Purchasing an established healthcare practice could help secure a medical practitioner’s financial future. It’s not uncommon for business-minded practitioners to look at setting up their own practice once they feel they have secured a firm list of clientele. However, few consider the option of buying into an established practice – given the right circumstances, this option can yield the best outcome for the practitioner.
In much the same way that purchasing an established business can help entrepreneurs bypass challenges encountered in the start-up phase, purchasing an established healthcare is advantageous to practitioners. Access to an existing customer-base provides a predictable cash flow from Day One, and everything you need to run the practice will already be in-place including staff who know the business and how to do their job, as well as equipment and premises, which have all been secured for you.
Buying an established practice also eliminates a lot of time and capital that would traditionally be spent on building your business from the ground up and working on an effective business plan, which some practitioners might not want to or can’t do. It also eliminates any unforeseen out-of-pocket expenses you might not have calculated for when setting up your own practice.
Below are some tips to keep in mind and consider when looking to purchase an established practice.
Finding the right practice
It’s important to make sure you fully understand what kind of practice you are buying into, before making the big purchase. One way to see if a practice is suitable for you is to try working near the area, or even at the same practice if possible, and potentially even have an arrangement in place where you have the option of buying the practice after 12 months.
Have clear intentions before you begin
Make your intentions clear from the start. It’s important to have an agreement in place when you join a practice, otherwise you could end up wasting a lot of time going back and forth on costs and transfers. Make sure you have a specific exit strategy in place for the existing owner as well, to avoid any crossovers that can cause problems.
Costs for a medical practice vary widely and can change depending on a number of factors. One of those factors is location. Some practitioners may prefer to work in an urban environment, however due to the convenience of the location, the price of a practice might be much higher than one based in the country. Country practices may cost less to purchase, however it’s important to keep in mind that they may also offer a smaller clientele.
Starting out with experienced staff is a bonus when purchasing an established practice. To ensure a smooth transition into the business, you should keep in mind how existing staff are used to working and what systems are in place. You might have to factor in potential costs for training.
Purchasing an existing practice often means you won’t need to worry about buying new equipment. However, you will need to consider if the practice wholly owns the equipment, or if they are paying it off or leasing it. This is another factor you need to consider before making your decision to avoid unnecessary costs.
Use a specialist adviser or lender
Having a specialist adviser or lender can make the buying process much more simplified for you. A specialist adviser will show you the ins and outs of the business, keeping the process simple and right from the start. They will also remind you to do your due diligence, to ensure you know exactly what you’re buying, including the liabilities.
Adequate income protection, accident and life insurance is recommended. As a practitioner, you are the business asset, so if you can’t work, you have no income. Make sure you take care of your biggest asset!
About the author
Paul Freeman is Head of Practitioner Segment at NAB Health and CEO of Medfin Finance.