Should You Sell Your Practice?

The decision to sell or not sell your practice is a complex one, and it involves much more than financial and security considerations, which are often foremost in the minds of physicians. While these considerations are important — after all, everything has its price and everyone wants security — my experience is that, in the long run, qualitative issues are a much better predictor of satisfaction than quantitative ones.

Though the above factors provide some compelling reasons to sell, it should be noted that many physicians and physician groups both large and small continue not only to survive but thrive in private practice. They are likely to continue to do so in spite of the challenges above.

Before you go much further, take some time to step back and reflect on:

• Why are you practicing medicine in your current location?

• Why are you in your current practice?

• Why are you in a solo, small-group, large-group, single-specialty or multispecialty group?

• What other types of practice have you tried?

Group practice is like a marriage, and some group practices go bad just like some marriages go bad. Yet usually it isn’t the institution of marriage that is the problem but rather the relationship. So why do many physicians have a bad experience in group practice and blame the group structure rather than the individuals?

There are many successful examples of single-specialty and multispecialty groups in most parts of the country. So don’t blame your experiences on the institution of group practice without reflecting on what else was at work in a bad situation. Evaluating what you like and dislike about your current structure is a critical first step.

The next questions you have to ask yourself are the following:

• What would change if your practice is sold and you become an employee of a hospital?

• Would you lose some of the things you like, such as autonomy and independence?

• Would the hospital solve some of the things you dislike?

Tread carefully. Just as having children is usually not the best way to resolve marital difficulties, selling your practice may simply move your problems into a different realm. See Checklists 1 and 2 at the end of this article to begin your self-evaluation.

I find that many physicians lack the perspective to recognize whether the current situation is objectively good or bad. Sometimes the grass looks greener on the other side. One physician hit the nail on the head when he told me: “I always have to remind myself that it’s never as good as it seems on the best days and never as bad as it seems on the worst days. That’s how I keep my perspective.”

Perspective on your current situation involves multiple components. I worked with an internist a few years ago who was pushing his group practice to sell to the hospital. He had a passionate list of plausible reasons why this was a good move. After spending some time with him and each of his partners individually, I learned that the underlying issue was that this physician didn’t get along with his partners, or anyone else for that matter. The question wasn’t whether or not they should sell. The question was how being employed by the hospital would solve their intra-group personality problems. They would still be working in the same office and sharing call — and still be financially tied together. What would change?

Many physicians think the decision to sell should be based solely on the monetary offer from the hospital because, after all, “everything has its price.” This is a trap, too. There are many things that are often more important than the monetary terms. Selling a practice is a strategic decision, and it needs to be viewed beyond the realm of short-term financial considerations.

Checklist 1: Potential Gains

Use this checklist to evaluate the severity of the problems you hope to solve and the relative importance of the perks you may gain.

Which of these potential “reasons to sell” apply to your situation? Note specifics about how each affects your practice and with what severity.

• Regulation and compliance issues

• Billing and management complexity

• Restrictions on and declining profitability of ancillary services

• Lack of leverage in payor contract negotiations

• Declining reimbursement and reimbursement uncertainty

• Need to recruit physicians and high starting salaries/physician shortages

How important is each potential hospital benefit to you?

• Professional practice management

• Negotiation with third-party payors

• Attractive benefit packages for staff

• Potentially lower malpractice insurance rates

• Retirement plan

• Health insurance for you and your family

• Disability insurance

• Integrated electronic medical records

• Sophisticated billing and collections systems

Checklist 2: Evaluating Your Readiness to Sell

Physicians become employees when a hospital owns the practice. Use the questions in this checklist to help you decide if you would be happy in that role.

• Are you prepared to turn over at least some control of your work schedule to fit in with the hospital’s policies?

• Do you currently have scheduling flexibility (like leaving early on Fridays) that may not fit in with corporate expectations?

• Would you look forward to adopting new ways to make your practice more efficient? Or does the thought of using a new practice management system or EHR system make your headache?

• Do you want to learn to work in a way that pulls in more money? Or would you resent a hospital “suit” giving you guidelines for increasing the number of patients you see?

• Are you ready and willing to trade away any upside potential for protection from downside risk?

• Do you hope to rid yourself of personnel decisions? Or does giving up some control of your staff feel too risky?

• What was your relationship with or attitude toward hospital management when you were in your residency program?

• Do you know and respect the leadership of local hospitals?

• Have you talked with other physicians who have sold their practices? Do you think their good and bad experiences would apply to your situation? How?

Excerpted from Time to Sell? Guide to Selling a Physician Practice: Value, Options, Alternatives 3rd Edition by Randy Bauman.