Buying and selling medical practices is a big decision. It’s crucial to do your research and recruit the right help. Consider hiring a healthcare CPA, such as Reed Tinsley who can advise you on financial decisions.
Here Are 5 Tips To Set You Up For Success When Buying a Medical Practice.
Seek Professional Valuation
The valuation is crucial for buying medical practice and should be conducted by a professional. A valuation involves both structured methodologies and subjective considerations to account for the unique aspects of the practice you are considering buying. This entails gathering and analyzing financial data, applying valuation methods such as income, asset, and market approaches, and understanding the intricacies of the healthcare industry, including revenue streams, overhead issues, and regulatory constraints
Conduct a Practice Evaluation
Conducting a practice evaluation is key to understanding the landscape of the new practice. This can include analyzing patient demographics, location, and market opportunities. It’s important for you to understand things such as the patient population, their needs and preferences. By combining due diligence (discussed next) with a patient demographics analysis and market dynamics, you will have a practice evaluation that can offer a roadmap to enhance patient care and drive sustainable growth. After all, you are taking a large financial step, and it’s good to know the landscape you are stepping into.
Complete Financial and Operational Due Diligence
Having surprises on your first day of ownership is not fun. Therefore, conducting complete financial and operational due diligence is necessary for a medical practice purchase. You should partner with an experienced and reputable broker (such as Tinsley Medical Practice Brokers) to ensure nothing is overlooked or missed. Your broker should note income statements, balance sheets, cash flow statements, and relevant financial documents to identify any irregularities or potential risks. Simultaneously, operational and compliance processes should also be assessed to identify areas for improvement, such as workflow inefficiencies or resource allocation discrepancies.
Create a Transition Plan
Don't overlook creating a transition plan for employees and patients! While transition plans can take different structures, it’s important to work with the exiting doctor. This could be crafting a plan in collaboration, and it could mean leveraging the work of a communications or operational professional. No matter the structure, transparent communication with patients, employees, and stakeholders foster long term trust and collaboration. And a structured transition timeline with milestones provides a systematic approach to implementing changes and monitoring progress- making sure your new practice is aligned on direction.
Leverage Professional Guidance
The bottom line is that as a buyer, you need professional guidance from the first step to when you walk in the doors of your newly purchased practice. Partnering with professionals in both accounting and tax such as Reed Tinsley, CPA, and brokerage, such Tinsley Medical Practice Brokers (TMPB) is a way to ensure you have help throughout the transaction.
Additional Resources for Buying or Selling Medical Practice
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