Selling a medical practice or healthcare services provider is a major milestone that can set the course for your professional–and personal–future. To make the most out of this pivotal event, it’s essential to maximize the value of what you have built as you contemplate a sale or merger. Below are the top 20 high-impact strategies that you can use to ensure you get the best price for your healthcare business.
1. Assess the Market
Conduct a comprehensive analysis of your practice’s current market to understand the demand for your specialty or service offerings. Identify the needs of potential buyers and adjust your services accordingly to increase value.
2. Financial Review
Analyze your financials, from income statements and cash flow to balance sheets, and ensure they are well-organized and easily understandable. Having solid financial records can significantly raise the value in a transaction.
3. Update Medical Equipment
Outdated equipment can devalue your practice. To the extent you can, update any aging technology and equipment to ensure you’re meeting current industry standards. This is like “staging” a house for sale.
4. Evaluate Your Staff
The competence of your employees is a crucial factor. Make sure your staff is well-trained, certified, and that employee turnover is low. You don’t want a buyer to discover your front office staff is disgruntled over what seemed, at the time, to make perfect sense. Discovering this friction now is a key move.
5. Review Contracts
Existing contracts with vendors, health insurers, and employees should be revisited. Make sure they reflect favorable terms that would be appealing to a potential buyer. Related to number 4, getting a handle on this now makes for much smoother sailing.
6. Improve Revenue Streams
Expand your revenue streams by introducing additional services that are complementary to your practice’s specialty, thus increasing its attractiveness and profitability. Your potential buyer might be doing the exact same thing on a bigger platform; rolling up disparate healthcare service providers to capitalize on the synergies available.
7. Build a Strong Patient Base
Your patient database is one of your primary assets. Maintain a large, loyal patient base by focusing on high-quality service and patient satisfaction.
8. Credentialing and Licenses
Ensure all credentials and licenses are up to date. The lack of current certifications can delay a sale and reduce value. This is an important thing to do even if you are not contemplating sale.
9. Pay Off Debts
High liabilities can lower your practice’s net value in a transaction as most deals are cash and debt free. Aim to pay off as much debt as possible before listing your practice for sale. Buyers aren’t fond of assuming someone else’s debt.
10. Standardize Procedures
Create standard operating procedures (SOPs) for all practice activities. This not only increases efficiency but also assures potential buyers that the practice is well-managed. This helps a potential buyer view your business as a turnkey transaction that will make a smooth transition in a sale.
11. Invest in Marketing
A strong brand identity (not just a new logo) can add value to your practice. Spend time and resources on marketing your services, both online and offline. There’s competition in almost any market, you want your business to stand out.
12. Optimize Billing Practices
Effective billing practices directly affect the bottom line. Ensure you have a competent billing team and modern software that minimizes claim denials and maximizes revenue. Again, this could be a good move even if you are not thinking of a sale (yet).
13. Pre-Sale Audit
Consider a pre-sale audit conducted by healthcare consultants or auditors. This will provide a third-party perspective on how to maximize your practice’s value. This is the same thing that Fortune 500 companies do to ensure they can stand behind the financial “story” they share with shareholders. Call in an unbiased practice consultant or audit team to expose (now) any areas that need attention.
14. Modernize Record Keeping
If your practice still uses paper-based systems, transition to electronic health records (EHR) and make sure your HIPAA compliance is solid. This makes your practice more attractive to modern buyers.
15. Retain Key Staff
Retaining your key employees during the transition can be a huge selling point. It ensures continuity of care and service quality, making your practice more attractive to buyers. Many practices have family members involved in front-of-office management. Time to check the pulse to understand what their hopes are in a sale.
16. Intellectual Property
Document any unique methods, training programs, or any intellectual property that adds value to your practice. Don’t forget, a trademark of your company’s name and logo and a copyright on your website content or a publication is intellectual property.
17. Accurate Valuation
Hire an experienced professional team to conduct a thorough valuation of your practice. An accurate valuation will guide you in setting the right selling price. Don’t go it alone on this one.
18. Legal Compliance
Make sure your practice is compliant with all healthcare laws and regulations, including HIPAA (mentioned above) and other state laws. Don’t forget your practice, from a legal standpoint, may have multiple jurisdictions. Non-compliance can be a deal-breaker for potential buyers.
19. Update Interior Décor
Just like selling a home, first impressions count, even in healthcare. A clean, modern, and well-organized office space can add perceived value to your practice. But you don’t have to have cookies baking when a potential buyer tours your shop!
20. Hire an M&A Professional
Last but not least, consider hiring a professional Mergers & Acquisitions firm that specializes in medical practice transactions. They can help navigate the complex landscape of selling a medical practice, ensuring you get maximum value for all the hard work you have put in to be at this stage. This is not the time to hire a small-business broker who focuses on valuing the real estate in brick-and-mortar retail, like dry cleaners or sub shops.
Conclusion
Selling your medical practice is a complex, multi-step process that involves careful planning and execution. Following these 20 strategies can help you prepare for a sale, making it more attractive to potential buyers and increasing the odds of a profitable sale.
Remember, the key to getting the best price for your physician’s practice lies in being well-prepared, transparent, and proactive. By taking these steps, you set the stage for a transaction that rewards the hard work you’ve put into building your medical career.