|
If you are reading this section, you may
have found a practice you want to buy, and you have many questions.
We will help you sort out the questions and give you some factors
to consider when purchasing.
Buying a practice is a little like buying
a racehorse — you never know how it will run until it’s
on the track.
Rule No. 1: The past success or failure
of a practice should not influence your decision to buy a practice.
As soon as you sign the papers and become
the new owner, the practice takes on a completely new character,
and it’s a completely different entity. The employees will
treat you differently from the previous owner; some patients will
like you more; and some will like you less. You’ll start adjusting
patients differently, and running the office differently, and everything
will change.
What you want to know in purchasing a practice
is that there will be no big surprises. Things are never what they
seem, but you don’t want to find out that something “Big
surprises” includes wrongs that you didn’t know about
— such as that the previous owner was committing insurance
fraud, or that he is going to move down the street a week after
you open and attempt to take back all of your patients — or
that he owed money to a contractor for an office renovation that
you now must pay.
Those are big surprises.
To avoid those big surprises, we’ve
compiled a list of questions to ask before you buy and a checklist
of things to do. Click here to see them in the Resource section.
Rule No. 2: Ask, ‘How long will
it take for me to make a decent living in this practice?’
If you have to wait longer than a year to
take out enough money to live on (including paying the purchase
price plus all overhead), you’re probably paying too much,
or the practice will take too much work to get into shape.
You should ask this critical question before
you go to a bank for financing, because if you can’t pay your
bills, you won’t be able to get financing anyway.
Rule No. 3: Don’t try to make
the practice fit. If it doesn’t feel right, walk away. :
Before you begin to look for practices,
make a list and divide it into two categories:
Category A: Want to have
Category B: Must have
Category B contains your “non-negotiables”
— those elements of the practice that you require for the
deal to be completely satisfactory. They are elements that you feel
must be satisfied or the deal is off.
Some non-negotiable items might include:
• Type of practice.
For example, if the current doctor has a PI practice, and you want
to work on children, it will take many years to turn around the
patient base into what you want.
• Location. If the practice
is in an area where the population is not expanding or that doesn’t
have the right demographic mix, you may not be able to make a living
there.
• Inability to assume a lease.
If you can’t assume the lease, you must renegotiate
with the lessor or find another location.
• A ‘bottom line’
price above which you feel you can’t make this deal
work. Be careful that you don’t set this price too soon in
the process; you’ll need to be flexible in the negotiation
of price.
In conclusion:
1. Trust your instincts. If it feels too
good to be true, it probably is. If something doesn’t feel
right, don’t move forward.
2. Make sure everything that’s agreed
on is in writing. Get an attorney and a CPA involved to protect
your interests. As Pres. Reagan said, “Trust but verify.”
3. Remember that this person is not just
selling a practice; he or she is selling a life. The doctor has
put a lot of “blood, sweat, and tears” into this practice;
be respectful of this hard work and passion.
Back
|
