How to broker a medical practice in California? Let’s find out…
With changes to the Affordable Care Act and others anticipated, and the way insurance companies are reacting, the margins a medical practice operates on are smaller. The need for business savvy is greater. The market for selling a medical practice in California is currently down, as the United States faces a shortage of physicians and fewer motivated buyers.
This does not, however, mean that you can’t sell your medical practice, but to do so, you do need the help of a business broker in California. Here is why: the process is complex, and to break even or make a profit, you will need to do some careful planning. Here are some of the key steps in brokering a medical practice.
Andrew Rogerson is a certified business broker based in Sacramento, California. Call Toll-Free at (844) 414-9700. If you prefer, email him at support@rogersonbusinessservices.com. Andrew services the whole state of California.
Make Sure Your Practice is in Shape to Sell
Many practices are never sold, not because they are not valuable, but because they are not in the right business shape to sell. Unfortunately, many practitioners who do not understand this tend to abandon their practices or simply sell them for the cost of the physical goods they own.
The problem with this is one we will mention in a moment: the legality of preserving and protecting patient records, which can cost the seller or buyer thousands if mishandled.
Ensure your practice is profitable and well-positioned for sale, if possible.
Plan as Far as You Can
Ensuring your practice is ready to sell in California, along with finding the right buyer, is crucial to its success. Planning, at least one year, and even three or four years at best, will be the easiest way to ensure your success. Trying to sell a practice immediately often leads to issues and can result in a significant financial loss.
Try to Sell Local First
The people who most want to practice in your community or live there are often already residents, looking to expand their practice or a local hospital group seeking to increase their patient base.
Your practice is much more likely to sell to a local buyer in California rather than one from elsewhere, so look for buyers in the circle of colleagues you already have in your area, including partners and other practitioners.
Prepare a Promotional Package
One thing that will help you broker your medical practice is a comprehensive promotional package that is both digital and physical, SEO-optimized, and contains all the relevant data related to the sale of your practice.
This should include your profit and loss statement, as well as your final numbers after paying all treatment providers and practitioners. This is important so that your potential buyers can see the profitability of your practice. See here about marketing the deal.
Arrange Bank Financing in Advance
Many banks have medical specialty divisions, and these divisions, like those of Wells Fargo and US Bank, focus on attempting to finance 100% of the requests they receive. This means that you can often arrange bank financing in advance by proving the value and worth of your business. The buyer then simply steps in and, provided they are qualified, can take over rather quickly.
The more you arrange in advance, the easier it is for the buyer to step in, and the more likely you are to sell your practice successfully in California.
Know the Laws in California
Every state has different laws when it comes to the retention of patient records and other data, and you will need to know these laws. Improper application of them can result in costs ranging in the tens of thousands of dollars, and either the buyer, seller, or both can be liable for these costs.
Be aware of these laws and ensure compliance during the selling process.
Offer the Buyer a Chance to Work with you First (If they don’t already)
One way to make the sale go more smoothly is to have the buyer work with you at a reduced wage for one to three years, and then purchase the practice for the cost of the assets. This makes the transition better for patients, helps you impart knowledge to them about the area and your patients, and keeps your earnings reasonable for the last few years.
Once you have moved on, a physician can get a job anywhere due to the shortage, and you can determine what your next steps will be.
Selling your medical practice in California can be challenging in a down market, but practices do sell.
The best approach is to hire a business broker who will help you navigate the intricacies of selling in your state and ensure everything is in place for a successful sale. Need help? Contact us at Rogerson Business Services for more information and a personalized consultation.
Andrew Rogerson is a certified business broker based in Sacramento, California. Call Toll-Free at (844) 414-9700. If you prefer, email him at support@rogersonbusinessservices.com. Andrew services the whole state of California.