How an Effective Succession Plan Transforms Medical Practices

Over the next decade, many physician owners will likely retire, creating an exceptionally competitive market for medical practices wishing to sell to new owners.

Fremont, CA: Succession planning is critical for private practice owners, primarily because ownership transitions can occur at any time due to unanticipated occurrences such as sickness, death, or retirement.

Unfortunately, many physicians have not considered or do not have a detailed succession plan. This general absence of succession planning can create significant challenges for private practice owners and patient continuity of treatment. Over the next decade, a growing number of physician owners will likely retire, creating an exceptionally competitive market for medical practices wishing to sell to new owners. Private practice owners who want to protect their medical practice's future must implement a robust succession plan to enable a seamless transfer from ownership to retirement.

You have numerous possibilities if you are a private practice owner searching for help constructing a succession plan. Here are a few pointers to get you started:

Select a designated successor

The first stage in medical practice succession planning is determining who will take over the practice. One can go with an individual doctor, a group of doctors, a hospital, another practice, or a private equity-backed management organization ("MSO"). 

Of course, the goal is to have someone who will continue caring for their patients while maintaining positive connections with referring physicians and the community at large. Because of their relationship with business, many potential patients and referring physicians may come to the office.

Establish a buy-sell agreement

Once one has chosen their successor, users must guarantee that the private practice succession plan is legally secured. One of the most common legal arrangements one may establish to plan for succession is to create a buy-sell agreement. A buy-sell agreement specifies what will happen if they decide to quit their practice. Users may choose who will own the practice, how shares will be apportioned if there are numerous owners, and the price at which shares will get sold.

Prepare your successor (and yourself) for success

After users have completed the private practice succession planning, selected a successor, and made the necessary legal arrangements, they must teach their successor to operate the medical practice effectively. It's an essential stage, yet it is frequently ignored after the attorneys have prepared the legal paperwork and left the office. Even if the potential successor is enthusiastic about the practice, one should develop a training plan that exposes them to all aspects of the medical practice to master key managerial responsibilities that users may take for granted.