Possibly the first thing to consider if you are thinking ofselling your practice is whether or not there would be an interested buyer.
This may be something that is more likely for urologiststhan nephrologists in the current climate, according to Akram Boutros, MD, founderand president of BusinessFirst Healthcare Solutions,an advisory firm to hospitals, physician practices and health systems based inGreat Neck, NY.
Dr. Boutros said a trend he seesis the creation of multi-specialty practices – like a cancer center that hasoncologists and urologists under one roof – where the two groups work togetherto increase purchasing power, but remain autonomous in ownership.
But urologists aren’t the onlyones wanting to sell. Physicians of all kinds are feeling the pinch of lower Medicarereimbursements. This, along with the uncertain future posed by health reform,is a potential maelstrom many doctors don’t want to face in private practice.
When Brian Baker, owner of Baker Healthcare Consulting Groupin Nashville, Tenn., works with physician groups, onething he notices is the decision to sell or not is made initially on the basisof emotion.
Medical groups are constantly under threat of being reducedin payments or having to put up with more regulation, Baker said. “So doctorsthrow up their hands and say, ‘I am tired of this, I want someone else to takeon the risk.'”
Focus on the businesstransaction
He tries to get them to focus on the business transactioninstead. He said most practices are able to project based on the past couple ofyears what their business will look like in the near future. They shouldconsider if there are new sources of business or if there is anything else theycan do to enhance the practice.
Today’s sales tend to be different than those in the past. Typically,“the hospital says, ‘we are going to take you over, there is no guarantee thatall employees will continue to be employed, and we are not going to pay you an exorbitantprice … we’ll just buy the assets, and you’ll get a contract for X number ofyears with renewals.’”
One major point for physicians to consider when looking at acontract isn’t the “sale price,” but the term and longevity of therelationship, Boutros said.
“Look to see if the personal compensation is in theballpark,” he said. “They should be looking for security; that’s why they arethinking of integrating in the first place. And that comes with contractlength.”
Possible loss ofreferrals
Other compensation issues to think about include whether youmight be shut out of other hospitals that have given you plenty of business.Also, be aware of whether you would lose referrals from some primary careproviders who send you a lot of patients.
Nicholas Janiga, a managerat HealthCare Appraisers, Inc. inCastle Rock, Colo.,said it pays to see what you will be incentivized to do, whether you will beheld accountable for costs or paid just for productivity (the latter is rare,he said).
Contracts will also include things like inventory, tangiblefixed assets, and some level of intangible value like a non-compete clause,Janiga said.
“Depending upon your required management duties there couldbe supplemental agreements in place if they expect you to participate in someof that,” he said.
The new span of your influence is something to understandbefore selling a practice. Boutros said to ask what you will be involved indirectly. Will the hospital participate in hiring and firing, creating newservice offerings, practice relocation? Will your staff be hospital employees?
The last financial aspect to mull over is what will happenif things don’t work out with the sale. You have to be aware of who will ownthe medical records, whether or not the staff can come back to work for you,and if you will be able to stay in that office.
Loss of autonomy
Finally, there are a couple of considerations that are moreabstract, but potentially the most important. The first is the loss of autonomyinherent to becoming an employee. Most times, a doctor will still make clinicaldecisions, but they no longer have control over business decisions once theysell.
“Some health systems that do a good job with employedphysicians keep them involved in decision making, but ultimately the owner isthe decision maker,” Baker said. “It is a big deal, but a doctor can close theireyes and their hold nose and dive in if it’s the best way to go.”
Most importantly, if you are going to sell your practice, ithas to be to someone for whom you can work. Take the time to get to know theleadership and structure of the buyer. They should make you feel valued and bea group with whom you can imagine having a relationship.
“You can’t work for people you don’t trust or like,” Boutrossaid. “You can do it for six months or a year, but not long term.