Physicians Foundation: Fascinating Results on Medical Practice Sale
A survey of more than 17,000 physicians has found shifting practice patterns limit patient access to care. The biennial research commissioned by the Physicians Foundation examined professional morale, practice patterns, career plans and perspectives of today’s physicians.
The Physicians Foundation is a nonprofit organization that seeks to advance the work of practicing physicians and help facilitate the delivery of healthcare to patients.
The survey results, coupled with the current uncertainty of healthcare reform in the U.S., indicate that it may be an opportune time for independent medical office owners to consider an acquisition by a “roll-up” practice or consider hospital acquisition offers. You may be courted by a big name in healthcare…or perhaps a private equity firm has purchased nearby medical offices nearby in a roll-up, and they now have your practice in their sights.
Enlist Help Early in the Process
That offer may be an answer to your prayers—a solid offer that would result in a quick windfall or relief from the pressures of business management. However, the most prudent response to an offer or a request for information would be to take a breath and thoroughly evaluate it with a business advisor to determine if selling your practice is indeed the right decision at this point in time.
Begin with the right frame of mind and examine your practice as a business, just like an investor or a potential buyer would do. You should work with a seasoned business advisor will help you analyze your medical practice and position it in the best possible light.
Here are some of the steps you and your business consultant should undertake to maximize your success when you’re approached with an offer to buy your practice.
1. Get organized.
In most instances, the initial request from a prospective buyer is for information about your medical practice. Accumulate your financial data that showcases your practice’s success, and include trends, risks, and opportunities. Thoroughly analyze all of your medical practice financial and operational information… and that information communicates to a potential acquirer. Be sure to differentiate income provided to “professionals” and “owners” of your practice. The more solid information you can provide to a prospective buyer, the better the offer and the smoother the transaction will be.
2. Contact your business advisor (if you haven’t already).
Let him know that you have a potential offer or interest from a buyer, and that you’ll need advice on mergers and acquisitions. Your business consultant will help you organize a response to the buyer’s request for information.
3. Quantify the possibilities.
Sit down with your business advisor and discuss all the differences—both positive and negative—to each of the future business scenarios that are practically available. These could be options such as selling to a roll-up practice that’s actively buying several businesses at the same time; selling to local hospital or healthcare facility; or remaining independent.
After thoroughly reviewing the practice data and discussing personal preferences, you’ll be equipped with the background to then consider offers and identify a fair offer for your practice. This important exercise will put all parties on equal footing and allow you to set realistic expectations.
What to Do Once You Have an Offer
The issue immediately becomes one of what to do next… First, don’t be hasty. You’ll need to quantify the value of the offer. This means creating and prioritizing the criteria you’ll apply to judge the value of your practice. The criteria can include things like the benefits to you, your family, and your business partners; the tax ramifications; the work environment; and considerations concerning the welfare of your patients and staff.
These guidelines will help you make informed decisions and consider only lucrative buyout offers for your practice.
Steps in a Medical Practice Sale
There are many steps to successfully sell a medical practice. Here’s a one-page summary of the many steps to sell a medical practice.