For many physicians, the chance to purchase a medical practice can often be a truly life-changing experience. Like any large investment, however, purchasing a practice is a decision that requires much thought and critical thinking. Here are just four important points to consider when buying a medical practice, and why reasonable minds often prevail in the medical community.
Why is the Current Owner Selling Their Practice?
As with any property investment, it is worth asking about a seller’s motivations before making a purchase on a medical practice. Is the practice attracting new patients? Has a leaving physician damaged the practice’s reputation in some way? These are difficult questions to ask, but a physician who invests hundreds of thousands or even millions of dollars in a practice should not avoid asking them.
Are There Strings Attached?
In many practices, a physician isn’t just selling a property. They may also be selling equipment or the use of a staff that is expected to stay on when a new management transition takes place. If an office’s equipment is old or outdated, you might have a bigger list of expenses on your agenda than you pictured: Replacing everything in a medical practice can be an extremely costly proposition for anyone. The same rule applies when it comes to taking on old staff: Taking on employees that display toxic attitudes or infighting can put a practice at a disadvantage before it has time to get off the ground.
When Can a Buyer Expect to Turn a Profit?
From a business perspective, taking on a new medical practice can either be a fantastic investment opportunity or a massive money sink. The difference between the two outcomes often lies in the time it will take for a new physician to turn a profit on their new practice. Will the previous owner’s patients be referred to your office after the previous owner leaves? Will you be able to drum up new business in a timely manner? Keeping up a medical practice that is not turning a profit can be an extremely expensive proposition: On top of medical school debt, most doctors will have trouble keeping up payments if the profitability of a practice isn’t there from the get-go.
Do You Like the People You’ll Be Working With?
Even when the notion of working with a particular group medical practice seems like the perfect gig, it can take a while to get a real view of the social dynamics inherent to a workplace. Before you sign off on a new practice, try taking the people you’ll be working with out for lunch and a conversation. Do you see eye to eye on business issues? To the best of your knowledge, will you be constantly at odds with other doctors or staff? If you’re risking psychological burnout by buying a practice, in other words, you might be better off looking for another investment that suits your personal values and outlook on life.