Can a New Dermatologist Buy a Practice?
A new dermatologist may be able to purchase an established dermatology practice, depending on the physician’s qualifications, financial profile, the practice being acquired, and the available financing structure.
For physicians considering dermatology practice financing, purchasing an established practice can provide an alternative to building a new practice from the ground up.
Clinical Experience Is Important
A physician’s clinical training and experience can be relevant when evaluating a practice acquisition.
A dermatologist who has recently completed residency or fellowship may have limited ownership experience but can still have the professional qualifications necessary to operate the practice.
Practice Performance Matters
An established practice provides historical financial information that can help lenders evaluate the proposed acquisition.
Revenue, collections, profitability, and cash flow can provide insight into whether the business may be able to support its ongoing expenses and proposed debt.
Credit History Can Be Considered
A physician’s personal credit history may be reviewed during the financing process.
Lenders may evaluate how the borrower has handled previous financial obligations and whether there are significant outstanding debts or other financial concerns.
Student Loans Do Not Automatically Prevent an Acquisition
Many physicians enter practice ownership while carrying student loan debt.
Existing student loans may be considered as part of the physician’s overall financial profile, but their existence does not necessarily mean that purchasing a practice is impossible.
The overall financial picture is important.
Available Liquidity Can Matter
A physician may need to demonstrate sufficient financial resources for the transaction and ongoing operations.
Depending on the financing structure, the buyer may need funds for a down payment, closing expenses, working capital, or other costs.
Buying an Established Practice Can Provide Historical Data
One advantage for a new owner is that an established practice can provide historical information that a startup cannot.
The buyer may be able to review prior revenue, expenses, patient volume, staffing, and other operational information before making a purchase decision.
Business Experience Can Be Developed
A new dermatologist may have limited experience running a business.
That does not mean the physician cannot become a practice owner. However, understanding the responsibilities of ownership is important.
The physician may need to manage employees, finances, vendors, compliance, scheduling, marketing, and other business functions.
Experienced Staff Can Help With the Transition
An established dermatology practice may already have experienced employees who understand the practice’s systems and patients.
Retaining key employees can help provide continuity while the new owner learns the business.
The Practice Should Fit the Physician
A new dermatologist should evaluate whether the practice matches their clinical interests and long-term goals.
Important considerations can include:
- Services offered
- Patient demographics
- Location
- Practice size
- Staffing
- Equipment
- Growth opportunities
Due Diligence Is Essential
New physicians should not assume that an established practice is automatically a good investment.
Before purchasing, the buyer should carefully review financial records, equipment, contracts, staffing, lease arrangements, patient information, and other relevant business details.
A Transition Plan Can Be Valuable
The seller may remain involved for a period after the transaction.
A transition arrangement can help introduce the new physician to employees, patients, referral sources, vendors, and other important relationships.
The specific terms should be clearly established in the transaction documents.
Financing May Be Available
Depending on the transaction and the physician’s qualifications, financing may be available for an eligible dermatology practice acquisition.
The financing structure can depend on the purchase price, practice cash flow, borrower qualifications, and other factors.
Start Planning Before Finding a Practice
Physicians who know they eventually want to purchase a practice can begin preparing before identifying a specific opportunity.
Building strong financial records, understanding personal finances, organizing documentation, and learning about potential financing structures can make the acquisition process easier.
Final Thought
A new dermatologist may be able to purchase an established practice even without years of previous ownership experience. The physician’s clinical qualifications, financial profile, credit history, available liquidity, and the financial strength of the practice can all be relevant to the transaction.
An established practice can provide patients, staff, infrastructure, and historical financial information, but careful due diligence remains essential. Physicians should evaluate the practice and financing structure carefully before committing to an acquisition.
