Starting a medical practice is likely the goal of every healthcare professional. But it’s not the only option to own a business. Some healthcare providers opt to buy an established medical practice due to its numerous benefits; they will have an established patient base (which guarantees immediate cash flow), require less time to set up and have access to experienced staff, among other advantages.
However, one may not enjoy these benefits if they make mistakes during acquisition. Below are three things to keep in mind when buying a medical practice:
Reason for selling
Physicians sell their practices for different reasons, including to get profit, to retire or to relieve themselves from the commitment of running a business. It may be wise to ask a seller why they are selling to make an informed decision.
For example, you may not want to buy a medical practice being sold because it was opened in a highly competitive location, which has affected its profits.
Patients’ records
How many patients does the practice have? How many are personally treated by the physician? (This will help you estimate the percentage of patients who are likely to leave because of the physician’s departure) How many patients are insurance beneficiaries? What percentage of the practice’s revenue comes from insurance plans?
The answers to these questions are crucial, as they can significantly determine your success.
Assets
Assets determine the value of a medical practice. These include tangible assets (furniture, medical equipment and so on), accounts receivable and goodwill (the practice’s reputation, location, history and trained staff – anything that gives the practice a unique competitive value).
Knowing the assets to be included in the sale can help you estimate your initial expenses. Do you need to get new equipment or train staff?
Buying a medical practice can be complicated. Consider legal help to avoid mistakes that can cost you thousands of dollars.