Medical practice acquisitions have been a noticeable trend in the health care industry. In the last several years, hospitals, medical groups, and even individual physicians continue adding new practices to their medical care networks. Understanding medical practice acquisitions will prepare you to enter the market yourself as a buyer.

Who Buys Medical Practices?

A single hospital or hospital system buys a medical practice to add to its health care network in its geographic area. Also, individual physicians purchase other physicians’ offices with the goal of creating a group practice. Finally, large medical groups buy individual offices or small health care groups within their own region, or outside the region to expand nationally.

Acquisition Can Benefit Buyer and Seller

Both buyer and seller can mutually profit in a health care firm purchase. The buyer offers the firm support in the form of improved tools and technology, as well as access to a larger budget. As a result, the acquired firm could potentially see cost savings and increased efficiency. Finally, the acquiring company assists its member physicians and facilities with marketing and outreach. In return, there is the potential of profits for the buyer, both in the immediate future as well as long term.

Purchase by a hospital system creates a relationship with its own set of advantages. For the hospital system, the practice can provide it with referrals as well as income. Also, the practice and its physicians may benefit from a reduced administrative load as well as guaranteed salaries.

Things to Consider When Buying a Practice

First of all, you’ll need to get an appraisal of the firm. A full valuation should reveal the worth of its tangible and intangible assets such as physical plant, equipment, furniture, and account receivables. It should also detail the firm’s liabilities, including secured debt, unsecured debt, and taxes owed. A careful examination will also uncover its reputation, patient satisfaction, and operating efficiency.

Next, consult an attorney about any regulations affecting your purchase. Health care, commerce, and anti-trust laws can all weigh in on your ability to acquire the firm. Other legal realities, such as the employment of the firm’s physicians and staff, will need to be negotiated as part of the acquisition.

The Health Care Practice Market Offers Opportunities

As health care continues to be a critical human need, medical practice acquisitions can offer benefits to both buyer and seller. Buyers stand to gain profits and expansion, and sellers have access to logistical support and more resources to improve patient care. An understanding of the industry and its legal realities, as well as a careful valuation of any firms you wish to buy, will be helpful as you navigate the health care practice market.