Buying a Medical Practice: Due Diligence Checklist

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

1. Why is the practice being sold?
2. What are the growth opportunities?
3. What are the main challenges?
4. How dependent is the practice on the seller?
5. 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.