As one of the largest economies in the United States, California is an attractive destination for those seeking to establish a medical practice for several reasons. With the sixth-largest economy in the world, if it were a country, a lifestyle and weather to die for, and unparalleled recreation, it might seem like a no-brainer to move a medical practice to California or purchase an existing one. So, selling a medical practice in California should be easy, right?
Well, that is true to an extent. Selling a medical practice in California does have some advantages. Still, when vetting your buyer and finding someone qualified to purchase your business, it’s essential to keep certain things in mind. Because running a medical practice is different in California than elsewhere, this is something that sellers and their buyers need to be aware of.
So what are those differences?
Licensing and Running a Medical Practice in California
You would think that you could simply find a physician who wants to relocate to California from another state and purchase your business. That can be true, but licensing in California is different, and the Medical Board of California is responsible for licensing that doctor.
Of course, there is a workaround for this if it is clear that the physician will be easily certified, or their certifications will transfer. You can stay on and work with the new owner as they navigate the process. It is essential to understand that this comes with some risk, though. If, for some reason, the buyer’s certification is not approved, you could end up in an awkward situation. It is always best to ensure your buyer has the right qualifications before selling your business.
California Taxes
No one enjoys discussing taxes. Even tax accountants get bored talking about taxes. However, it’s a necessary topic in California because many aspects of running a medical practice depend on the company’s structure and the practice’s location.
There are also regional and local taxes to consider, as well as regulations governing billing practices. The new California medical practice owner must understand that how taxes work in their home state is likely not the same as how they work for California healthcare providers.
Differences also emerge from the way the sale itself is structured. Your business broker can help both you and your buyer understand this process. However, even if they have purchased medical practices in other states or regions, your buyer will likely encounter some differences in California.
Privacy Concerns
The California Consumer Privacy Act is similar to the GDPR in the European Union, but with more stringent restrictions in certain areas. This initiative has actually been further strengthened by the passage of Proposition 24, which is even stricter than the CCPA. What it really means is that you must be careful how you store, share, and handle private personal information.
These regulations are strict and carry substantial fines for violations, making them particularly important for businesses such as medical practices that collect personal information daily. Being hyper-aware of these laws and appropriate security measures is key to a successful California medical practice.
While it seems likely that several other states will follow California’s lead in this area, California currently stands out as being significantly different and stricter in this aspect of business.
Making the Transition Easier
Make the transition easier with these requirements.
- Ensure your buyer is qualified or has assurance of the qualifications required to own and operate a medical practice in California.
- Ensure your buyer has the necessary financing in place to purchase your California medical practice.
- Have a transition plan. Determine the amount of time you will spend on and help introduce your buyer to patience, vendors, key staff, and other relevant contacts. This makes the takeover smoother for everyone.
- Hire a Certified Business Broker to help you sell your business. They will help qualify your buyer, assist you during due diligence, and be with you throughout the process, from escrow to closing.
There is no foolproof way to make every transition perfect. However, with the help of a business broker and by educating your buyer on the unique aspects of running a medical practice in California, you can ensure the best possible transition.
Need help understanding how to prepare your medical practice for sale? Let’s start by determining the value of your business. Contact Rogerson Business Services today for a business valuation, which will enable us to talk about the best exit plan for selling your business.
The Definitive Guide to Selling a Medical Practice in California