Building a medical practice and keeping it vibrant means thinking long term, so that when the time arrives for a physician to retire, he or she can leave practice in a satisfying, appropriate and profitable way. This means taking steps throughout the life of the practice to ensure that it will ultimately appeal to buyers and command a good price.
Deborah Ford, MD, a solo primary care provider in Worcester, Massachusetts, describes her surprise at the difficulty that one of her colleagues had passing on a flourishing primary care practice to another physician.
“He had a paid-up medical condo and a staff that knew the patient population very well and could guide a new physician,” Ford says. Still, no other doctor wanted to acquire his practice.
To maximize the worth of a medical practice to potential future buyers, bear in mind these important considerations:
1. Sellers may shy away from a part-time practice. “Sell your practice when it’s making its highest gross and net income,” says David Owji, owner of Doctors Broker, an Orlando-based medical brokerage that has been selling medical practices nationwide for 15 years. “Don’t wait until you’re working part-time and expect the full-time price.”
This may mean giving up an enjoyable practice more abruptly than feels comfortable to the seller. “Doctors love their work and don’t want to abandon their patients,” Owji says. However buyers are unemotional. They want to purchase a practice that shows enough income and growth potential to support them. “Cut the emotional cord,” says Owji. “Sell at the height of your game.”
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2. A well-planned sale doesn’t happen overnight. “People come in and they say that they want to sell in three or six months,” says Alex Nechay, a consultant with Transition Consultants, which provides business valuation, brokerage and business consulting services to healthcare professionals. It is better, Nechay advises, to plan for the process to take at least a year because finding the right buyer can take time. This is especially true if the seller lives outside of the large metropolitan areas where lots of physicians want to reside and practice. “Once we find a buyer, it also takes time to get the buyer credentials and to get them onto the lease. We have to get financing for the deal, too,” he says.