Even though healthcare is now the world’s largest industry, finding a buyer for a medical practice can be very difficult now for many physicians. These tips can help you find the right buyer.
Keith Borglum, CHBCEven though healthcare is now the world’s largest industry, finding a buyer for a medical practice can be very difficult now for many physicians. These tips and best practices can help you find the right buyer.
It's no surprise that finding a buyer can be difficult: Our nation is facing a severe shortage of physicians. Many physicians would retire today if they had the means to do so, but many residents have said they would rather be employed by a hospital rather than go into independent practice. Healthcare groups are swamped with candidates who want to leave behind, or avoid, the burdens and risks of independent practice.
On the other hand, there are still many physicians out there interested in independent practice. Additionally, many physicians who finished residency or fellowship three-to-five years ago and took a job somewhere are now looking for opportunities to leave. These younger physicians possess growing confidence in their clinical skills, and may be interested in taking on the challenges of practice ownership.
I have given up trying to figure out which practices will sell and which won’t. It usually comes down to a candidate being available at the time the seller wishes to exit. It’s also about location, and about timing. I see some urban practices with multi-million dollar net incomes going unsold, and small, rural practices selling instantly, because of the availability of geographically-oriented candidates.
These tips can increase the chances of finding a buyer for your practice:
Advertise early, advertise often, advertise widely. If you are trying too hard to keep the sale a secret, it may stay a secret until you close. Advertise everywhere a candidate would look. Start advertising at least a year prior to exit. According to business broker organizations, more than 85% of candidates now come from Internet searches (“family practice for sale in Indianapolis”), so your ads need to be search engine optimized.
Next: Be ready to sell
Be prepared to sell on the day you place your first ad. Maybe your best candidate has been looking for months, and your new ad just popped up in front of him or her. I’ve seen sellers turn down the first candidate, never to find another. Work something out using your broker and attorney, maybe as a transition via associateship if you want to stay on longer.
Price your practice right, and prove it with an expert appraisal. All buyers are worried about paying too much, and will ask their own advisers for guidance.
Look locally for a candidate –including your biggest competitor– since they already have a reason to be in your locale. If you are in a multi-hospital market, look in the other camp. If you are just outside the non-competition zone for other large group employed physicians, advertise there.
Finally, promote the lifestyle of private practice and your community to both the candidate and his or her spouse or significant other.
Keith Borglum, CHBC, is a medical practice management consultant in Santa Rosa, California, and a Medical Economics editorial consultant. Send your practice management questions to firstname.lastname@example.org.