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Physician Buy-in

What Doctors Need To Know About Buying Into a Medical Practice or Surgery Center

Being a part-owner of a medical practice can be an exciting and rewarding step for a doctor. There are various ways to achieve this, such as starting your practice from scratch or buying an existing one. However, another option that offers a smoother transition is becoming a partner in an existing practice. But what exactly does it mean to become a partner?

What is a Partner Buy-In?

Becoming a partner means you get to own a piece of a medical practice or a surgery center that’s already doing well. This ownership comes with benefits, including a share of the practice’s income in addition to your regular salary. Plus, being a partner allows you to have a say in how the practice is run, all without the challenges of starting a new practice or becoming the sole owner of an existing one.

Before You Make the Decision

Before you jump into becoming a partner, there are some crucial questions you should answer:

1. How is the Buy-In Offer Structured?

Understanding the offer is essential. You should carefully review all the documents related to the buy-in. It’s a good idea to have a legal expert help you with this. They can go through the practice’s rules and agreements to determine if everyone has the same terms or if they vary among partners. Together with your professional team, you should also evaluate financial information, assess your bargaining power, and predict your future earnings.

2. What’s the Value of the Practice?

Before you buy in, you need to know how much the practice is worth. This value can depend on various factors like assets, real estate, debts, and income. Work with a financial expert to examine income statements, balance sheets, and other financial documents to determine the practice’s true value.

3. How Does the Practice Share Income?

Understanding how the practice divides its income is crucial for your financial planning. There are typically three ways practices do this:

  • Equal Allocation: Everyone gets an equal share of the income.
  • Productivity Model: Your income is based on how much work you do, measured in things like patient billings or services performed.
  • Hybrid Model: This combines equal shares with productivity-based income.

There’s no one-size-fits-all answer here; it depends on your situation and preferences. Whatever the case, make sure it’s clearly spelled out in your agreement.

4. What Happens If You Leave?

You should think about the long-term, including what happens if you decide to leave the practice. Be aware of the rules for selling your share and whether you’re entitled to any compensation. Understand if there are any conditions that might affect your departure, such as non-compete clauses or reductions in compensation.

5. How Will You Pay for the Buy-In?

Finally, you’ll need to figure out how to pay for your share of the practice. Most practices are corporations, so you’ll essentially be buying stock in the company. You can choose to have a portion of your salary go towards this buy-in, or you might consider paying a lump sum upfront. There are also partner buy-in loans available to help with the immediate investment.

In conclusion, becoming a partner in a medical practice can be a fantastic opportunity, but it’s a big decision. Make sure you thoroughly understand all the details, and don’t hesitate to seek advice from professionals who specialize in these matters. With the right knowledge and guidance, you can confidently pursue your goal of practice ownership or partnership.

Contact one of our attorneys at Dike Law Group and schedule a meeting so we can discuss at dorismeet.com.

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