Buying a Practice
Buying an existing practice is an option with much appeal for the graduating or new doctor of optometry. In fact, most practices up for sale are sold to doctors entering practice for the first time.
Starting your optometry career with your own practice? What to consider when buying an optometric practice:
As a buyer, you should be certain that practices in which you are interested are compatible with your professional philosophy and goals, as in patient volume and fees. Decide if your preference is a more general practice, a practice with a special area of expertise or a more comprehensive practice offering added services. But there is more to consider.
Evaluating a practice is a good first step. Before buying, you’ll need to investigate many aspects of the practice—both to determine a fair price and to decide whether this is a worthwhile practice for you to assume. Evaluate location, surrounding competition, real estate, an existing lease, furnishings and office design, instruments and equipment, ophthalmic material selection and supplies and growth rate. Last, consider goodwill—described as potential income that buyers can reasonably expect after a practice changes hand.
Major demographic considerations are new zoning regulations changing commercial zoning to residential or vice versa, parking egulations, planned openings or closings of nearby factories or office complexes, the type of medical care facilities available and their recent growth or decline, and any other demographic or planning information available to you.
Other things to consider are the personality and character of the seller, whether staff members are well-trained, knowledgeable and friendly and know the patients, the current operating hours of the practice you’re going to buy and the current roster of patients.
Financial aspects of buying an optometric practice
Considering the financial aspect of buying a practice, seek financial advice from an accountant whom you’ve hired to review all records. You also should be familiar with the fee schedules, income sources, cash on hand, overhead, accounts receivable, accounts payable, the sales contract and, finally, financing the transaction.
In the stage of purchasing an optometric practice, you’ll also want to avoid potential problems. Consider restrictive covenants—a clause restricting the seller from opening another practice nearby that might compete with the practice you’ve purchased. When working out the details of the purchase, both parties should consult with their lawyers about the possibility of the death or disability of either or both parties during the transition.
Many buyers and sellers prefer to maintain a continuing relationship because this arrangement helps to ensure patient retention. A continuing relationship is advantageous in helping a new doctor get practical guidance that an established doctor can offer.
The transition from the predecessor to a new doctor should be handled carefully so as to be so smooth that patients will hardly notice the difference. A smooth transition also will ensure that you as the buyer will retain most of the accumulated goodwill of the practice.
If the seller agrees to stay in the practice to make introductions to patients, then termination compensation may be paid upon his or her departure. Last, because tax considerations vary widely and change frequently, it is essential that you consult a tax specialist about all matters prior to purchasing a practice.
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