Tips Selling a Medical Practice
Most of physicians two decades ago worked in small medical practices with ownership in the practice. Now days, more physicians are selling their small or individual practices, or merging to fight problems like declining reimbursements, questions about the Affordable Care Act, rising costs, and a shortage of available physicians. Those physicians in smaller practices looking to make a change to improve their future typically have four options: a hospital take-over, practice merger, getting their practices ready to sell, or diversifying with ancillary services. Let’s look at the last two.
Tips Selling a Medical Practice
Experience shows that there are generally three scenarios that precipitate the sale of a medical practice: an independent physician is closing in on retirement age; the medical practice is forced to address issues that aren’t easily overcome through other available options; and the physician(s) would like to free themselves from the administrative duties of operating a business.
A physician needs to be aware of several things prior to moving forward with a sale. Here are just a few:
Improve your financial records.
This important task includes effort to maintain or increase profits for several years prior to a sale. Physicians also need to remove their personal expenses from their practice, make sure their financial statements in order, and engage an experienced business valuable expert and business broker to help them identify the strengths and weaknesses of their overall financial position. Look at your profit margins, too.
Consider your involvement with the practice post-sale.
Physicians must decide if they want to continue working with the practice. If they do, they need to think about what that would look like, meaning hours, responsibilities, pay structure, and authority.
Be sure to set a realistic price.
Like many of us when trying to sell our homes, some physicians will price their practices way to high. Remember that some of the medical equipment can’t be sold, and the value of intangible assets may be hard to ascertain. The physician may see a higher value in good will and client relationships than potential buyers. Your business broker will have experience with this element of the calculation and can assist in setting a wise asking price for the Sacramento metro area.
Ancillary Services to help sell a Medical Practice
Even with the many hospital take-overs and mergers happening in the past few years, some independent physicians are enjoying success in establishing or taking over practices where services are needed in markets where hospitals can’t fill. Some physician practices are looking into diversifying by adding ancillary services. These are services such as concierge care, lab testing, rehab centers, nutraceuticals, and other approaches to disease treatment and prevention. This can be a strong selling point or opportunity for a buyer, as service expansion improves patient care and at the same time increases revenue, while restricting out-of-practice referrals.
Many independent physicians are now facing critical issues that may impact the future of their practices. Prior to making any sudden decisions, physicians should work with a business valuation expert and business broker to devise a strategic plan that pinpoints issues and opportunities in the sale of the practice. Only then should they consider their options to address their practice issues and act on opportunities.
Don’t be afraid to ask for help, to ask questions, and be prepared. Your medical practice will sell for much more with help, which Andrew Rogerson is happy to provide. To discuss issues with selling a medical practice in the Sacramento area and throughout California, please visit our website Services and choose from the drop down menu the information you’d like.
For more immediate help, please send an email to Andrew or call him at (916) 570-2674.