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.

  1. 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.
  2. Patient Records: Review patient charts to ensure compliance with HIPAA regulations and to verify patient demographics and medical histories.
  3. Staff Records: Verify staff employment and credentialing, including licenses, certifications, and continuing education requirements.
  4. Equipment and Inventory: Conduct an inventory of all medical equipment, supplies, and medications. Verify the condition, age, and maintenance history of equipment.
  5. 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.
  6. Contracts and Agreements: Review all contracts and agreements, including employment agreements, leases, vendor contracts, and insurance policies.
  7. Referral Sources: Verify referral sources and relationships with other healthcare providers.
  8. Marketing and Branding: Evaluate the practice’s marketing efforts and brand reputation, including website, social media, and online reviews.
  9. Financial Projections: Develop financial projections based on historical data and market trends to identify potential growth opportunities and risks.
  10. 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.