Buying a Practice: The best way to keep patients in the process

I talked recently with someone who was buying a practice.  She was concerned about how many patients  she would keep after the practice sale.  She said she heard that you could expect to lose 50 percent of the patients.  Someone told me later it’s more likely that you will lose 80 percent of the current patients. Yikes!  Why would you buy a practice where you’re going to lose that many people!  What a waste of money!

So what’s the best way to assure that you will retain most of the patients.  One simple factor:  The selling doctor.  If you can get the selling doctor to continue to participate in the business, you will increase your chances of keeping more patients.  The best way to do this is to require the seller to be your banker.  Have the seller take on at least part of your debt.  For example, let’s say you’re buying a practice and the seller says he wants $250,000 for it.  Get a loan for $100,000 for the down payment, then put an “earn out” in the contract that you will pay him back up to $150,000 out of the revenues.  What does that cause him to do?  He will do everything he can to help you retain patients.  He will give you a great recommendation; he will really work hard in the practice for the three months of transition; he’ll tell his staff to help you.  You get the picture.

If you let the seller walk away with the cash, even if he agrees to a transition, the seller has no incentive to help you retain patients.  So remember, if you’re buying a practice, structure the sale so that the seller has to take part of the payment directly from you based on practice earnings.

For more information on buying a practice, see Planning for Practice Success.