Buying a Cardiology Practice: What Should You Consider?
Buying a cardiology practice can give a cardiologist an established patient base, referral relationships with primary care physicians, trained staff, in-office diagnostic services and a location patients already know. For many physicians, it is a more direct path to ownership than building a new practice from the ground up.
It is also a large and complex transaction. Cardiology practices tend to carry more equipment, more space and more ancillary revenue than many other specialties, and each of those elements needs careful review. This guide covers the main areas buyers should consider. Ownership, licensing and payer rules vary by state and payer, and nothing here is legal, tax, billing or compliance advice.
Know What Type of Cardiology Practice You Are Buying
Cardiology practices differ widely in how they earn revenue and what they need to operate. Before evaluating a specific opportunity, it helps to know which model fits your skills and goals.
- General and clinical cardiology practices: focused on office visits, consultations and routine testing such as ECGs and stress testing
- Imaging-heavy practices: with in-office echocardiography, nuclear cardiology or cardiac PET/CT, which may add ancillary revenue but also equipment and staffing obligations
- Interventional groups: where physicians perform procedures at hospitals, ambulatory surgery centers or office-based labs
- Electrophysiology or heart failure practices: which may depend on device clinics, remote monitoring and specialized staff
- Multi-physician groups: that offer scale but require governance, compensation formulas and management systems
Your experience and subspecialty training will shape which practices make sense and how a lender views your ability to run them.
Understand Where the Revenue Comes From
Cardiology revenue usually comes from a blend of professional services and ancillary services. Professional revenue includes office visits, consultations and procedures. Ancillary revenue may include imaging, stress testing, Holter and event monitoring, and device checks.
Buyers should review revenue by service line and by payer over several years. Medicare is often a significant payer in cardiology because of the age of the patient population, so changes to Medicare reimbursement can affect earnings. A practice that depends heavily on one payer, one imaging modality or one referral source carries more risk than one with a diversified base.
Evaluate Referral Relationships and Hospital Ties
Most cardiology patients arrive through referrals from primary care physicians, emergency departments and other specialists. Many of those relationships are tied to the current owner. Buyers should understand which referral sources drive volume, how long those relationships have lasted and how the transition will be introduced.
Hospital relationships matter too. Cardiologists may hold hospital privileges, cover call or have professional services or directorship agreements. Those arrangements may not transfer to a buyer and should be reviewed by healthcare counsel.
Assess Owner Dependence and the Clinical Team
In many practices, the selling cardiologist sees a full panel, reads studies and maintains the key referral relationships. When that physician leaves, revenue can fall if the plan for covering patients is not clear. If you are considering a practice where the owner plans to retire, our guide to buying a practice from a retiring cardiologist covers transition planning in more depth.
Buyers should also review:
- Physician, nurse practitioner and physician assistant roles and tenure
- Sonographers, nuclear medicine technologists and other credentialed staff who run diagnostic services
- Billing and front desk staff who hold important operational knowledge
- Employment agreements and restrictive covenants, which should be reviewed by counsel because enforceability varies by state
- How workers are classified, which should be reviewed by qualified professionals
Review Equipment, Space and Accreditation
Diagnostic equipment is often one of the largest assets in a cardiology practice. Buyers should review the age and condition of echocardiography machines, nuclear cameras, stress testing systems and any other imaging equipment, along with service contracts and any existing equipment loans or leases.
Some services require accreditation, radioactive materials licensing or facility requirements that may not transfer automatically. The lease also deserves attention, including assignment rights, landlord consent, renewal options and whether the space can support current and planned services.
Understand Valuation and Price
Value is generally driven by documented cash flow, payer mix, the stability of ancillary revenue, owner dependence and the strength of the team. Buyers should understand true earnings after paying a market salary to the physicians who will treat patients and should document any add-backs the seller proposes. Our article on cardiology practice valuation explains the factors buyers and lenders tend to focus on.
Complete Due Diligence Before Buying a Cardiology Practice
Due diligence typically covers:
- Financial statements, tax returns and bank statements
- Revenue by payer, service line and provider
- Payer contracts, Medicare and Medicaid enrollments and credentialing status, which should not be assumed to transfer
- Billing, coding and documentation practices, which should be reviewed by qualified billing or compliance professionals
- Accounts receivable aging and collection history
- Equipment lists, service records and existing financing
- Any certificate of need, accreditation or licensing that applies to diagnostic services
- Past audits, payer recoupments, complaints or claims
Findings can affect the price, the structure of the deal or whether the buyer moves forward.
Plan the Financing
Many buyers use financing rather than paying the full price in cash. Depending on the transaction, options may include SBA 7(a) loans, conventional practice loans and, in some cases, seller financing. Lenders and programs may limit earnouts, and seller notes are typically subordinate to the senior loan.
Lenders generally review the practice’s historical cash flow, the buyer’s clinical and management experience, credit history, available liquidity and the overall deal structure. Eligibility and terms depend on the business, the buyer, use of proceeds, program rules and lender review, and every loan is subject to approval. For a closer look at loan structures, read our cardiology practice acquisition financing guide.
Budget for the Transition
Payroll, rent and supply costs continue after closing while payer enrollments are updated and claims are processed. Building enough cardiology practice working capital into the plan can give a new owner more flexibility during that period.
Final Thoughts
Buying a cardiology practice can be a rewarding path to ownership when the buyer understands the revenue mix, referral relationships, equipment, owner dependence and financing structure before closing. Careful planning can help a buyer avoid surprises and protect the value of the practice.
US Medical Funding helps cardiologists finance the purchase of established practices. Learn more about our cardiology practice acquisition financing and our full range of cardiology practice financing options.
