Randall H. Lee, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Newark office, authored an article in Thomson Reuters’ Practical Law The Journal, titled “Preparing to Sell a Medical Practice.” (Read the full version – subscription required.)

Following is an excerpt:

There has been significant movement towards consolidation in the medical practice market. Many independent practices with solo or multiple owners are considering or being offered opportunities to be acquired by hospitals, health systems, private equity firms, larger practices, managed care organizations, and other market players. Physician-owners can expect significant benefits from a sale of their medical practice, including:

  • Economic gain from the proceeds of the sale, which usually represents a multiple of the practice’s earnings.
  • Greater access to capital.
  • More administrative support.
  • Better management and an improved organizational structure.
  • Greater potential for value-based initiatives.

On the other hand, there are legitimate concerns and issues that physician-owners need to take into account when considering a sale, such as:

  • Less independence.
  • Less control over hire or fire decisions.
  • The potential for reduced compensation and income.
  • Structural complexities arising from becoming part of a larger business enterprise.

Depending on the acquiring entity, these issues have differing impacts on physician-owners, who must carefully consider each one to determine whether a sale of their medical practice makes sense for them. Each sale process has unique challenges and concerns. To help physician-owners make well-informed decisions, they should engage counsel and accountants who understand the issues. This article assumes that the physician-owners have already deliberated the issues and decided to sell their medical practice.

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