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Buying a practice
Since theres lots of partners on this forum I wanted to ask – I have the opportunity to buy an entire radiology practice, has several full time employees who arent business minded but want to stay on and keep providing services, and then it uses a few locums guys like most practices to cover gaps. Its about an hour away from a major city covering more suburban hospitals and providing remote coverage for other practices. Seems like a good gig from the numbers, but for those who have been in the business as partners for a much longer period of time, is it worth buying practices now with continuous reimbursement cuts and staffing issues and how would you put a valuation on a radiology practice?
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10 Replies
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Rads don’t buy practices. Offer to take the contract and service it.
It has never been worth it to buy a practice. This is a private equity thing. Notice PEs are or are soon to be filing bankruptcy.-
What are you buying with a Rad practice? Its just a 6 month contract that can be ended without cause either way.
Pretty much useless. Only the talent (Rads) have value.
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Sounds like the equivalent of asking if you should put drop a few hundred thousand into one stock. Risky and might pay off but could also go to zero.
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If you are really into it, you could structure a deal that pays a percentage of the buyout yearly contingent upon keeping the hospital contract. That way you limit your downside. Bc say you lose the contract in six months- that would suck if you paid several hundred thousand in buyout
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Is this owned by one guy ?
Is he working in the practice and what is he going to do after you buy ? How much of the volume does he carry ?
How many years left on the contract ?
The most important part is whether the talent is going to stick around or whether they are committed to the owner (come from the same same village in Korea for example).
Unless you can expect for the overall business to remain intact and produce revenue for you, there is no reason to buy a professional services corp. You want to buy a business, not a job for yourself.
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In this environment, you might as well pickle your own reproductive organs. Not even the PE guys are “buying” groups any more. They are “taking” over contracts.
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Is this a professional only practice or imaging centers?
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Yea, agree with above. We should have all known that when PE started buying radiology practices that they were desperate (and on the decline). PE works great if interest rates are essentially zero, but you actually need a very profitable business if you’re going to make money in PE if interest rates are higher.
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PE is in hibernation waiting for the great AI revolution that was foretold. If this ever materializes, its probably more likely that hospitals get greedy and employ their rads, paying them less and taking more of the professional fees for themselves. PE is just a middle man
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Either way you probably will get more ROI buying a gas station than buying a rads practice. People will need gas longer than a radiology contract lasts
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