Plastic Surgery Practice Due Diligence Checklist
Plastic surgery practice due diligence is the buyer’s chance to confirm that what the seller describes matches what the practice actually is. In aesthetic medicine, some of the biggest risks are not obvious from the financial statements: how much revenue depends on the selling surgeon, how heavily the practice relies on paid marketing, whether the surgical suite’s accreditation will carry forward and whether there is a history of malpractice claims.
This checklist outlines the main areas buyers typically review. It is a planning tool, not a complete list for every deal. Legal, billing, accreditation and regulatory matters should be reviewed by healthcare counsel and qualified professionals, and nothing here is legal, tax, billing or compliance advice.
Financial Records
- Several years of business tax returns and financial statements
- Year-to-date financials and monthly revenue trends
- Revenue by procedure category, surgeon and provider
- Proposed add-backs and supporting documentation
- Bank statements to confirm reported deposits
- Debt schedule, including equipment loans and leases
Revenue should be separated into surgical cosmetic, nonsurgical and reconstructive categories. Our article on cosmetic vs reconstructive revenue explains why lenders look closely at that mix.
Patient Deposits and Prepaid Obligations
This area is often overlooked in plastic surgery practice due diligence. Review:
- Deposits for scheduled surgeries
- Prepaid treatment packages and memberships
- Gift cards and promotional credits
- Revision policies and open revision commitments
- Third-party patient financing arrangements
These may represent services the buyer will have to provide without receiving new payment. How they are handled in the purchase price should be worked out with counsel and accountants.
Surgeon Dependence and Goodwill
- Share of cases and revenue performed by the selling surgeon
- Revenue from associate surgeons, nurse injectors and aestheticians
- Ownership of the website, domains, phone numbers and social media accounts
- Reviews and galleries tied to the surgeon’s personal name
- Scope of patient photo consents, which counsel should review
- The seller’s willingness to commit to a transition period
These factors can have a major effect on price, as explained in our article on plastic surgery practice valuation.
Marketing Dependence
- Marketing spend by channel over several years
- New consultation volume and lead sources
- Consultation-to-surgery conversion trends
- Agency contracts and their termination terms
- Advertising practices, which counsel should review for compliance with applicable rules
A practice that needs constant advertising to fill the schedule carries a different risk than one that generates steady referrals and repeat patients.
Surgical Suite and Accreditation
If the practice has an office-based OR, review:
- Current accreditation status and recent survey results
- Steps required to maintain accreditation after a change of ownership
- Facility permits and licenses
- Anesthesia arrangements and staffing
- Emergency protocols and transfer agreements
- Condition and age of surgical and anesthesia equipment
Accreditations, facility licenses and permits should not be assumed to transfer. Our article on financing a surgical suite for plastic surgeons covers related considerations.
Malpractice and Risk History
- Malpractice claims history for the practice and each surgeon
- Open or threatened claims and patient complaints
- Professional liability coverage, including tail coverage for the seller
- Licensing board actions or investigations
- Any adverse events in the office-based suite
Reconstructive Billing and Payer Contracts
For practices with insurance-based work, review payer contracts, credentialing, Medicare and Medicaid enrollments, accounts receivable aging and denial trends. Payer contracts, credentialing and enrollments should not be assumed to transfer. Billing and documentation should be reviewed by qualified billing or compliance professionals.
Staff and Operations
- Staff roster, tenure, licenses and compensation
- Employment agreements and restrictive covenants, which counsel should review
- Worker classification, which qualified professionals should review
- Key relationships held by patient coordinators and injectors
- Practice management and records systems
Lease, Equipment and Vendor Agreements
- Lease term, renewal options, assignment rights and landlord consent
- Ownership of leasehold improvements
- Equipment list, condition and existing leases or liens
- Device service agreements and vendor programs, which should not be assumed to transfer
- Product inventory and supplier agreements
Questions to Ask the Seller
Documents tell part of the story. Conversations with the seller can fill in the rest. Consider asking:
- Why are you selling, and what are your plans after closing?
- Which patients or referral sources are most loyal to you personally?
- Have any key staff members indicated they may leave?
- What would you change about the practice if you were staying?
- Are there any disputes, complaints or pending issues we should know about?
Organize the Process
A shared document list, a clear timeline and assigned responsibilities among your counsel, accountant and financing advisor can keep the review on track. Note issues as they arise so they can be addressed through price, deal terms or closing conditions rather than discovered after the sale.
Financing Considerations
Lenders will often request much of the same information during underwriting. SBA 7(a) loans and conventional loans each have their own requirements, and eligibility and terms depend on the business, the buyer, the use of proceeds, program rules and lender review. Findings in due diligence may affect the loan amount or structure. Every loan is subject to approval.
For the full acquisition process, see our guide on how to buy a plastic surgery practice.
Final Thoughts
Thorough plastic surgery practice due diligence helps buyers understand not only what a practice earns, but how much of that revenue is likely to continue and what obligations come with it. Reviewing deposits, marketing dependence, accreditation and malpractice history carefully can help you negotiate with confidence and avoid surprises after closing.
US Medical Funding helps plastic surgeons finance practice acquisitions. Learn more about our plastic surgery practice acquisition financing and our full range of plastic surgery practice financing options.
