Considering Selling Your Medical Practice to a Private Equity Group?

Why Careful Advanced Planning Counts

Understand the Process and Plan for a Successful Sale of Your Practice to a Private Equity Firm

Advanced Planning is Essential

For many physicians, selling their medical practice to a private equity company can seem like an attractive option. However, this type of sale comes with unique challenges as well as a lengthy transition period that can stretch out for a year or more before everything fully settles. If selling to a private equity group is on your radar, advanced planning is essential to protect your patients, your revenue, and your long-term professional satisfaction.

Understand Your Patient and Payer Mix

One of the first steps physicians should take when considering a sale is evaluating their patient base and insurance carrier mix. Start by creating a comprehensive list of all the insurance carriers your practice currently accepts. Next, determine how many of your active patients are insured under each of these carriers.

This information is critical because many equity companies work under a new Tax ID and often have a different payer mix than an independent practice. Some of your current patients’ insurance plans may not be accepted under the new ownership. That could result in a significant loss of patient volume — a loss that could negatively impact both patient care and your revenue, particularly if your post-sale compensation is tied to production.

Employee vs. Production-Based Compensation

Another crucial factor to consider is your employment agreement after the sale. Will you become a salaried employee, or will your compensation be tied to your productivity and patient volume?

• Salaried Employee: If you’re on a set salary, the loss of patients due to insurance changes primarily affects the equity company’s bottom line, not yours.

• Production-Based Compensation: If your pay is directly tied to the number of patients you see, losing a substantial percentage of your patient base can drastically reduce your income.

This distinction makes it essential to understand exactly how the sale will impact your future earnings before finalizing any agreement.

Exploring Other Sale Options

Selling to a private equity group isn’t the only option. Catalyst Consulting helps physicians evaluate all potential buyers, ensuring that you make the best decision for yourself, your practice, and your patients.

Here are three common options to consider:

1. Private Equity Sale

   • Can more than 90% of your current patients continue care under the new ownership’s insurance contracts and Tax ID?

   • Will the equity group respect your clinical autonomy and approach to patient care?

2. Hospital Acquisition

   • Would you become a hospital-employed physician?

   • Would you retain any control over how you manage your patient relationships and treatment plans?

3. Sale to Another Physician

   • How will the transition impact patient care and continuity in the local community?

   • Would you have the option to work part-time to assist with the transition?

     
     

Expert Guidance Through Every Step

Selling your medical practice is one of the most important decisions of your career, and each option carries long-term financial and professional implications. Our experienced team helps physicians analyze all potential scenarios, ensuring you fully understand the pros, cons, and financial outcomes before moving forward.

If you’re considering selling your practice — whether to private equity, a hospital, or another physician — we are here to guide you through every step of the process. Contact us today to schedule a consultation and start your transition with confidence.