5 Key Steps in Moving From The Exam Room To The Golf Course.
If you are an owner of your own medical group and have been practicing for over 20 years, you are probably asking yourself how you can successfully sell your medical practice to exit from the business that you have worked all of your career building. To answer this question, there are quite a few variables that need to be addressed but basically the exit scenario and the strategy depends on you. Below is a simple “to do” list that can help you with the “how and when” you can make this transition.
1. Develop a game plan, with the end game in mind.
Ask yourself these types of questions:
- How many more years would you like to continue to practice?
- Would you like to continue to be involved in the medical group after you retire from practicing?
- Have you drawn up a succession plan regarding ownership and management of the practice after your retirement?
- Do you have written agreements with your providers, for either salary or for equity?
- Would you like to partner with a private equity group or sell your practice to your providers using traditional bank financing? (Either of these or similar type options could generate a significant upfront payment to you).
- Are you interested in partnering with any medical groups, health plans, or hospitals in your area which could remove most of your administrative burden and give you a guaranteed salary for the rest of your career?
- Would you be happier and healthier if you sell your medical practice?
- Would you sell your medical practice to your providers, or to an outside entity?
2. Get your clinic finances in order.
To extract maximum value for your business, your business needs to be functioning on all cylinders. All departments, such as scheduling, billing, collections, accounting, human resources/staffing, purchasing, and inventory management should all be running like clockwork.
3. Hire your replacement at the appropriate time.
When you retire from practice, the void that you leave should be negligible if you transition your patients to a provider who is familiar with your group and how you practice. Hiring your replacement also means that the group will not lose significant revenue and profit after you retire, meaning its valuation will not be affected.
4. Start talking to your peers, bankers, private equity firms, and your providers.
Start talking and playing out scenarios to see what seems like a good fit for you, your staff, and your potential partners.
5. Develop a network of advisors who are experienced in your specialty.
This could include some in your geographic location who can guide you through the pros and cons of any scenarios you are considering. You cannot be expected to have all of the answers, but you are expected to know how to get them.
Remember, you are in control and you do not have to be pressured into doing anything that you are not comfortable with. Until the final deal is signed, you can always back out (and you may be able to back out even after the deal is signed, depending on the terms of your agreement).
Too many providers do not deal with their own practice mortality until it is too late. The transition of the business may involve many uncomfortable discussions and having to deal with some harsh realities, but the prospect of leaving your practice under your own terms will make some of the sacrifices that you made to get there well worth the effort.
Whether to Sell Your Medical Practice
Transitioning to a new phase of involvement does not mean that you must sell your medical practice. It could mean taking on a smaller role, and shoring up the operational efficiency to secure healthy revenues and stability. Taking action could mean reviewing and updating contracts with providers and staff. It could mean utilizing outside and outside management advisor, and outside billing and collections services.
PE for healthcare can help to find a solution for transitioning ownership or involvement in a medical practice / group. We have experience working with exiting owners and practicing physicians in the sale and purchase of the practice. We help buyers and sellers negotiate fair and equitable agreements, and examine the options of private equity partners and traditional financing. Contact us to discuss your options, whether to sell your practice, and how to prepare for the transition.