How Physicians Can Negotiate to Buy a Medical Practice

The opportunity has arrived.  Whether you have been in practice for many years or are a freshly graduated resident or fellow, the opportunity to acquire the practice of a retiring physician can be very appealing—and nerve wracking.  This is likely one of the most important negotiations and acquisitions you will make in your lifetime.  For many physicians it is more expensive than the purchase of their primary residence.  The negotiation and purchase of an established medical practice may be also one of the best long-term investments you ever make because it can sustain you and your family’s livelihood for your entire professional career and then be sold for a significant sum when you decide to retire.

While this article is focused on buying out the interests of an established medical practice, many of the same tips are applicable to a physician who is becoming a “partner” in an existing practice and would like to make sure the investment—financially, professionally, and emotionally—is warranted. Below are our tips for how to negotiate the purchase of a medical practice:

  • Identify exactly what your buying (assets or stock)
  • Decide what entity you will establish to buy the medical practice
  • Determine the precise items that are included in the purchase (charts, medical supplies, furniture, fixtures, equipment, etc.)
  • Figure out the most the practice is objectively worth
  • Make sure you can pay the bills after you have bought the practice
  • Understand what you need to place to run the new practice from day one
  • Ensure that the selling physician stays retired
  • Make sure this is the right practice opportunity for you
  • Make sure everything is in writing
  • Get professional help

The above was excerpted from The Physician’s Comprehensive Guide to Negotiating’s chapter on Negotiating the Purchase of an Established Medical Practice written by Bruce D. Armon, Esq. Mr. Armon is a partner at Saul Ewing, LLP.  Bruce has assisted physicians and physician practices in various health care corporate matters including: the establishment and merging of physician practices; drafting and reviewing employment and other practice agreements; HIPAA compliance; review and analysis of regulatory issues including Anti-Kickback Statute safe harbors, Stark II, Medicare, Medicaid, and private third party payment issues; and drafting physician and billing company compliance plans. Mr. Armon regularly lectures to a variety of medical audiences on health care-related legal issues.

Steven Babitsky, Esq. is a negotiating consultant and founder of SEAK, Inc., an ACCME accredited continuing education company.  Steve has trained thousands of physicians.  He is  the co-author of The Physician’s Comprehensive Guide to Negotiating and Never Lose Again, Become a Top Negotiator by Asking the Right Questions and is the presenter on SEAK’s highly-acclaimed DVD negotiating training program for physicians, Negotiating Skills for Physicians.