Bsm Consulting Group

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Growth Through Practice Acquisition By: Bruce Maller, President and CEO, BSM Consulting™ Physicians are faced with a myriad of challenges when attempting to grow the bottom line of their practices. Downward pressure on reimbursement, third-party payer intervention and competitive influences make it increasingly difficult for most practitioners to think about seeing sustained growth in take home pay. Practitioners employ a variety of strategies to combat these challenges. These strategies include diversification of service lines, addition of subspecialists, and the development of ambulatory surgical centers. For most practices the key to success is to make more efficient use of their providers, staff, and physical plant. Many practices employ a wide array of marketing programs in an attempt to enhance revenue opportunities with existing patients and/or to pull new patients into the practice. Practices will generally spend between 3% and 5% of annual collections on practice marketing. Organic or internal growth can also come from the development of new practice locations. Suffice it to say, these projects will often entail significant capital expenditure. In some cases it may make more sense to acquire an existing patient base from a retiring practitioner. Growing a business through acquisition offers several potential advantages vs. building a new facility "de novo." First of all, the buyer of a practice will have immediate access to the charts and records of the acquired practice. There may be an opportunity to capture surgical referrals that may have previously been kept in-house or referred out to other practitioners. Availability of subspecialty cases may also help to augment the productive capacity of the physicians of the purchaser. If the buyer has an ambulatory surgical center, there may also be an opportunity to improve the productive capacity and profitability of the facility. On the flip side acquiring an existing practice can be a complicated and expensive proposition. This article provides an overview of the major issues that need to be considered when acquiring another practice. In all cases the purchaser will need to engage the services of experienced legal and tax counsel in order to make sure the deal is structured within applicable regulatory guidelines and in a manner that maximizes tax advantages. -Structure of the Transaction: A buyer can acquire the stock or assets of the selling practitioner. Asset purchases are most common and generally preferred by the buyer. In a stock purchase, the buyer will acquire the shares of the seller

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