Buying a practice

1. Consider the reasons why the current Doctor is selling the practice:
GOOD reasons for selling: Doctor/therapist(s): Wants to retire Needs to move (relocating to another city or country – not just down the street) Health reasons prevent practicing	POOR reasons for selling: Doctor/therapist(s): Needs money Has lease issues Has pending legal issues Wants a new location in the same area Increased competition in area Licensure/disciplinary issues Practice and catchment area has been declining Major tenant or business relocating Insurance coverage has decreased or been eliminated in the area
2. Consider the pros and cons of purchasing a practice:
(+) Positive: Provides immediate income/ positive cash flow Financing available (from existing loan or parties involved) Immediate patient load You are the owner and can build on what already exists Income potential is great Established location Immediate access to clinic contacts and suppliers Staff is trained and experienced You can change practice operations / procedures / staff to suit Less time / energy required compared to starting up New marketing plan / ideas may attract more new patients and create interest in long-term patients	(-) Negative: Large initial start-up costs / capital required Clinic may be outdated – may need lease, equipment, or furniture updated Competition – more buyers than sellers High responsibility – expenses and liability Practice operations/procedures are deeply entrenched Staff may be resistant to new ideas, change and may have personality conflicts Large volume of patients to treat immediately Responsible for all administrative duties Patients have to transition from existing Doctor/therapist(s) technique/philosophy/personality to yours Patients are used to existing Doctor/therapist(s) and feel abandoned
3. Important points to consider:

General Questions:

• How long has the practice been for sale?
• Why is the practice for sale?o What is for sale- Turn-key, files, goodwill, equipment / furniture, leaseholds, accounts receivable, real estate?
• Is existing financing available or will the existing Doctor/therapist(s) help with financing?
• If there is an associate or contractor, why are they not buying?
• If there is an associate or contractor, are they planning on staying?
• What is in their contract? Is the practice protected against competition and solicitation?
• Age and condition of leaseholds, equipment, and furniture?
• What is the lease situation?o What type? Length, cost, leaseholds, is it transferable or extendible, future plan for location, upcoming renovations, or major tenants?
• Are there any financial/liability/contractual obligations of the practice?
• Are there any impending liability or lawsuit issues with the practice?
• Are the past financial records and tax returns available?o Revenues, overhead and net income? Are they increasing, stable, or decreasing?
• What is the insurance coverage breakdown?o WCB, auto, medicare, social assistance, native affairs, etc?
• Is the practice in or near an area you want to live?o urban, suburban or rural
• What type of practice is it?o Acute care, wellness, integrative, or mixture
• What are the patient demographics?o Age, income, education, ethnicity, gender
• Are old appointment books available/included?
• Is the existing Doctor/therapist(s) willing to work an appropriate transition period?
• Is the income generation transferable?
• How did the previous Doctor/therapist(s) market and advertise?

Interpersonal Questions:

• Existing Doctor/therapist(s) personality?o Do not want to follow a superstar, 85% of practice success is non-technical skills or personality (New England Journal of Medicine)
• What is the existing Doctor/therapist(s) technique/philosophy/style?
• What is the existing Doctor/therapist(s) gender?
• How long has the Doctor/therapist(s) been in practice?
• How long has the Doctor/therapist(s) been in practice at this location?
• How long has the staff been there?o Are they satisfied, type of training received, will they remain?