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In tough economic times, the rules of retiring and selling your practice have changed. See what you need to ensure an orderly transition.
A: In the past, physicians began thinking about selling their practices for retirement 1 or 2 years before the anticipated date, especially during a time when it was easy, and one could reasonably expect to find a willing buyer for almost any practice. In fact, in the mid to late 1990s, physician corporations and hospitals were competing to buy private practices.
Over the past few years, the landscape for practice transition and sales has become challenging, to say the least. The rules and regulations of transitioning a practice have become more complex-and the economy more challenging. Remember, the value of a practice's assets, which include accounts receivable and equipment, still are a substantial part of any physician's net worth. You can no longer wait 1 or 2 years before retirement to plan an exit strategy.
The next question is to determine how quickly you want to make your exit. Do you want to do it gradually or suddenly? It might depend on the size of your practice and its fixed expenses. A smaller, leaner practice likely will be easier to unload quickly. Your accountant can help you establish an accurate valuation of your practice.
Once these preliminary determinations have been satisfied, develop a customized practice transition plan complete with objectives and dates. This plan must be specific to your goals and practice characteristics. Your financial needs are vital in determining a firm date for the practice sale, closure, or incorporation into a hospital model, as well as the terms of the outcome.
Answers to readers' questions were provided by Thomas J. Ferkovic, RPh, MS, managing director, SS&G Healthcare Services LLC, Akron, Ohio. Send your practice management questions to firstname.lastname@example.orgAlso engage at http://www.twitter.com/MedEconomics and http://www.facebook.com/MedicalEconomics.