5 Points to Contemplate When Selling Your Practice

Written by on June 30, 2017 in Features - No comments

The market for purchasing or selling medical practices is enormously active at the present time. This doesn’t mean each arrangement is the absolute best, because conditions for an effective deal or buy aren’t always “One Size Fits All.”

“With the cost related with giving administrations today, you need a bigger base to share that kind of cost.”
- John Fanburg, Managing Director at Brach Eichler.

Here are a couple tips to consider when selling your practice:

1. Get more than one bidder: Contact your potential prospects to tell them that you’re thinking about the selling of your practice, and get them thinking about it before you list.

Hospital(s). Tell your hospital administrators about your arrangements. They could be assembling a group interested in practice purchases or might have a recommendation of someone intrigued by a neighborhood practice in your general location.  They could also be keen on the possibility of you remaining on as a salaried doctor.

Your Competitors. Contact every single solo practice in your area and let them know your intentions. A competitor might be interested in your practice, wishing to expand by having another doctor assume control of your established practice.

2. An EHR System is more attractive to potential buyers rather than paper records: An assessment for an ENT practice that hadn’t changed to an EHR system was less marketable even though it was a sound practice in an upscale suburb. Interested ENT doctors left when they found the paper recording system still in place.  They perceived the enormous undertaking of changing over these records – one by one – into an EHR framework.

3. If you own the practice office than plan on two deals: If you own the practice and the office space, then you now have two deals to make; one for the physical office and one for the practice. You have several alternatives:

Sell the practice and rent the space means you’re presently proprietor and screen the deal, your property goes into the hands of Property Management Company, who will gather leases and keep up the office.

Sell the practice and rent the space, with an alternative to purchasing at some future time implies the doctor takes over the practice, but you proceed as the landowner or find an interested purchaser/owner for the physical office space.

Sell the practice and offer the space implies the physician/purchaser is not keen on office possession, so consider finding a purchaser for the office itself.

4. Remain as an Employed Physician: A stipulation to buy your practice by the purchaser might be for you to stay on as a physician at the practice. In the event that a doctor remains for 90 to 120 days after the sale, they can increase the value of the deal.

5. Turning the practice immediately over to the new provider: The final alternative is to sell the practice and turn it over to new proprietor upon the sale. The new owner/physician will then have to acquaint themselves with their new patients and staff. At that time, they can either continue with the office procedures in place or implement their own.

The Business Understanding

There is no assurance that future execution of the practice will give the new owners the same rewards as when you were the proprietor. Medical facilities making a weak showing in regards to charging and accumulations will often ponder decreased collections and debilitated net incomes. The value of your facility reflects your execution in managing the practice up to the point of sale. The value of the practice after that point reflects the execution and marketing skills of the new proprietor.

By Vishal Gandhi, BSEE, MBA
Founder and CEO

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