Planning to Buy a Healthcare Practice? Ensure Due Diligence Is on Your To-Do List
Buying a healthcare practice is a big undertaking—no matter your specialty. Therefore, if you are considering purchasing a medical practice, you must not overlook or rush through the due diligence process.
In this guide, the experts at LenDRgroup Consulting will explain what due diligence is as well as some instructions on things a potential healthcare practice owner should check for prior to moving forward with a deal.
What is Due Diligence in the Acquisition of a Medical Practice?
Buying a healthcare practice is more complicated than ever before, and there are so many elements involved in due diligence than simply determining the worth of a business. Applying a systematic approach to strategic due diligence can ultimately yield huge returns.
As a simple explainer: Due diligence represents the orderly investigation of any matter pertaining to business dealings. It is a deep dive into understanding how a business works. Furthermore, it isn’t a “one-size-fits-all” undertaking. Why? Because no two medical offices are exactly the same. When due diligence is done well, a potential buyer will have the opportunity to recognize any financial, legal, or operational risks that are not entirely obvious from an outsider’s perspective.
Why Due Diligence Matters
Due diligence can help both the buyer and the seller of a medical practice. The seller is responsible for providing a potential buyer with all of the information they need to make an informed decision. On the buyer’s side, due diligence offers peace of mind that the right deal is being made and they have the necessary information they require to make a good purchasing decision.
What is Included in Due Diligence
Many business factors are examined in the due diligence process, including:
- The practice’s existing patient base and referral relationships
- Patient volume and catchment areas
- Existing strategic physician relationships
- Workforce and the bench of talent
- Competitive environment of the practice
- Financial standing and reporting
- Potential legal liabilities, including current partnerships and existing contracts
- Business sustainability, including cash flow management, billings, collections, procedures offered, and long-term outlook
- Assets, including equipment, real estate, lease arrangements, etc.
- Employee-related issues, including benefits plans, retirement plans, COBRA continuations, NDAs, employment contracts, non-compete agreements, etc.
Ultimately, it is important to look at a practice from multiple angles. Evaluating the history and performance of a healthcare practice is much easier than trying to look into the future, assess what the practice could be doing better, what opportunities exist, and if there are any looming threats. It’s true that no potential buyer has a crystal ball to answer such questions.
And that’s where LenDRgroup Consulting could be a strategic partner. We have the ability to use our extensive business knowledge and skill to ensure any healthcare practice you are interested in purchasing is a wise decision, exhibits no proverbial red flags, and will offer a return on your investment.
We would welcome the chance to speak with you more about your practice acquisition goals and objectives. Reach out to our team today and let’s talk.