Buying a Practice

[houseofpain23]

Has anyone had any experience buying a practice? I was initially interested in starting a practice in the same location but discovered a provider that is interested in selling their practice. Current doc is selling through transition consultants. Does anyone recommend a company in regards to medical practice appraisal?

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[drusso]

Has anyone had any experience buying a practice? I was initially interested in starting a practice in the same location but discovered a provider that is interested in selling their practice. Current doc is selling through transition consultants. Does anyone recommend a company in regards to medical practice appraisal?

You can find a good business appraiser with experience in medical practice valuations. BTW, most medical practices aren't worth dirt because they don't make money unless a doctor shows up and works there. Dirt, on the other hand, is worth A LOT. So, if you can structure the deal to include real estate, that is where the value is...and also much simpler to appraise. They should pay YOU to buy the "going concern" of the practice," and you should pay them Fair Market and a little gravy for the real estate. Getting a bank, a lender, or Vinny to lend you money for dirt is much easier because it's recourse financing. You don't pay; they take your stuff or your legs.

Relatedly, that's why most of these PE deals are complete BS.

PE Dude: "I'll pay you 5X EBITA in 5 years and then when we're all bought up, we'll sell for 20X EBITA and be rich, rich, rich!"

Doctor: "Okay, I'll take the 5X now and leave you all the 20X upside on the table for yourself you gorgeous little greedy bastard. Would you like to do that deal?"

PE Dude: Crickets....

 

[Ducttape]

just be careful that Vinny doesnt decide to put you in the dirt...

 

[mandrew]

Has anyone had any experience buying a practice? I was initially interested in starting a practice in the same location but discovered a provider that is interested in selling their practice. Current doc is selling through transition consultants. Does anyone recommend a company in regards to medical practice appraisal?

I looked at several practices and you really need to know your budget. Do not look at $500,000 practices unless that is within your budget. 50% of gross collections is a reasonable starting point for negotiating. I found a 3 year old practice that was not busy. Seller was moving south because she thought things were better down there. I paid about 60% of gross collections which were $120,000. The practice was established but not busy, I built it up to double the gross collections in about 7 years with minimal overhead increase. The practice is all ages and almost all insurance accepted. Well rounded practice.

 

[vit8bsm]

I looked at several practices and you really need to know your budget. Do not look at $500,000 practices unless that is within your budget. 50% of gross collections is a reasonable starting point for negotiating. I found a 3 year old practice that was not busy. Seller was moving south because she thought things were better down there. I paid about 60% of gross collections which were $120,000. The practice was established but not busy, I built it up to double the gross collections in about 7 years with minimal overhead increase. The practice is all ages and almost all insurance accepted. Well rounded practice.

Isn't $120k or even double that really low for a pain clinic's annual collections.

 

[Status Sciaticus]

I looked at several practices and you really need to know your budget. Do not look at $500,000 practices unless that is within your budget. 50% of gross collections is a reasonable starting point for negotiating. I found a 3 year old practice that was not busy. Seller was moving south because she thought things were better down there. I paid about 60% of gross collections which were $120,000. The practice was established but not busy, I built it up to double the gross collections in about 7 years with minimal overhead increase. The practice is all ages and almost all insurance accepted. Well rounded practice.

7 years to double the 120K gross collections???

 

[BobBarker]

He is a podiatrist. But still, I don’t see how that is enough to pay overhead unless he means net not gross.