Safeguards to Buying a Medical Practice
November 15th, 2007
Buying a medical practice is a stressful transaction that a physician undertakes. The dollars and obligations are big and the pitfalls are many for an untrained businessman. Medical Business Exchange has a legal guide for doctors and medical practitioners looking to purchase a medical facility.
Consult Your Advisors Early and Specify All Major Deal Terms Up Front.
The first item discussed is the practice purchase price, before such other items including sale structure (asset sale versus stock sale), tax allocation, payment terms, collateral and post-sale employment of doctor. Paying $500,000 for a stock sale is a lot different than paying $500,000 in an asset sale, in terms of tax write-offs. So is paying $100,000 for equipment and $400,000 for goodwill versus $400,000 for equipment and $100,000 for goodwill (again, the tax write-offs). Your offer for the medical practice should be in an outline, letter of intent or other writing specifying all major deal terms in the presale agreement specifying purchase of the medical practice.
Stock sales are good for medical practice owners since all the gain becomes taxable to them at capital gains rates. However, stock sales aren’t good for medical practice buyers because stock is not categorized as a depreciable asset. The purchasing doctor gets no tax deductions for any of the medical practice purchase price. Buyers want to buy assets rather than strictly stock. Depending on the tax allocation of the purchase price among the assets acquired (medical equipment, medical supplies, tangible receivables, goodwill, consulting payments), buyers can increase the write-offs from their transaction, reducing the after-tax cost of the medical practice purchase.
Read more about buying a medical practice.
January 11th, 2008 at 9:41 pm
Have you considered buying medical practice software?
alloFactor is a free practice management software solution for medical practices. It is the only software a clinic would ever need as it supports all internal clinic functions including scheduling, registration, billing, EMR, reporting and all external interactions with payers including claim submission, ERA and eligibility verification. The software is built to allow communication with external agencies such as billing, transcription, appointment scheduling vendors. Since it has extensive functionality, website has free tutorials and free customer service to help customers become proficient with the system.
With an integrated database and automated workflow, alloFactor increases productivity, velocity and accuracy within the clinic. It is deployed as hosted solution eliminating the need to purchase expensive hardware or backup solutions. All communication is encrypted to protect patient information. alloFactor is unique in that it does not use a web browser; instead it has the familiar, intuitive Windows based interface. alloFactor automatically self-updates with the latest version, which are generally released every 2 weeks. Since it is not browser based, alloFactor can directly interface with compatible desktop products such as scanners and mobile charge capture software.
alloFactor’s business model is truly unique – it does not charge for its software modules (except optional EMR module - $35/month), customer service and setup. However it supports itself by charging a small fee for each payer transaction, typically less than what you would pay your clearinghouse to submit claims electronically.
For more details go to http://www.alloFactor.com