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Buying a medical practice? Tips for success.

Although due diligence is important in any merger or acquisition transaction, deals that involve purchasing a physician practice offers unique obstacles. Whether a new physician looking to take over another doctor’s practice or a private equity firm looking for an investment, an interested buyer can mitigate the risk that comes with these hurdles by including these questions in the due diligence process:

  • Compliance. Review the target practice’s compliance program. Does it follow regulations regarding coding and billing? If not, or if the compliance program is not in line with applicable regulations, it may be wise to look elsewhere.
  • Infrastructure. Most physician practices rely on technology. Review the group’s information technology infrastructure. Is it where it needs to be or will the buyer need to set aside funds for future investments to set the practice up for success?
  • Capital. A potential buyer should review the length of time it takes for the target practice to convert a medical procedure into payment received. How much of the bill does the practice collect? It is also important to review the practice’s debt and any potential lawsuits. Inquire about both claims that are in the works and those that have not yet been reported.

As noted in a recent analysis in Becker’s Hospital Review, it is also important for a prospective buyer to consider likely changes to the physician payment model and care delivery systems. The delivery of medicine is changing, health care is evolving. Thorough due diligence can better ensure a wise acquisition and better position the buyer for a favorable return.