Purchase a Practice
Buying a practice can be a great option for new doctors. It comes with all of the benefits of owning your own practice — namely, you’re in charge and make your own decisions — without having to start from scratch.
In general, it’s usually better financially to purchase rather than starting your own practice, since the system, equipment and patients are already in place and the business has a track record you can use as a basis for financing.
Still, there’s a lot of homework to do before you dive in. You have to be clear on exactly what you’re looking for — everything from the types of patients you want to treat, the physical location of your building and even the existing culture at the practice. And then there’s the valuation of the practice. Look at the practice’s assets, debts, cash flow, accounts receivable and payable, revenue forecasts and more to determine what the practice is truly worth. Is it worth your time and money and can you obtain the funding?
Don’t let the research deter you. Once you’ve done your due diligence, buying a practice can be very rewarding.
- An established practice mitigates your risk. Because it’s already established and proven, you’re less likely to spend the first couple of years wondering if you’re going to make it.
- You’re not starting from scratch. Many key decisions have already been successfully hammered out, including staff, demographics, location and marketing.
- You’ll see profit sooner. You may even see profit immediately. By contrast, it usually takes a startup three to five years to start turning a profit.
- The clientele is built-in. However, even if you’re unsure if patients will transfer to your practice, you can still generally make a profit faster by purchasing a practice than starting a new practice, if you can get a reasonable price.
- You’ll save time. Starting your own practice involves a lot of time and effort on your part. Buying a practice will too, of course, but by not building the whole thing from the ground up, you’ll save yourself some hassle – and precious time.
- Is the practice in the right location?
- Does the physical layout work for your needs, or is it easily modified?
- Is the equipment in good condition?
- Does the practice have good employees that you will keep in place, or will you need to bring in your own?
- Can you reliably determine if it is generating profits consistently at a comfortable level?
- Can you reliably determine that the information about the patients and financials is correctly stated?
- Are you confident the seller will work with you during the transition
If you can make all the stars align, purchasing a practice can be a good way to jump-start your new career.