When you are buying or selling a healthcare practice, even simple, straightforward transactions can become needlessly complex. Miscommunications and misunderstandings over key terms of the transaction can emerge, requiring the parties to spend unnecessary time, energy, and money on attorneys’ fees to resolve disputes. One of the best ways to avoid, or at least minimize, these misunderstandings is through a letter of intent, also sometimes referred to as a memorandum of understanding or a term sheet.
Owning a practice right out of dental school can be a daunting endeavor. Although dental school may prepare you for clinical practice, often little or no attention is paid to the administrative responsibilities of running a practice. In fact, a 2013 survey conducted by the American Dental Education Association (ADEA) showed 95% or more of graduating dental students believed that their education adequately prepared or well-prepared them in the areas of patient evaluation and diagnosis; radiology; and operative and restorative dentistry, whereas less than half believed their education had prepared them for practice administration.
June is graduation season for new doctors in Arizona. While graduating from medical or dental school is an enormous achievement, it may also be a time of uncertainty as you transition from the academic setting into your new career in the professional world. The following are some legal and practical tips that might help you as you embark on your career.
If you own your own medical or dental practice, but not the building in which it is located, you have likely encountered the dreaded commercial lease. The commercial lease is legalese in its purest form: 25 or more pages of byzantine, sometimes incomprehensible lawyer-speak that can make even some lawyers’ heads spin. Although people can (and actually do) write entire books on dissecting and explaining the commercial lease, and although you should always have your commercial lease reviewed by an attorney, below are some key concepts you should understand when entering in to a commercial lease:
Whether you are buying or selling a dental practice, we recommend making a timeline and a checklist to make sure that everything is in place for the transition. You should consult with your legal and financial advisors to help address the specifics of your situation, but transitioning into a new practice involves several steps that have to take place over weeks or months, so you should map out a timeline and set goals for each stage in the process. Each of these steps has many individual components, and the following is simply an overview, but generally speaking, here are some of the steps in the process.
Most doctors know that, as part of buying a practice, they need to perform due diligence into the practice’s records to ensure they know what they are buying. However, determining what that diligence will entail can vary widely, depending on the circumstances. As a general rule, you should review at least the following:
In our final post in this series, we look at ways to structure asset purchase agreements to resolve disputes that may arise after the asset purchase agreement has been executed. Although the goal of every agreement is to clearly define the rights and obligations of the buyer and seller, disputes can arise even with the most careful planning and best intentions. A well-crafted asset purchase agreement will have mechanisms for resolving potential disputes in a fair and cost-effective manner so that you can continue to build your medical or dental practice.
Our previous posts in this series looked at different ways you can structure the exchange of assets in a practice purchase agreement. This post will look at a different topic: how non-competes can be structured so that a buyer can preserve the value of his investment in the practice, while a seller can continue to pursue his career without overly burdensome restrictions.
In our previous posts in this series, we looked at the allocation of the purchase price and the treatment of accounts receivable. In this post, we examine how to handle work in progress (or work in process, depending on the verbiage your attorney uses). These are patients whose treatment requires several visits and are most commonly an issue in dental and elective surgery specialties such as orthodontic, periodontic and cosmetic practices.
In many cases, the patients have paid up front for the work. Whether you are buying or selling a practice, you must account for these patients and the money they have already paid. You have several options to accomplish this, depending on the circumstances of each case.
In our previous post in this series, we looked at the allocation of the purchase price between equipment, goodwill and non-competes. In this post, we examine the treatment of accounts receivable in the sale of a practice.
The importance of accounts receivable to an asset purchase agreement often depends on the type of practice you have. If you have a fee-for-service practice where your patients pay upfront for all of the work you will do, accounts receivable may not be a significant part of the transaction. However, if you accept payment over time, or some or all of your practice is insurance-based, then you will often carry significant receivable balances that must be accounted for in the asset purchase agreement. Although there can be variations, there are two ways general ways in which receivables are treated in asset purchase agreements: