What Are the Benefits of Buying an Established Internal Medicine Practice?
Physicians considering practice ownership generally have several paths to consider, including starting a new internal medicine practice or purchasing an established practice.
Buying an established practice can provide several potential advantages because the physician may be taking over an existing business with established patients, employees, systems, and operations.
For physicians considering internal medicine practice financing, understanding the potential benefits of an established practice can help when evaluating an acquisition opportunity.
Here are seven potential benefits of buying an established internal medicine practice.
1. An Established Patient Base
One of the primary potential benefits of purchasing an established practice is gaining access to an existing patient base.
A new practice generally has to build its patient base over time. An established practice may already have patients who regularly visit the office.
An existing patient base can provide a foundation for continued practice operations after the ownership transition.
2. Existing Revenue and Financial History
An established practice typically has historical financial information that a physician can review before purchasing it.
This may include:
- Historical revenue
- Operating expenses
- Profitability
- Patient volume
- Accounts receivable
Having historical financial information can help a physician evaluate the potential financial performance of the practice before making an acquisition decision.
3. Existing Employees and Staff
An established internal medicine practice may already have physicians, nurses, medical assistants, administrative employees, billing personnel, and other staff.
Keeping an experienced team can help the new owner maintain continuity and avoid having to recruit an entirely new staff immediately after opening.
However, the buyer should carefully evaluate staffing costs, roles, compensation, and employment arrangements during due diligence.
4. Established Office Space and Equipment
An established practice may already have a functioning medical office with equipment, technology, furniture, and other business assets.
Depending on the transaction, the buyer may be able to acquire some or all of these assets as part of the purchase.
This can potentially reduce the amount of time and effort required to establish a fully operational office from the beginning.
5. Existing Business Operations
Starting a medical practice requires creating many business systems from the ground up.
An established practice may already have processes for:
- Patient scheduling
- Billing
- Insurance administration
- Record management
- Vendor relationships
- Payroll
- Office administration
An established operating structure can provide a starting point for a physician taking over the practice.
6. Potentially Faster Transition Into Ownership
Buying an existing practice can potentially allow a physician to begin operating an established business sooner than building every part of a new practice from scratch.
The timeline will depend on the transaction, financing, licensing, legal requirements, lease arrangements, and other factors.
Proper planning is still important to help minimize disruptions during the ownership transition.
7. Opportunities for Future Growth
An established internal medicine practice may also provide opportunities for future growth.
A new owner may identify opportunities to:
- Add physicians or other healthcare professionals
- Expand services
- Upgrade equipment
- Improve technology
- Increase patient capacity
- Expand the office
- Improve marketing
The potential for growth will depend on the practice’s location, patient demand, financial performance, staffing, available space, and other factors.
What Should You Look for When Buying an Established Practice?
Although an established practice can offer potential advantages, physicians should conduct thorough due diligence before completing an acquisition.
Important areas to evaluate can include:
- Revenue and profitability
- Patient retention
- Operating expenses
- Accounts receivable
- Staffing
- Equipment condition
- Lease terms
- Existing contracts and obligations
The purchase price should also be evaluated in relation to the practice’s financial performance and future potential.
Is Buying an Established Practice Better Than Starting One?
There is no single answer that applies to every physician.
Starting a new internal medicine practice can provide greater control over the practice’s location, branding, systems, staffing, and development.
Buying an established practice may provide an existing patient base, revenue history, staff, equipment, and operating infrastructure.
Physicians should compare the financial requirements, risks, timeline, and long-term goals of both options before deciding which approach is appropriate.
How Can Financing Help With an Established Practice Acquisition?
Financing may potentially be used to help fund eligible costs associated with acquiring an established internal medicine practice.
Depending on the transaction and financing structure, funding may potentially support expenses such as:
- Practice acquisition
- Working capital
- Equipment
- Technology
- Commercial real estate
- Other qualifying business expenses
The specific financing options and requirements will depend on the physician, practice, transaction, and lender.
Final Thought
Buying an established internal medicine practice can provide several potential advantages compared with starting a practice from scratch.
An existing patient base, financial history, staff, office, equipment, and established business operations can provide a foundation for a physician entering practice ownership.
However, physicians should conduct thorough due diligence and carefully evaluate the practice’s financial performance, purchase price, operations, and future growth potential before completing an acquisition.
