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Three things to know before buying a medical practice

On Behalf of | Dec 15, 2020 | Physicians & Physicians Groups |

Purchasing a medical practice is a large investment. Entrepreneurs who wish to find success within this marketplace must understand the practice as well as have good business sense. Those who are considering such a move are wise to know the following before finalizing a deal.

#1: Look into the location

As with any business endeavor, the location of the target practice will play an important role in success. Get information on the demographics of the area. Is the area growing? Is it already saturated with physicians who practice in this specialty? Is there anything this practice can bring to the current medical community?

#2: Review revenue

Get information on the business’ revenue. Most medical and business professionals recommend reviewing a few years of net cash flow data to get an idea of the target practice’s revenue. Aim for two to four years’ worth to get a good picture of the group’s financials.

Also take assets and liabilities into consideration. Ask questions like:

  • Does the practice own its facilities and equipment?
  • What is the state of the facilities and equipment?
  • Are there any pending lawsuits?
  • Is the practice properly staffed? Will the staff remain?

Take this information along with all potential expenses into consideration when looking at the overall cost of the purchase.

#3: Check for compliance

Medical practices are subject to federal, state and local regulations. Check to make sure there were not issues with compliance in the past. If so, check resolution status.

These are just three areas that should be taken into consideration before finalizing a deal to purchase a medical practice. Thorough due diligence will require additional information and better ensure a smooth and fruitful transition.

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