By Barry A. Posner

As I have said for nearly two decades in my healthcare practice, “business management should be a class in medical school.” Increasingly, to manage a successful medical practice, a physician or business manager must engage actively in the business of medicine. Understanding third party and governmental payer reimbursement, supply chain management, and payer and patient mix is the difference between a thriving medical practice and one struggling to stay open. It’s incredibly nuanced and the blend between commercial, cash pay, Medicaid and Medicare patients and how all of those areas impact the profitability of a medical practice can be difficult to navigate on your own.

Said simply, a physician must be concerned with the practice of medicine as well as the business of medicine. These issues all come to a head at the time of a sale of the practice or business. There’s so much to consider, from asset vs. stock sales (which will determine whether the purchaser is required to apply for new Medicaid and Medicare applications), liability issues, medical malpractice insurance continuity, HIPAA requirements, corporate practice of medicine structuring issues, and consent requirements around the assignment or change of control of commercial payer contracts.
There are many reasons why a medical practice may be sold. One may be the retirement of the doctor/owner. In this case, it’s not uncommon for the practice to be sold to a junior member of the practice, ensuring continuity in the minds of the patients. Also prevalent is the sale of a smaller practice to a larger, regional practice or health or hospital system. In this case, the doctors become employees or independent contractors of those potential buyers. And of course, there are the sales of practices that are unprofitable.

If you are considering buying or selling a practice, before you do anything, consult with an attorney and your accountant or another accountant with experience in buying and selling of medical practices. There are a number of business and compliance related issues that must be addressed. Particularly as a buyer of stock of a practice, you must confirm the billing and collection practices (particularly ensuring that the billing codes being submitted to payers are correct), including false claims act and other issues surrounding fraud, waste and abuse are accurate. At the federal level, these can be addressed criminally or as civil monetary penalties, which can be significant. Most states also have anti-kickback laws that may impact a sale.

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