Whether you are simply thinking about selling your practice or you are actively marketing to sell your healthcare practice, you will want to make sure you complete these 4 steps first.
Have an Internal Practice Assessment
Before anything, you need to know how your dental practice would fare on the market. Here are key benchmark metrics you need to assess:
- Productivity of your physicians and midlevel providers
- Employee/Physician compensation
- Number of active patients
- Number of patient visits per year
- Average cash collections per patient visit
You also want to conduct a SWOT analysis.
- Patient satisfaction and loyalty
- Dedicated staff
- Your competition
- High secondary use
- Referral sources
You don’t need to hide your healthcare practices weaknesses from potential buyers when trying to sell your healthcare practice. There’s no such thing as a perfect business and buyers know that and expect that improvements in some fashion will be needed. Also, what a seller could see as a weakness, a potential buyer could see as an opportunity.
Identify and Categorize All Expenses: Discretionary and One-Time
Identifying your practices expenses and physician’s compensation helps practice buyers understand the true value of the healthcare practice for sale. It’s important to standardize its operating expenses to account for discretionary and non-recurring items. Practice-owner expenses or compensation include the following:
- Travel
- Meals and entertainment
- Car/Transportation expenses
Examples of non-recurring or one-time expenses that are not a normal aspect of healthcare practice operations include:
- Improvements that are expensed instead of capitalized
- Consulting fees
- Unusual or uncommon legal fees
Prepare a Financial Forecast
Having a history of strong financial growth and success is naturally appealing to potential buyers. That’s i why it’s a good idea to have a financial forecast that includes the healthcare practice’s performance targets and goals both immediate and in the future. It’s basically a roadmap of how your practice approaches opportunities and threats identified in your internal assessment. It demonstrates that you understand where your practice stands compared to other practices on the market.
Also, you want to make sure that the financial projection reflects the post-acquisition compensation to assess future profit. Because most physician practices distribute remaining profits to the owners, you want to make sure your financial projection reflects this in the proposed post-acquisition compensation model.
Hire Experts
It’s normal for potential buyers to have a practice transition team of business development experts, attorneys, appraisers, analysts, and C-suite level executives who have an abundance of experience with practice transitions. They will require you to produce detailed financial and operational data on the practice, including specific questions about the practice’s historical trends and outlook for the future.
It’s best to retain the services of healthcare practice brokers to rival that of your buyers’ team. Your advisers will understand how buyers assess your practice and the ins and outs of the valuation process. They know all of the intricacies to sell your healthcare practice and they know all the right questions to ask as well as how to best market your practice to maximize the purchase price and post-acquisition compensation. They know how to get things done to best represent your best interests.
