CA Dreaming: The Differences Between Running a Medical Practice in California vs. Elsewhere
As one of the largest economies in the United States, California is attractive to those seeking to run a medical practice for a number of 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, but when it comes to vetting your buyer and finding someone who is qualified to buy your business, it’s important to keep some 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 move to California from another state, and they could simply purchase your business. That can be true, but licensing in California is different, and that doctor must be licensed by the Medical Board of California.
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 important to understand 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 loves to talk about taxes. Even tax accountants get bored talking about taxes. But it’s a necessary topic in California because a lot of the ways you run a medical practice depend on how the company is structured and where the practice is located.
There are also regional and local taxes to consider, along with regulations about billing practices. The new California medical practice owner must understand that how taxes worked in their home state is likely not the way they work for California health care 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, but even if they have purchased medical practices in other states or regions, your buyer will find some differences in California.
Privacy Concerns
The California Consumer Privacy Act is similar to the GDPR in the European Union, but with greater restrictions in some areas. This initiative has actually further been 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 hefty fines for violations, and they are especially important to businesses like medical practices where personal information is gathered on a daily basis. Being hyper-aware of these laws and appropriate security measures is key to a successful California medical practice.
While it does seem likely that several other states will follow California’s lead in this area, at the moment California stands out as extremely different and stricter in this area of business.
Making the Transition Easier
Understand these things are not designed to discourage sellers from selling a medical practice in California or buyers from buying. Rather, they are intended to offer information and help you lay out a plan to make any transition simpler. So here are some tips for you.
- Make sure your buyer is qualified or assured of the qualifications they will need to own and operate a medical practice in California.
- Make sure your buyer has the financing in place to be able to purchase your California medical practice.
- Have a transition plan. Determine the amount of time you will say on and help introduce your buyer to patience, vendors, key staff, and more. 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 all the way through the process to escrow and closing.
There is no foolproof way to make every transition perfect. But with the help of a business broker and by helping your buyer understand the things that make running a medical practice in California unique, you can ensure the best transition possible.
Need help in understanding how to get your medical practice ready to sell? Let’s start by learning what your business is worth. Contact Rogerson Business Services today for a business valuation which will enable us to talk about the best exit plan for selling your business.