What Are the Benefits of Buying an Established Dermatology Practice?
Buying an established dermatology practice can provide physicians with an opportunity to become practice owners without building every part of the business from the ground up. An existing practice may already have patients, employees, equipment, systems, and a history of financial performance.
For physicians considering dermatology practice financing, understanding the potential advantages of an established practice can help when comparing an acquisition with starting a new practice.
Existing Patient Relationships
One of the primary advantages of buying an established practice is that the business may already have an established patient base.
Rather than starting with no patients, a buyer may take over a practice with existing appointments, patient relationships, and referral sources.
Historical Revenue
An established practice provides historical financial information that may not be available when starting a new business.
Buyers can review previous revenue, collections, expenses, and profitability to better understand how the practice has performed.
Established Referral Sources
A dermatology practice may have relationships with primary care physicians, specialists, hospitals, and other healthcare providers.
These referral relationships can be valuable because developing a referral network from scratch can take considerable time.
Existing Staff
An established practice may already have experienced employees who understand the office’s systems and workflow.
Retaining qualified staff can help provide continuity for both the physician and patients during the ownership transition.
Existing Equipment
A buyer may acquire equipment as part of the transaction.
This can potentially reduce the need to purchase an entirely new set of equipment immediately after closing.
However, buyers should carefully evaluate the age, condition, maintenance history, and remaining useful life of major equipment.
Established Location
The practice may already operate from a location that patients know and regularly visit.
An established location can provide continuity and may eliminate some of the uncertainty involved in selecting and developing a new facility.
Operational Infrastructure
Established practices typically have systems already in place for scheduling, billing, patient communication, recordkeeping, inventory, and other administrative functions.
A buyer can build on these existing systems rather than creating every process from the beginning.
Existing Online Presence
An established practice may already have a website, online listings, reviews, social media profiles, and other marketing assets.
These resources can help maintain visibility in the local market after the ownership transition.
Potentially Faster Path to Ownership
Starting a dermatology practice can involve finding a location, completing construction or renovations, purchasing equipment, hiring employees, establishing systems, and attracting patients.
Acquiring an existing practice can potentially shorten some of these steps because the business is already operating.
Opportunity to Improve the Practice
An established practice does not have to remain exactly as it was under the previous owner.
A new owner may identify opportunities to improve scheduling, introduce new services, update technology, expand marketing, or increase patient capacity.
Ability to Add New Services
A buyer may be able to expand the practice’s service offerings after the acquisition.
Depending on the practice and physician’s qualifications, opportunities could include additional medical dermatology services, surgical procedures, cosmetic treatments, or other offerings.
Existing Financial Records Can Help With Planning
Historical financial records can provide a starting point for developing future projections.
A buyer can compare previous performance with planned changes to estimate how the practice might perform under new ownership.
Financing May Be Available for Acquisitions
Physicians may be able to obtain financing for an eligible dermatology practice acquisition.
Depending on the financing structure, funding may potentially cover the practice purchase and other eligible expenses associated with the transaction.
Due Diligence Is Still Essential
Buying an established practice does not eliminate risk.
Before completing an acquisition, physicians should carefully review the practice’s financial statements, patient base, equipment, staffing, lease, liabilities, and other relevant information.
Understanding what is actually being purchased is essential before committing to the transaction.
Compare the Acquisition With Starting a Practice
An established practice may offer advantages such as existing revenue, patients, staff, equipment, and infrastructure.
Starting a practice, however, provides greater control over the location, facility, equipment, services, and business model.
Physicians should compare both options based on their goals, available capital, experience, market, and long-term plans.
Final Thought
Buying an established dermatology practice can provide several advantages, including an existing patient base, historical revenue, experienced staff, equipment, operational systems, and an established location.
However, physicians should not assume that every established practice is a good acquisition opportunity. Thorough due diligence and careful financial analysis are important for determining whether the purchase price and business fundamentals make sense.
