast a slightly wider net in terms of your network and potential client list.

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