How to Broker a Medical Practice
With changes in ACA and others anticipated, and the way insurance companies are reacting, the margins a medical practice is operating on are smaller and the need for business savvy is greater. It is a down market for selling a medical practice, as the United States faces a shortage of physicians and 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. Here is why: the process is complex, and to break even or make a profit, you will have to do some careful planning. Here are some of the key steps in brokering a medical practice.
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 the preservation and protection of patient records, something that can cost the seller or the buyer thousands if handled improperly.
Be sure your practice is profitable and ready to sell if at all possible.
Plan Ahead as Far as You Can
Making sure your practice is ready to sell, along with finding the right buyer, is essential. Planning ahead, one year at least and even three or four at best will be the easiest way to ensure your success. Trying to sell a practice immediately most often leads to issues and even a significant loss of money.
Try to Sell Local First
The people who most want a practice in your community or want to live there most often live there already, and may be looking to expand their practice, or may even be a local hospital group looking to expand their patient base.
Your practice is much more likely to sell to a local buyer 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 promotional package that is digital and physical, SEO optimized, and that contains all of the data related to the sale of your practice.
This should include your profit and loss, and what your final numbers are after paying all treatment providers and practitioners. This is important so that your potential buyers can see the profitability of your practice.
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 than 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, the more likely you are to sell your practice.
Know the Laws of Your State
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 that can range in the tens of thousands of dollars, and either the buyer, seller, or both can be liable for them.
Know these laws, and be sure you are in 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 better is to have the buyer work with you at a reduced wage for one to three years, and then buy 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 patrons, 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 can be challenging in a down market, but practices do sell. The best way is to hire a business broker who will help you navigate the ins and outs of selling in your state, and make sure everything is established for you to have a successful sale. Need help? Contact us at Rogerson Business Services for more information and an personalized consultation.