Buying a Medical Practice: Due Diligence Checklist
Acquiring an existing medical practice can fast-track your business goals, but proper due diligence is essential. Here's what to investigate before signing.
Lukasz Wyszynski
Principal Solicitor
Why Due Diligence Matters
Buying a medical practice is a significant investment. Proper due diligence helps you:
- Understand what you're actually buying
- Identify potential problems
- Negotiate appropriate price and terms
- Plan for transition and integration
Financial Due Diligence
Revenue Analysis
- 3-5 years of financial statements
- Revenue by practitioner and service type
- Patient mix and demographics
- Medicare and private billing breakdown
- Seasonal variations
Expense Review
- Rent and lease terms
- Staff costs and contracts
- Equipment and maintenance
- Insurance and compliance costs
- Outstanding liabilities
Working Capital
- Accounts receivable aging
- Outstanding Medicare claims
- Prepaid expenses
- Inventory (if applicable)
Legal Due Diligence
Property and Leases
- Lease terms and renewal options
- Assignment provisions
- Make-good obligations
- Landlord consent requirements
Contracts
- Staff employment contracts
- Supplier agreements
- Equipment leases
- Service agreements
Compliance
- Registration and accreditation status
- Outstanding complaints or notifications
- Compliance history
- Insurance coverage
Operational Due Diligence
Staff
- Staff qualifications and experience
- Employment terms and entitlements
- Key person risk
- Staff attitudes to sale
Patients
- Patient demographics and loyalty
- Record keeping practices
- Transfer arrangements
- Privacy compliance
Systems
- Practice management software
- Billing systems
- Clinical equipment
- IT infrastructure
Key Questions to Ask
- Why is the practice being sold?
- What are the growth opportunities?
- What are the main challenges?
- How dependent is the practice on the seller?
- What support will the seller provide post-sale?
Common Pitfalls
- Overvaluing patient goodwill
- Underestimating transition challenges
- Missing hidden liabilities
- Inadequate seller warranties
- Poor transition planning
Our Role
We assist buyers with:
- Due diligence coordination
- Contract negotiation
- Transition planning
- Post-acquisition integration
Contact us early in your acquisition process.
This article is general information about Australian law and is not legal advice. It does not take account of your circumstances, and you should not act on it without obtaining advice about your own situation. Liability limited by a scheme approved under Professional Standards Legislation.
Lukasz Wyszynski
Principal Solicitor
Principal Solicitor of Hamilton Bailey, a sole-practitioner law practice in Adelaide focused on healthcare and medical practice law.