1. Figure out what you’re looking for
Before you make any decisions, it’s a good idea to get clear on what type of practice you’re interested in buying. Think about the types of patients you want to treat, the services you want to provide, and the area you want to practice in.
It’s also helpful to make a list of core values you hope to reflect on your practice, whether it’s empathy, empowerment, transparency, or flexibility. Clarifying your intentions can help you narrow your focus and eliminate options that don’t support your goals.
2. Decide whether or not the culture is a fit
When you’re buying a medical practice, you need to figure out whether or not the practice aligns with your particular vision and patient care philosophy.
Start with the basics: Does your specialty line up with the practice’s services? Do you like the facility, neighborhood, and location the practice is in? Can you envision yourself working there?
Next, consider whether you would continue serving the same patients or try to target different patient demographics. Similarly, you have to figure out whether the current staff would stay on or whether you’d need to hire new people when the sale of the medical practice goes through. Asking patients and staff about their experiences can also alert you to potential red flags or issues with how the practice is run.
When you examine the practice’s operational processes, find out how their staff organizes medical records and facilitates billing and payment. Learning about a practice’s management style — including how a practice onboard new patients or resolves billing disputes — can give you better insight into how smoothly the practice runs.
Ultimately, you have to determine how much cultural and operational change would be necessary to ensure the practice supports your goals. Acquiring a business inevitably requires effort during the transition period, but it’s important to be honest with yourself about what level of effort you’re comfortable putting in.
3. Do your due diligence
Before you acquire a business, it’s critical to do your due diligence. This includes a practice valuation to determine what the practice is worth and whether or not it has long-term value (in case you ever want to consider the sale of the medical practice in the future).
Make sure to review the practice’s cash flow, revenue forecasts, accounts receivable and payable, debts, assets, permits, contracts, and equipment, as well as any past legal issues or claims. You may also want to conduct a building inspection to make sure the practice facility is up to code and in good condition.
It’s also helpful to find out why the current owner is selling the medical practice. Depending on what your attorney advises, you may want to request a background check for the seller, so you’re not surprised by any litigation claims or financial issues that crop up.
Reviewing all this information won’t just help you determine the potential risk involved with purchasing the practice, it’ll also allow you to negotiate a favorable purchase price and set of terms.
4. Crunch the numbers
The decision to buy a medical practice will likely come down to the numbers. The price is one component, but you also need to consider how much it will cost to run — and improve — the practice.
Make a list of operational costs, including payroll, utility bills, IT services, building maintenance, and inventory. Beyond those base costs, consider what else you might need to spend money on. Maybe you’ll have to remodel the office space, hire new staff, or update the current electronic health record (EHR) system. All of these expenses can become a factor when selling medical practices, as you want to ensure you’re turning a profit when it comes time to transfer ownership.
Consider how long it will take for you to earn a profit and whether or not you can keep the practice operational until then. Beyond covering basic expenses, you’ll want enough cash to make necessary changes to the practice, whether that means buying new furniture, replacing outdated equipment, or hiring a new office administrator. It’s also smart to factor in the cost of lost productivity during the transition, as well as the potential loss of patients.
5. Look into financing
Buying a medical practice is a massive financial commitment, so you may need medical practice financing. Review your personal finances and credit score with your accountant to see which loans you’d qualify for. Bank loans, loans backed by the Small Business Administration, and loans from online lenders all have different terms and benefits, so do your research to find out which option is best for you.
CONTACT PRACTICE ADVISORS
Now that you have read some basic tips and things to consider you are ready to sell your practice. After you have found a place that meets your needs you will still need to make on offer, secure financing, sign the practice sale agreement and lease, and complete the purchase. As you can see a lot of important factors go into this decision. Make sure you are being properly advised. Practice Advisors 360 is the nation’s leading dental advisory company. Contact us today at (844) 360-8360 or visit us online at practiceadvisors360.com