wasatch

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What are some good ideas for buying a practice from someone?

Are there a few good websites that list practices for sale?

I am interested in having a practice that does a lot of procedures to keep things interesting. What are some good ideas that people concerning which procedures are work best in a family practice setting?

I worked with a family physician who did colonoscopies once a week, OB with c-sections, tubal ligations, vasectomies and he also did EM one night in a rural city for an xtra 70k a year. His wife was also a family physician who worked part time. She also started doing botox, collagen injections and laser hair removal. The laser she bought outright for a little over 100k. I think most people lease the laser. She does other derm procedures.

I thought setting up a solon/family practice situation would be a good combination...what do you think?
 

skypilot

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If you have as much imagination, talent and energy as that guy and his wife do I think it is a great idea!
 

ctsjas1

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wasatch said:
What are some good ideas for buying a practice from someone?

Are there a few good websites that list practices for sale?

I am interested in having a practice that does a lot of procedures to keep things interesting. What are some good ideas that people concerning which procedures are work best in a family practice setting?

I worked with a family physician who did colonoscopies once a week, OB with c-sections, tubal ligations, vasectomies and he also did EM one night in a rural city for an xtra 70k a year. His wife was also a family physician who worked part time. She also started doing botox, collagen injections and laser hair removal. The laser she bought outright for a little over 100k. I think most people lease the laser. She does other derm procedures.

I thought setting up a solon/family practice situation would be a good combination...what do you think?
I think it is good idea also but the problem is finding an area large enough to support such a practice without a lot of competition from derms and plastic surgery. Also, when pts enter a family practice, they are expecting insurance to pay. Insurance want pay for most cosmetic procedures but pts are still in the "insurance pays" mindset. I always thought it would be nice to partner up with an existing, successful salon and do minor cosmetic procedures there and have a medical practice nearby.
 

Blue Dog

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I thought setting up a solon/family practice situation would be a good combination...what do you think?
Bad idea. Keep the medical stuff and the cosmetic stuff separate. As in physically separate. Two different offices.
 

JackADeli

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...Also, medical practice brokers such as myself have listings posted online.

>My company website<
This is slick ressurection of a thread from 2005 by someone with a commercial interest... thus rebirth of thread with subtle link to practice broker website, etc....
 
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lowbudget

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This is slick ressurection of a thread from 2005 by someone with a commercial interest... thus rebirth of thread with subtle link to practice broker website, etc....
Whoa whoa. Hold on. Hardly slick, duh. But let the man speak.

Educate us. How does a person buy a family medicine practice? And, what I mean is, how does a buyer know they're not overpaying for a practice? What are the things that you consider?

On your blog, you talk about how much annual revenue the target practice brings in. How are people these days valuing the practice? A multiple of the revenue? Cash flows? Hard assets?

We all know that medical practices are built by people and built on people. And, we know that when medical practices are bought/sold, people will come and go. So, how does someone buy a practice?

(And, don't tell me you hire a broker... I get it. You're a broker.)
 

Blue Dog

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A medical practice is worth virtually nothing apart from its accounts receivable. Many retiring physicians overvalue their practices. There is no guarantee that a "new guy" will retain all of the existing staff and patients, so any practice acquisition that does not involve the retention of the physician(s) should be considered risky.

When hospitals acquire practices, they're really acquiring the doctors. That's what they're paying for.
 

JackADeli

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...How does a person buy a family medicine practice? And, what I mean is, how does a buyer know they're not overpaying for a practice? What are the things that you consider?

...How are people these days valuing the practice? A multiple of the revenue? Cash flows? Hard assets?

We all know that medical practices are built by people and built on people. And, we know that when medical practices are bought/sold, people will come and go. So, how does someone buy a practice?...
A medical practice is worth virtually nothing apart from its accounts receivable. Many retiring physicians overvalue their practices. There is no guarantee that a "new guy" will retain all of the existing staff and patients...

When hospitals acquire practices, they're really acquiring the doctors. That's what they're paying for.
Exactly. The idea of "buying a practice" is silly from the individual's standpoint. Stark laws and other legal opinions have spoken to this. You do not buy the employees. You do not buy the referral base. You do not buy the practice "reputation" or community "status". What you buy is the real estate and any old equipment at age/depreciated costs. IMHO, If you want to go solo, you should get a local med-ctr/hospital to front you cash to build a practice, shiny & new.

Individuals continuing to practice and selling their practice to a hospital is different in some ways. Again, what I said above remains. But, The hospital "buys" the practice in the hopes of building its referral base and tapping into the practice's patient lists. They still do not buy anything more then FMV for the hard assets, etc... The goal is for the individuals to establish a stable income and off-load the practice overhead to the hospital. The physician employment contracts are seperate and individual to each physician.

As it should be, you can NOT sell your reputation or standing in the community. Years of senior physicians charging excessive "partnership buy-in" and excessively priced practice sales has left many with unrealistic expectations. Just because you are a nobel piece prize winning, key to the city, Ghandi humanism award winner physician does not mean the physician you sell to now gets that veneer.
 

chris majdi

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Exactly. The idea of "buying a practice" is silly from the individual's standpoint. Stark laws and other legal opinions have spoken to this. You do not buy the employees. You do not buy the referral base. You do not buy the practice "reputation" or community "status". What you buy is the real estate and any old equipment at age/depreciated costs. IMHO, If you want to go solo, you should get a local med-ctr/hospital to front you cash to build a practice, shiny & new.

Individuals continuing to practice and selling their practice to a hospital is different in some ways. Again, what I said above remains. But, The hospital "buys" the practice in the hopes of building its referral base and tapping into the practice's patient lists. They still do not buy anything more then FMV for the hard assets, etc... The goal is for the individuals to establish a stable income and off-load the practice overhead to the hospital. The physician employment contracts are seperate and individual to each physician.

As it should be, you can NOT sell your reputation or standing in the community. Years of senior physicians charging excessive "partnership buy-in" and excessively priced practice sales has left many with unrealistic expectations. Just because you are a nobel piece prize winning, key to the city, Ghandi humanism award winner physician does not mean the physician you sell to now gets that veneer.
Well I better make this discussion worthwhile since I got an infraction for it. :) There is a distinction to be made between personal and enterprise goodwill as well as other intangible assets present within a practice. Hospitals typically don't pay for intagibles but I have seen it...and they get creative about it. Many other types of buyers will pay for intangibles, and the case can certainly be made that it exists and is transferrable. Much of this earnings driven. I think you're solely addressing personal goodwill and it's transferrabilty, but even this can be transacted. There is plenty of case law and tax law that addresses it. From a practical standpoint I guess it's just a matter of whether a buyer can realize and preserve that value. However, the intangible assets transferred in a typical sale are mostly enterprise driven.
 

chris majdi

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Whoa whoa. Hold on. Hardly slick, duh. But let the man speak.

Educate us. How does a person buy a family medicine practice? And, what I mean is, how does a buyer know they're not overpaying for a practice? What are the things that you consider?

On your blog, you talk about how much annual revenue the target practice brings in. How are people these days valuing the practice? A multiple of the revenue? Cash flows? Hard assets?

We all know that medical practices are built by people and built on people. And, we know that when medical practices are bought/sold, people will come and go. So, how does someone buy a practice?

(And, don't tell me you hire a broker... I get it. You're a broker.)
Earnings, cashflow, dividends, etc are usually what buyers find most important when it comes to valuation unless we're talking about a practice which is heavily weighted in tangible assets (e.g. lab, imaging center). It's all about the underlying profitability, which can vary widely by specialty, region, payor mix, clinical skill of providers, and ultimately the business acumen of the owner. As far as realization and preservation of value, this is largely dependent on the transition plan and replicabilty by the buyer. These are not the types of deals which can be turned on a dime.
 

cabinbuilder

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Bad idea. Keep the medical stuff and the cosmetic stuff separate. As in physically separate. Two different offices.
This is what our residency medical director does. He over sees the residency clinic except for Wed/Frid afternoons where he does laser cosmetics and liposuction at a separate office for cash only. He has it set up where patients can apply for a medical credit card so he gets paid by the bank and the patient pays on their loan for the procedure. Not sure how he set that up but he said his 100K lipo machine paid for itself after 15-20 procedures. Not a bad turnover.