Medical practices are being bought and sold in what's still an active market, but physicians who want to sell their practices must be sure the deal works in their favor, according to a report in Physician's Money Digest.
Physicians in the market to sell their medical practices have different options, John Fanburg, managing director and chairman of the health law practice Brach Eichler in New Jersey, told the publication. For example, they can join or affiliate with a larger multi-specialty group or sell the practice to a hospital.
Hospital acquisition, while a popular option right now, has its downsides and may not be in the long-term best interests of the physician group, Fanburg says. Typically, contracts with hospitals are not long-term agreements and hospital leadership may turnover in two or three years. Furthermore, he says, hospitals do not always turn out to be good managers of physician practices.
But for those who do want to sell their practice, Fanburg offered the following tips:
- Prepare for negotiations by talking to your financial advisor and getting a good handle on your numbers and how they compare over recent years.
- Impose a restrictive covenant in a deed or lease that limits what the owner of the land or lease can do with the property.
- Have a backup plan. If a relationship with a new owner, such as hospital, doesn't work out, what will you do? There is a large investment to set up a new practice.
When it comes to evaluating practice acquisition opportunities, physicians must perform due diligence. Weigh the benefits of selling a practice against the risks, some of which may not present themselves until it's too late to easily reverse course, as FiercePracticeManagement previously reported.
However, one encouraging factor is that most physicians don't regret selling their practices. One 2014 survey found 55 percent of physicians who sold said they do not miss private practice and 67 percent of sellers said they would make the same choice again.
To learn more:
- read the article