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Understanding Accounts Receivable Buy-In for Medical Practices

If you’re a physician considering a partner role in a practice, you need to know the accounts receivable buy-in. This process is vital for fairness in a new partnership. It involves acquiring a share of the revenue the practice has earned but not yet collected.

Defining Accounts Receivable Buy-In

In medical practice, accounts receivable are the money owed for services rendered. This includes debts from patients, insurers, and other payers. When a new physician joins a practice, the accounts receivable buy-in ensures they pay their fair share of the practice’s value. This value comes from its outstanding earnings. Without it, new partners could unfairly benefit from collections on work completed by others before they joined.

Valuation and Transparency

Valuing the buy-in requires careful consideration. Practices usually check the total outstanding AR and the chance of collection. They also adjust for bad debts or uncollectible amounts. This ensures that the buy-in reflects the true financial position of the practice. For incoming partners, this step builds trust. It shows a clear picture of what they are investing in. This fosters a strong foundation for collaboration.

Structuring the Buy-In

Understanding the accounts receivable buy-in can be structured in various ways. It can be a lump-sum payment, an installment plan, or an offset against future earnings. Each approach depends on the practice’s policies and the partnership’s terms. Legal guidance is essential to structure the buy-in. It avoids complications or misunderstandings later.

For help with joining a medical practice or a fair accounts receivable buy-in, contact the Dike Law Group. Our team has extensive experience in practice transitions. We ensure a smooth process for every aspect, from valuation to contract negotiation.

Schedule an In-Person Consultation with Dike Law Group today. Let us guide you through joining or expanding a medical practice with confidence.

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