Buying a Pulmonology Practice: What Should You Consider?
Buying a pulmonology practice can give a pulmonologist an established patient base, referral relationships with primary care physicians, trained staff and, in many cases, in-office services such as pulmonary function testing or sleep studies. For physicians who want ownership without building a clinic from nothing, an acquisition can be a practical path.
It is also a complex purchase. Pulmonology income often comes from several places at once, including office visits, testing, procedures and hospital work, and not all of it may stay with the practice after a sale. This guide covers what buyers should consider before signing a letter of intent. Ownership, licensing and enrollment rules vary by state and payer, and nothing here is legal, tax, billing or compliance advice.
Start With the Type of Practice You Want
Pulmonology practices can look very different from one another. Before you review listings, decide which model fits your training and goals:
- Office-based pulmonology: clinic visits for asthma, chronic obstructive lung disease, interstitial lung disease and related conditions
- Pulmonary and critical care groups: practices that combine office work with hospital and intensive care coverage
- Pulmonary and sleep practices: groups that run sleep testing alongside pulmonary care
- Interventional practices: groups with bronchoscopy and procedural work, often tied to hospital privileges
Each model carries different risks, staffing needs and financing considerations. Knowing what you want helps you evaluate opportunities and explain your plan to a lender.
Buying a Pulmonology Practice Starts With Revenue
When buying a pulmonology practice, the first question is where the money actually comes from. Buyers should separate revenue into categories such as:
- Professional fees from office visits
- Pulmonary function testing and other in-office diagnostics
- Sleep studies, if the practice offers them
- Procedures performed in the hospital or an outpatient setting
- Hospital stipends, medical directorships or call coverage arrangements
Some of these streams belong to the practice, while others may be tied to an individual physician or a contract that ends when that physician leaves. Our article on pulmonology hospital contracts explains how lenders tend to view that type of income.
Review the Payer Mix
Pulmonology patients often skew older, so Medicare may represent a meaningful share of revenue, along with commercial insurers and Medicaid. Buyers should review revenue and collections by payer over several years and look for concentration in any single payer.
Payer contracts, Medicare and Medicaid enrollments and credentialing should not be assumed to transfer. Depending on how the deal is structured, the buyer may need to enroll, re-credential or sign new contracts, and claims may be delayed during that period. Healthcare counsel and qualified billing professionals can help plan the change of ownership.
Look at Referral Relationships
Many pulmonology patients arrive through referrals from primary care physicians, hospitalists, cardiologists and other specialists. Buyers should learn which sources drive new patient volume, how long those relationships have existed and whether they depend on the selling physician personally. A planned introduction period during the transition can help preserve them.
Evaluate Owner Dependence
In a small practice, the selling physician may see most of the patients, read most of the tests and hold the hospital relationships. When that person leaves, revenue can decline unless there is a clear plan.
Buyers should consider:
- How much of the clinical volume the seller personally provides
- Whether other physicians or advanced practice providers will stay
- Which staff hold key knowledge about testing, scheduling and billing
- Whether the seller will remain for a transition period
- How workers are classified, which should be reviewed by qualified professionals
Practices sold because a physician is retiring raise their own set of questions. See our guide to buying a practice from a retiring pulmonologist.
Inspect the Equipment and Facility
Pulmonary function testing systems, sleep testing equipment and bronchoscopy tools can represent a significant share of a practice’s assets. Buyers should review the age and condition of each item, service records and any existing equipment leases or loans that may need to be paid off or assumed.
The lease also matters. Confirm whether it can be assigned, how long it runs and whether the landlord must consent to the sale.
Understand How the Practice Is Valued
Value is generally driven by documented cash flow, the stability of referral sources, the payer mix, ancillary services and how much the practice depends on the seller. A practice whose earnings rely on hospital contracts that may not continue will usually be viewed differently from one with steady office-based income. Our article on pulmonology practice valuation explains these factors in more detail.
Complete Due Diligence
Due diligence for a pulmonology acquisition typically includes:
- Tax returns, financial statements and bank statements
- Collections by payer and by service line
- Accounts receivable aging
- Payer contracts, enrollments and any past audits or repayment requests
- Billing and documentation practices, reviewed by qualified billing or compliance professionals
- Hospital agreements, directorships and call arrangements
- Equipment lists, service records and existing financing
- Employment agreements and any restrictive covenants, which counsel should review
Findings during this stage can change the price, the structure of the deal or whether you move forward at all.
Plan the Financing
Most buyers finance part of the purchase. Depending on the transaction, options may include SBA 7(a) loans, conventional practice loans and seller financing. SBA eligibility and terms depend on the business, the buyer, use of proceeds, program rules and lender review, and every loan is subject to approval.
Lenders generally review the practice’s historical cash flow, the buyer’s clinical experience, credit, liquidity and the deal structure. If the seller agrees to finance part of the price, lenders and programs may limit how that note is structured, and seller notes are typically subordinate to the senior loan. Our pulmonology practice acquisition financing guide covers the options in detail.
Mistakes to Avoid
- Counting hospital stipends as practice income without confirming they will continue
- Assuming payer contracts and enrollments will transfer automatically
- Overlooking the age of testing equipment
- Underestimating how much volume depends on the seller
- Using all available cash at closing and leaving too little working capital
Final Thoughts
Buying a pulmonology practice can be a rewarding step, but the best acquisitions start with a clear view of where revenue comes from and what will stay after the sale. Careful review of payers, referrals, hospital arrangements and equipment can help a buyer avoid surprises.
US Medical Funding helps pulmonologists finance the purchase of established practices. Learn more about our pulmonology practice acquisition loans and our full range of pulmonology practice financing options.
