Buying or selling a medical practice can be a complex process. Due diligence is a critical step in ensuring a successful transaction. Due diligence is a thorough investigation of the practice’s financial and legal information to identify any potential issues or risks. In this article, we will provide a due diligence checklist for buying or selling a medical practice.
- Financial Records: Obtain financial statements, tax returns, and other financial documents for at least the last three years. Review revenue, expenses, and profits to ensure that they are consistent and accurate.
- Patient Records: Review patient charts to ensure compliance with HIPAA regulations and to verify patient demographics and medical histories.
- Staff Records: Verify staff employment and credentialing, including licenses, certifications, and continuing education requirements.
- Equipment and Inventory: Conduct an inventory of all medical equipment, supplies, and medications. Verify the condition, age, and maintenance history of equipment.
- Legal and Regulatory Compliance: Verify compliance with federal, state, and local laws and regulations, including medical billing and coding requirements, licensing and accreditation, and any legal disputes or liabilities.
- Contracts and Agreements: Review all contracts and agreements, including employment agreements, leases, vendor contracts, and insurance policies.
- Referral Sources: Verify referral sources and relationships with other healthcare providers.
- Marketing and Branding: Evaluate the practice’s marketing efforts and brand reputation, including website, social media, and online reviews.
- Financial Projections: Develop financial projections based on historical data and market trends to identify potential growth opportunities and risks.
- Transition Plan: Develop a transition plan that includes a timeline for the sale or purchase, staff retention and training, patient communication, and integration of new systems and procedures.
Due diligence is an essential step in buying or selling a medical practice. A thorough review of financial, legal, and operational information can help identify potential risks and opportunities for growth. Working with a team of experts, including attorneys, accountants, and consultants, can help ensure a successful transaction.
