Transferring a Medical Practice Not As Simple As On TV
When the ABC television series “Private Practice” came to an end after six seasons, fans of the medical drama could hardly be surprised. The series was a spinoff of the long-running “Grey’s Anatomy,” and actress Kate Walsh – who played Dr. Addison Montgomery – had already announced her intention to leave the show and move on to other projects. As the Huffington Post reported at the time, show creator Shonda Rhimes then met with the network and mutually agreed to end the series rather than continue without “Dr. Montgomery.”
Private practices come to an end in real life as well. And when they do, it usually involves the sale of the business in one form or another.
Reasons for Selling a Practice Vary
It could be that a solo practitioner has decided to retire after a long career, and a young upstart has stepped forward to take his place in the community. Or perhaps one member of a team of doctors who started the business together has now chosen to go her separate way, selling her interest in the practice to the physicians who remain. In other cases, a larger healthcare organization may have agreed to acquire the practice as part of its overall business strategy for the delivery of health services.
Whatever the reason, the changes in the leadership and operation of the business won’t be nearly as straight-forward as it may have appeared in the final episode of “Private Practice.”
Help is Available
Such transactions are complicated work on both sides of the deal. Physicians contemplating acquiring or buying into a practice may want to consult the resources of the Healthcare Financial Management Association (HFMA) before getting too far along on this journey. The organization has a handbook that offers an eight-page checklist outlining many of the steps that should go into any decision to buy another physician’s business.
The factors put forth by HFMA that any buyer should investigate fall into six broad categories:
- Overall finances;
- Reimbursement and medical billing issues of the practice;
- Patient demographics;
- Evaluation of medical personnel;
- The physical layout of the doctor’s office and examination rooms; and
- Any legal and regulatory issues
The doctor or doctors selling the business also have a number of legal matters that must be addressed. For instance, can the selling physicians take patients’ medical records with them? According to the American Medical Association, the answer is usually no.
The records belong to the practice itself, which exists as a separate legal entity from the doctor or team of doctors running it. Any exception would need to have been spelled out in a pre-existing contract or partnership agreement.
Consulting an experienced transactional attorney should be on the physician’s checklist as well. There are often tax implications and medical malpractice insurance matters that also come into play.
At the Boca Raton, Lake Worth, and West Palm Beach Law Offices of Larry E. Bray, P.A., we utilize a team of people to analyze your options before proceeding with the sale or purchase of a medical practice. We’re ready to assist you in planning your financial future. Contact us to arrange a free consultation.