Buying a Rheumatology Practice: What Should You Consider?
Buying a rheumatology practice can give a rheumatologist an established patient panel, referral relationships with primary care physicians, trained staff and, in many cases, an in-office infusion program or imaging services. For physicians who would rather own than build, it can be a direct path to independence.
It is also a complex purchase. Rheumatology practices often combine evaluation and management visits with drug administration, ancillary imaging and sometimes owned real estate, and each piece carries different risks. This guide covers the main considerations. Ownership, licensing and payer rules vary by state and payer, and nothing here is legal, tax, billing or compliance advice.
Know What Kind of Practice You Are Buying
Rheumatology practices come in several forms, and the structure shapes value, risk and financing.
- Clinic-only practices: revenue comes mainly from office visits and a modest set of in-office procedures
- Practices with an infusion suite: drug administration can be a meaningful share of revenue and of working capital needs
- Practices with imaging: musculoskeletal ultrasound and bone density services add revenue and equipment obligations
- Practices with real estate: some listings include the building, which changes the size and structure of the deal
- Small groups: buying into or acquiring a group means reviewing partner agreements and governance
Defining which model you want helps you screen listings and explain your plan to lenders.
Understand the Revenue Mix
When buying a rheumatology practice, separate professional revenue from drug and ancillary revenue. Office visits tend to depend on patient volume and payer contracts. Infusion revenue depends on drug acquisition costs, payer payment rates, prior authorizations and how promptly claims are paid.
Buyers should review several years of revenue by category and by payer, including Medicare, Medicaid and commercial insurers. A practice where a large portion of profit comes from a handful of infused drugs may be more exposed to payment changes or biosimilar shifts than one with a balanced mix. Qualified billing professionals can help review how revenue was earned and documented.
Evaluate the Infusion Program Carefully
The infusion suite is often the most valuable and most complicated part of a rheumatology practice. Questions to ask include:
- How much drug inventory is on hand, and how is it valued at closing?
- What are the purchasing arrangements, and will they continue for a new owner?
- How are prior authorizations and benefits checks handled, and by whom?
- What share of infusions are buy-and-bill versus drug supplied through other channels?
- Are nursing staff trained and likely to stay?
Purchasing programs, supplier terms and payer arrangements should not be assumed to transfer. Each should be confirmed during due diligence.
Measure Physician Dependence
Rheumatology patients often have chronic conditions and long relationships with their physician. That loyalty can be an asset, but it can also make revenue sensitive to a change in ownership. Buyers should look at how many visits the selling physician personally provides, whether advanced practice providers see their own panels and how long the seller is willing to stay through a transition.
When the seller is near retirement, a planned handoff matters even more. Our article on buying a practice from a retiring rheumatologist explains how buyers often approach that situation.
Review Valuation and Earnings
Value generally rests on documented, sustainable cash flow after paying a market salary to the physician who will see patients. Buyers should test proposed add-backs, separate one-time items and consider how drug margins may change. Our guide to rheumatology practice valuation covers the factors that tend to move value.
Decide How to Handle Real Estate
If the seller owns the building, buyers may have the choice to purchase it, lease it from the seller or negotiate a lease with an option to buy later. Owning can provide control over the infusion space and long-term occupancy costs, while leasing can preserve cash. Our article on the rheumatology office buy or lease decision walks through the tradeoffs.
When leasing, review assignment rights, landlord consent, renewal options and who owns the build-out.
Complete Due Diligence
Due diligence when buying a rheumatology practice typically covers:
- Tax returns, financial statements and bank statements
- Payer contracts, enrollments and reimbursement history
- Drug inventory, purchasing records and accounts receivable aging
- Billing and documentation practices, reviewed by qualified billing or compliance professionals
- Equipment condition, leases and existing equipment financing
- Staff tenure, compensation and employment agreements, reviewed by counsel
- Licenses, insurance and any past audits or claims
Payer contracts, credentialing and Medicare and Medicaid enrollments should not be assumed to transfer. Healthcare counsel can help plan the change of ownership.
Plan the Financing
Most buyers use financing rather than paying the full price in cash. Depending on the deal, options may include SBA-backed loans, conventional practice loans and, in some cases, a seller note. SBA 7(a) loans can be used to help finance an acquisition and, in some cases, working capital and related real estate. 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.
Seller notes are typically subordinate to senior debt, and lenders or programs may limit earnouts. Our rheumatology practice acquisition financing guide explains how lenders tend to evaluate these deals.
Reserve Working Capital for the Transition
Rheumatology practices that buy drugs before they are paid can feel a cash squeeze after closing, especially if enrollments are being updated. Payroll, rent and inventory purchases continue while claims are processed. Building reserves into the plan can give a new owner room to operate.
Final Thoughts
Buying a rheumatology practice can be a rewarding move, but the infusion program, payer mix, physician dependence and real estate all deserve close attention. Careful review and a well-planned transition can help you protect patient relationships and the value of what you buy.
US Medical Funding helps rheumatologists finance the purchase of established practices. Learn more about our rheumatology practice acquisition financing and our full range of rheumatology practice financing options.
