Buying an Internal Medicine Practice From a Retiring Physician
Buying an internal medicine practice from a retiring physician is one of the most frequent paths to ownership in primary care. A physician who has cared for a community for decades is ready to step back, and a buyer has the chance to take over long-standing patient relationships, an experienced staff and a known location.
These transactions also carry specific risks. Patients may be loyal to the individual physician rather than the practice, systems may be dated and the seller’s timeline may be driven by personal plans. This guide explains what to watch for and how such purchases are typically financed. Rules vary by state and payer, and nothing here is legal, tax, billing or compliance advice.
Why Retirement Sales Are Different
A retiring seller is often motivated by more than price. Many want to know their patients will be cared for and their staff will keep their jobs. That can work in a buyer’s favor, because sellers may be willing to stay on during a transition or accept a structure that helps the deal close.
At the same time, a practice built around one physician can be highly dependent on that person. Before making an offer, buyers should understand:
- How many active patients see the retiring physician directly
- Whether other providers already see part of the panel
- How long the staff have worked with the seller
- Whether technology, equipment and records systems need investment
- Whether the seller owns the building or leases the space
Evaluating a Practice From a Retiring Physician
Many retiring physicians have gradually reduced hours in the years before a sale. That can make recent financial statements look weaker than the practice’s potential, or it can signal a shrinking patient base. Buyers should review several years of collections, visit volume and new patient trends to understand which is true.
Normalizing earnings also matters. The seller may have paid themselves most of the profit, run personal expenses through the practice or not taken a market salary. Our guide on how to evaluate an internal medicine practice before buying covers the broader review process.
Planning the Transition Period
The transition plan is often the most important part of buying from a retiring physician. A well-structured handoff can help keep patients who might otherwise look elsewhere. Typical elements include:
- Seller stay-on period: the retiring physician continues working part time and introduces the buyer to patients
- Joint communication: letters and conversations that present the buyer as the seller’s chosen successor
- Referral introductions: meetings with specialists and hospitals the practice works with
- Staff retention: early conversations with key employees about their roles
The length and terms of any stay-on period should be documented in the purchase agreement and reviewed by healthcare counsel.
Credentialing and Payer Contracts
Payer contracts, Medicare and Medicaid enrollments and credentialing should not be assumed to transfer to a new owner. Depending on how the transaction is structured, the buyer may need to enroll, credential and sign new contracts before claims under their name can be paid. That process can delay cash flow after closing.
Planning for that gap is essential. Our article on the credentialing gap after buying a practice explains how buyers may prepare for it. Qualified billing or compliance professionals and healthcare counsel can help plan the change of ownership.
Financing a Practice From a Retiring Physician
Most buyers use financing rather than paying the full price in cash. Depending on the transaction, options may include:
- SBA-backed loans: SBA 7(a) loans can finance the purchase of a practice and, in some cases, working capital and related real estate
- Conventional practice loans: underwritten under a lender’s own standards, often for buyers with strong credit and experience
- Seller financing: the retiring physician may agree to receive part of the price over time
SBA eligibility and terms depend on the business, the buyer, use of proceeds, program rules and lender review. Every loan is subject to approval, and nothing here is a commitment to lend.
A retiring seller may be open to carrying a note, especially if they want the deal to succeed. Lenders and programs may limit seller notes, and those notes are typically subordinate to the senior loan. Our guide to internal medicine practice seller financing explains how these notes work. Buyers can model potential payments with our SBA loan calculator. Estimates are for planning purposes only and do not represent an offer or approval.
What Lenders Want to See
When financing a purchase from a retiring physician, lenders typically focus on how much revenue will remain after the seller leaves. They may look at:
- Historical cash flow and how recent declines in the seller’s hours affected it
- The buyer’s clinical experience and plan to retain patients
- The length and terms of the seller’s transition period
- Payer mix and the timeline for credentialing
- Working capital to cover expenses while claims are processed
A written transition plan can make the request stronger and help a lender understand the risks.
Mistakes to Avoid
- Assuming every patient will stay after the seller retires
- Paying for revenue that declined as the seller reduced hours
- Underestimating upgrades needed for dated equipment or systems
- Skipping a plan for the credentialing gap
- Leaving the seller’s transition role undefined in the agreement
Final Thoughts
Buying a practice from a retiring physician can be an excellent route to ownership, particularly when the seller is committed to a thoughtful handoff. Careful review of patient dependence, payer transitions and financing structure can help the buyer protect the relationships that make the practice valuable.
US Medical Funding helps internists finance the purchase of established practices, including retirement-driven sales. Learn more about our internal medicine acquisition financing and our full range of internal medicine practice financing options.
