American Osteopathic Association

Advancing the distinctive philosophy and practice of osteopathic medicine

5 Tips for Selling a Medical Practice

A solo internist was approached by an entrepreneurial local physician interested in increasing profits by establishing a large group practice with a range of ancillary services. During the valuation process, her admitting hospital contacted her to provide a ready-made practice for a physician just completing her residency, interested in practicing in this community.  With two potential buyers, the bidding for her practice increased its value to nearly 40% more than the valuation.

If you are considering the sale of your practice, knowing what your options are for selling is essential to maximizing the value of your practice before your sell. The following tips should help guide you as you consider your practice and career:

1. Your EHR system has value; paper charts do not.

You will need to convert your paper charts to an EHR system. Prospective buyers will account for the time effort needed to convert charts in negotiations.

2. If you own the practice facility, prepare for up to two sales.

  • If you are not ready to be owned by a hospital, sell the practice and lease the space. You become the landlord and you can place your property in the hands of a property management company to collect rent and maintain the facility.

  • Sell the practice and lease the space with an option to buy at a future date (say five years). If you do not exercise this option, you can continue as landlord or consider finding a buyer interested in investing in rentable space.

  • Sell the practice and sell the space. If the practice buyer is not interested in owning the facility, consider an alternate buyer. This makes sense if you do not plan to remain in the community.

3. Sell your practice and negotiate your employment agreement.

You may agree to remain at the practice as an employed physician. Consider negotiating a compensation plan based on your performance not the performance of the new owners, which may ultimately have weaker billing and collections that your practice. The model for a fair compensation plan is based on relative value units (RVUs). Being paid per RVU allows you to be paid on your efforts rather than the effectiveness of the new employer.

  • An example: A family physician produced approximately 10,000 RVUs per year. The physician’s take-home income was $200,000 (i.e. $20 per RVU).

4. Provide transitional marketing services.

As part of the sale, the established physician may offer to introduce the owner to new patients and key hospital administrators for three to four months.

5. Get more than one bidder.

Make your key hospital administrator(s) aware of your plans. They may be forming a group or want to provide this practice to someone interested in practicing in the community. They may or may not be interested in you staying on as a salaried physician.

Contact each local group or solo practice in your specialty. Let them know of your plans. A likely buyer could be one of these practices that wish to expand by bringing in a new physician to take over your practice.

About the Author: To find out more tips and for help in determining the value of your practice contact George Conomikes of Conomikes Associates, Inc . Conomikes Associates, Inc. is a nationally recognized medical practice management consulting and publishing firm. They have undertaken over a thousand on-site medical management consulting assignments throughout the U.S. with virtually every specialty, from solo to 80-physician groups.


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