Selling any small business is tough, but selling your medical practice will present their own unique challenges. Negotiate the best terms for sale of your medical practice to a hospital by hiring a business broker.
More hospitals have been buying medical practices in recent years. This trend may be due to rising costs, the drop in reimbursement rates, and other conditions that are unfavorable to owning a solo practice. Hospitals acquire cardiology, urology, OB/GYN, and primary care physician practices, among others, giving physicians the opportunity to earn a steady income without the hassle of running a private medical office.
Hospitals make money on inpatient fees from acquired practices. These fees are greater than the reduction in professional charges. Cardiologists and some other specialists will make more money billing services via the hospital outpatient department than they could in a solo practice.
If you have considered selling your practice to a hospital, you should think about the pros and cons of becoming a hospital employee, and the impact it will have on your career and finances. Most importantly, you should learn how to negotiate the best deal possible when selling your practice to a hospital.
Here are a few common questions you should ask before selling your medical practice to a hospital.
What Will Happen to Your Staff?
During sale negotiations, consider what will happen to your staff. Will the hospital hire them and provide jobs in that particular hospital or in another part of their system? If not, you will need to make other provisions to ensure your trusted medical and administrative staff have access to jobs similar to the ones they held at your office
Will the Hospital Add More Doctors to My Practice?
A new doctor will bring in more patients to your business, but you should know how the hospital plans to deal with compensation for additional physicians, and how the extra doctor(s) will affect workload and productivity.
Will You Assist in Making Decisions for the Hospital-Based Practice?
Define how much power you will have in overall decision-making for the business and medical ends of the practice. The hospital management may have the authority to make certain decisions you were used to making on your own, and this may take some adjustment on your part.
To a certain extent, though, the hospital administration will work with physicians to make important decisions regarding patient treatment procedures and daily operation of the practice.
How Will The Practice Be Managed?
Your practice may be one of several managed by an individual appointed by the hospital. In some cases, each acquired practice may have its own manager. Make sure that the person managing your practice knows about the daily business operations of a medical practice as well as the hospital as a whole. A hospital and a medical practice need different management techniques.
Negotiating Sales Documents
When you sell your medical practice to a hospital, you need to take special care negotiating restrictive covenant and physicians’ right of repurchase. Obviously, all aspects of the sales documents are important, but improper terms regarding these two subjects can cause you problems once your practice is officially owned by the hospital.
Covenants
After your practice is sold, the employment agreement with the hospital will have several covenants. They include, but are not limited to:
A non-compete covenant, which stops you from practicing medicine for a certain amount of time in a particular region after you are terminated from hospital employment,
A non-disclosure and confidentiality covenant, which may prevent you from accessing patient medical record once you are no longer employed by the hospital,
A no-pirate covenant, which states that you can’t employ or solicit employees from the hospital practice after termination, and a non-solicitation covenant, which prevents you from soliciting patients from the practice after you are terminated.
You need to understand how these covenants will affect you if you leave the hospital’s employ. Some physicians may not want to give up all their rights to patients and practice employees if they are terminated, while others doctors, (especially ones who are closer to retirement age), may not be concerned with these covenants.
Right of Repurchase
This contract term deals with your right to buy the practice and its assets at the end of the hospital contract. If you don’t negotiate a beneficial renewal agreement with the hospital, you will be unable to have access to patients or employees. You’ll need to start over with a new practice, equipment, employees and find new patients.
Regardless of how positive initial employment with the hospital may be, there is always the chance you will want to return to a solo practice. Negotiating the right to re-purchase will give you this option.
Call 1-800-Biz-Broker today, or visit their website at www.1800bizbroker.com to learn more about how to sell your medical practice for the to a hospital for the best price while protecting your interests.
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