Buying a medical practice is one of the best investments you can ever make in your lifetime. With some good practice in place, it can produce significant returns on your investment. No wonder, many buyers are willing to invest in this type of business because they know that there are good chances of getting a steady flow of income over time and potentially give you a great retirement settlement when you decide to sell it. This article will discuss some of the benefits of buying an existing medical practice.
The investment risks are low
You can be confident that patients will be available when you buy a medical practice in a specific location. As a result, you reduce the investment risk and it ensures that you make money from the onset. Often, many medical practitioners work in the practice before deciding to buy it while others choose to buy a practice in another location.
When you are familiar with the practice, it can be easier to negotiate for a discounted buy-in price. The best due diligence you can have before buying the practice is by knowing the patients, the staff, and other medical practitioners. This can help you to understand what makes the practice tick and it can give you confidence that there will be a steady stream of income once you buy it.
Remember that starting a medical practice from scratch is possible, but you will face higher risks than buying an existing one. After all, it can take you months to get your practice up and running, especially if it involves town planning permissions.
There is more certainty in buying a medical practice
If you’re not prepared to launch your medical practice from scratch because of concerns about business skills, cash flow, and administration, the best option is to check out for medical practice for sale in Northern Virginia.
There are several benefits to buying an established medical practice. These include an existing setup that has equipment in place, a practice that is financially suited to your situation, an existing patient list, experienced staff, and fewer needs for planning and marketing.
Think about it, buying an existing medical practice assures you that you will have a predictable cash flow from the start of your operations. With everything you require to run a medical practice in place, such as staff who know the practice and how to do their job, you can have the peace of mind knowing that there will be a steady cash flow.
Even better, inheriting a full list of patients cannot be taken for granted. You see, you can have patients who go to your practice for regular treatment, though it might depend on your specialty. Specialists usually tend to see their patients in what is known as a one-off treatment, so there is no ongoing patient book.
On the other hand, general practitioners or dentists can take advantage of this patient list. This list is an invaluable asset because it means you don’t have to worry a lot about marketing activities.
You already have established patients who will bring in business. Simply put, the already available patients are a guarantee that you’ll make income from the first day you buy the medical practice.
There is business continuity
When you buy medical practice, you can take over the staff contracts. This means staff liabilities, such as annual leave, long service leave, or sick leave are deducted from the sale price. The importance of knowing staff liabilities cannot be emphasized enough. If they exist, the buying price should be adjusted accordingly.
For example, if there is an employee who has worked for thirteen years, perhaps they will be eligible for three month’s long service leave in about 2 years. Therefore, the buying price of the medical practice needs to be adjusted on a pro-rata basis depending on the long service settlements.
You need to keep the staff. This is because the real goodwill of the medical practice largely depends on staff continuity to make sure that there is a great patient relationship. However, if you decide to let some staff go, you should ensure that you keep the right staff to prevent the practice from experiencing challenges. This is the reason why you need to take caution and avoid letting staff go until you see how the business is performing.
It can save you lots of money
As explained earlier, the investment risks are low when you buy a medical practice. You can also save tons of money if you hire someone to work on your behalf. Negotiations are always dynamic, so you should engage someone who can double-check your plans and perhaps create for you a valuation report.
This can help you to make sure that you aren’t rushing your decisions. Keep in mind that you must be satisfied with the buying price, so you can ask for more time to think things through. In such situations, it’s a good idea to hire someone to negotiate a deal, especially if you are lacking in confidence.
Emotional indifference works well when it comes to negotiations, so the right person can check the whole proposal with an objective perspective. Negotiations can be hard, and in most cases, it’s never easy to determine whether you have a better buying price or not. But once you agree on the price, you can make the practice work
A chance to value goodwill
If you are buying a medical practice that generates good profits, you can inherit goodwill. While goodwill varies from practice to practice, there is enough evidence to suggest that it can help you maintain a competitive advantage. Therefore, you will find out that some practices get a reasonable amount of passive income while others generate a low amount of passive income.
Now you might be wondering what passive income is all about. Well, passive income refers to income generated by other doctors who don’t own your business and health professionals, practice incentives and grants, and sub-lease agreements with specialists. So medical practices that are on large scale can make a larger passive income compared to those that have a smaller setup.
Therefore, you can have a chance to generate this existing passive income when you buy a medical practice. Ultimately, goodwill gives you a great opportunity to take home more money from the other sources than you would have taken home if you didn’t own the practice.