Medical practitioners may decide to sell a private or group practice for numerous reasons. Often financial considerations enter into the decision-making process. For example, selling a medical practice offers a financial windfall as someone enters retirement. Another financial reason is the high cost of running a practice. As a result, some physicians will sell to hospitals or other health groups and negotiate higher reimbursement rates. In these cases, the buyer assumes many of the overhead costs once paid by the previous private practice. So, selling a medical practice provides financial rewards.
In addition to financial considerations, some physicians may sell a private practice for other reasons. Occasionally, a medical practitioner may want to spend less time at work and more time enjoying life. In other words, sometimes folks want more of a work-life balance. Since a private practice remains very time-consuming, selling it and joining a hospital group may provide more free time. Other factors that may induce someone to sell include health issues, a desire to work for a large health system for personal growth, and reduced stress. In other words, various factors enter into a decision to sell a medical practice.
Advice on Selling a Medical Practice in Florida
Selling any business involves legal issues. Selling a medical practice is an extremely complicated process. The seller must carefully plan the sale and follow federal and state laws. Regardless of the reason for selling, the process requires an experienced attorney navigating all aspects of the sale. Key considerations for a successful and legal sale include:
- Compliance with State and Federal Laws
One example includes transfer of patients’ records. Under Florida Statute 456.057 patients must be notified about their doctor’s retirement or relocating and patients must be given the opportunity to transfer their records. Also, the physician must keep copies of patients’ records for a period of time. Federal Laws including the Health Insurance Portability and Accountability Act (HIPAA) privacy and security provisions must be followed. Further, if a practice participates in Medicare or Medicaid, the seller must notify the Centers for Medicare and Medicaid Services (CMS) of any change in ownership at least 30 days prior to sale. - Financial Considerations
One of the first considerations is finding the fair market value (FMV) of your practice. Do you own the practice outright? Do you own the physical office or building? Are you selling one, or both? If you own the property, will you sell it or lease it to the new owner? Next, you must decide on how to structure the sale. This will depend on circumstances related to your practice. Some questions include: What are debts? Do you have a lease agreement in place? Are you selling stock in your practice? Do you have equipment leases to resolve before the sale? Is office furniture part of the sale? In other words, everything must be inventoried. Finally, tax implications must be discussed with your accountant and attorney. - The Importance of Hiring a Qualified, Experienced Attorney
Selling a medical practice is a complex financial, legal process. It requires sound legal advice. Hiring an experienced attorney protects your interests. Your attorney understands the intricacies of complicated medical practice sales and will ensure that all contracts are legally valid. In fact, an experienced attorney will draft a comprehensive purchase agreement. This vital document contains numerous areas necessary for a valid, legal sale. Additionally, your attorney understands which buyers are allowed to purchase your practice. Sometimes private equity firms may buy up medical practices and hire medical professionals. However, this is allowed in specific fields of medicine and may not be allowed in others. As a result, it remains vital to hire an experienced healthcare attorney to navigate any medical practice sale.