The market for buying and selling a medical practice is currently active, but that doesn’t mean that you will be guaranteed a good deal, especially if you fail to negotiate the terms of sale properly. Selling a medical practice is not an easy task, it involves careful planning and preparation to ensure that you have all bases covered. What most physicians fail to understand is that negotiating a sale can take up to 6 months or more if you are not clear about the terms of your contract. Having a basic understanding of how much your practice is worth by performing a practice valuation of your tangible and intangible assets (such as goodwill) and seeking professional help from a lawyer, accountant or medical practice brokers is a good place to start. However, there are a few more things to consider before negotiating the terms of your sale that could be the difference between getting the sale you want or settling for less than you expected.
Over the last few years, there has been a growing trend in the number of primary care practices being bought by hospitals, insurance companies, and private equity firms. Entities such as hospitals and insurance companies have long been acquiring privately owned medical practices and offer high remuneration potential. In just one-year (2015- 2016), over 5000 practices were bought and 14,000 physicians were employed by hospitals driving the decline of solo practices even further. However, this is not a new phenomenon, with historical records showing that primary care practices have been on a steady decline for the past three decades, with the percentage of solo physicians falling from 41% to 17% between 1984 and 2014.
‘So, I’m considering the sale of my medical practice…now what?’
Whether you’re looking to pursue ventures or you’re ready to retire to enjoy life after work, you might be wondering ‘how do I sell my medical practice?’ Selling a medical practice is not something one does often, it’s a big decision that requires careful planning and preparation to ensure that you have the right exit strategy. Not all medical practices are worth the same amount, generally the more profitable your clinic is, the easier it will be to sell or merge. Therefore, growing your medical practice into a profitable and scalable business that is not solely dependent on your labor, is one of the things that will make it more attractive to prospective buyers. However, there are a few more things to consider when selling a medical practice that could maximize the value of your practice in the market and make your exit strategy as smooth as possible.