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Questions from an Acupuncturist Selling Her Practice

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This is from an Arizona based acupuncturist.  If you know anyone looking to practice in Arizona, please leave a comment and I’ll put you in touch.   If you think you’ll ever want to sell your practice, you may want to read her questions.  They’re pretty good:

“I am looking to sell my acupuncture and herbal medicine practice, due to my spouse’s relocation to another state for work.  Since I have not bought or sold a practice before, I don’t know how to decide what it’s worth.  I don’t own a building, so in essence what I am selling is my patient records.  Questions I have include the following:

How much do I charge for a patient file?  Should I ask a different amount for active and inactive patients?

Do I need to ask my patients if it is ok to sell their files?  Do I need them to sign release forms?  Or do I just need to notify them that I have transferred their records to the acupuncturist who buys my practice?

Do I need to keep a copy of all files?

What do I need to do, to be HIPAA compliant in transferring patient files?

Are there any other legal issues I need to be aware of?

I have been in practice for 4 years in northern Arizona rural town, close to Sedona, with a good reputation and a growing association with local doctors, chiropractors and nurse practitioners who refer patients to me, mainly for pain relief.  I have done much outreach with stress relief clinics and public events, and have generated a fair amount of goodwill in the community through my involvement with the local chamber of commerce and other networking organizations.  I am also a member of my state acupuncture association, and several other professional organizations.

I began to explore relocating a few months ago.  During this time, I have held back on promotion and focused on readying my patients for my departure.  I currently have over 200 patient files, and am currently treating 10-15 of those, with new patients calling me every week.  The reason I have so few active patients, is my patients tend to “get better” rather quickly.

Most of the patients who come to see me are seniors, with a smaller percentage ages 40-65.  I treat a lot of knee, low back, shoulder and neck pain, fibromyalgia, headaches (migraine, tension and other), trigeminal neuralgia, neuropathies, post-herpetic neuralgia, etc. as chief complaints.  Secondary issues that commonly come along for the ride include smoking cessation, menopausal complaints, menstrual disorders, PMS, weight gain, stress, diet, heart health, exercise, and digestive issues.

I have tried to integrate more “artsy” elements into my practice as is more commonly accepted in Sedona, such as acugem therapy and essential oils, but my town is a bit more conservative for that.  Local docs are willing to refer for acupuncture, but hard to sell on herbs.

My schedule has been by appointment between 10 am and 6 pm weekdays, except Thursdays.  I have a cash-based practice and charge $85 for an initial 90-minute visit, and $65 for 45-minute follow-ups, plus herbs as needed.  For the rare patient who has insurance that covers acupuncture, I do provide superbills for their reimbursement.  I recently relocated my practice into my home from a chiropractic office, and my patients enjoy the “less clinical” feel of my treatment room.  I have not gotten into a website and blogging, but do send quarterly newsletters to my patients and have 3-4 public outreach events annually in my office, plus some kind of promotion most months.

Any feedback from those who have sold or purchased a practice would be very helpful.  Thank you.”

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17 responses so far ↓

  • 1 Dan | Practice Growth // May 8, 2009 at 5:40 am

    As far as I know HIPAA allows for the sale or transfer of your practice, since that activity is part of “health care operations” which don’t require a written contract. According to http://www.medscape.com/viewarticle/431379 it’s a myth that you can’t sell your practice without written consent.

    That being said, I’m Canadian, and definitely no expert. :)

    There are a few ways to value your practice, as Burton has mentioned in the past. Your active files are probably worth more than your inactive, but you can base the price on pure financial data, too. I’d say your best bet is to ask around – your accountant, lawyer, etc. – until you find someone that can help. Every practice is different.

    I think practices tend to start devaluing quickly once someone decides to move on. Marketing and enthusiasm tend to fall off, and as a result so do patient numbers. For that reason, the most important thing is to get going. Don’t get held back by too many details. Get the word out, and figure out small stuff once you have an interested buyer. They’ll have questions and ideas of their own, and the best way to move forward is to simply start that conversation.

    In short:
    1. Get some help to decide on an approximate price
    2. Start spreading the word
    3. Figure out the fine details as you go!

    Good luck in your new home!

  • 2 Burton Kent // May 8, 2009 at 11:19 am

    Dan’s advice is golden. Just get started. (Thanks, Dan!)

    Most of the writings on HIPPA are VERY misleading. It’s not an all-encompassing privacy act, but most writings imply this. It is almost entirely to do with electronic transmission of medical records. I think a big factor behind it is paranoia about using medical records for bad – for example, denying medical insurance after reading private records.

    I’d like to add that it’s also possible to sell the practice without money changing hands. Have a revenue-sharing agreement where the income pays off what’s owed on the practice. There can be a LOT of creativity involved here while still making sure it’s fair all around.

  • 3 Christina Wolf // May 8, 2009 at 12:09 pm

    Hi There! I have priced my practice to sell it using Biz Pricer (software I found and downloaded on the web) — I don’t know if it is completely accurate, but it takes into account all of your business income and expenses as well as the overall climate in which your business exists (economy, competition, office space, etc.). I have had difficulty getting a business broker to contact me, the only one who did was charging $800 to go through the same process I went through on my own (granted, it may be more accurate and an accurate price is easier to stand by). The main thing to remember is that unless you HAVE to ditch your practice soon, don’t undervalue what you’ve built so far. Also remember that for the right person, buying your practice will be easier in the long run than starting a practice from scratch. Good luck!

  • 4 Nalini Chilkov, L.Ac., O.M.D. // May 8, 2009 at 12:32 pm

    There are business brokers and accountants that do nothing but value businesses and buy and sell medical practices.

    There are standard formulas for valuing a medical practice for sale and standard formulas for the payment arrangements, revenue sharing and transitions.

    These business practices are well established and do not need to be reinvented. For your newsletter/blog best to get expert advice from a medical practice broker and then the larger community whom you service will have truly professional expert education and advice.

    Hope this is helpful.

    Nalini Chilkov, L.Ac., O.M.D.

  • 5 Jimmy Yen, LAc // May 8, 2009 at 3:16 pm

    I have never purchased a clinic, but if I put myself in the buyers position these are some things I would look for:

    1. Financials – if I was a buyer i would want to see the stats on your clinic. For example, the number of patients you treat per week since you have been open. (it would help to have all this data entered into a spreadsheet, so that you can show that your clinic was growing)

    2. the most valuable asset that you have is your Active patients and your business phone number. If, like you said, you are still getting calls from potential patients, the phone number is probably the most important asset you have right now. The active patients that you have right now ranks #2 in importance. The reason being, your patients may not feel comfortable going to another acupuncturist, because they’ve built a strong rapport with you. Reality, is not 100% of your active patients will continue treatments with the new owner that buys your practice. Inactive patients list is least valuable. Reason being, the new owner has to try to develop rapport with them without seeing or talking to them in person. With the active patients, the new owner can talk to them face to face and instantly develop rapport.

    3. If you have a record of how many phone calls you are still getting from potential patients that would be a great attraction factor to buyers.

    In regards to HIPAA, you need to check with the laws in your state also. In Texas, we are required to keep our patient files for 5 years. I would suggest you keep the original files, because you provided treatments up til now. For the new owner you can provide copies of the initial exam that you performed and other pertinant info.

    hope this helps!

  • 6 Jann // May 9, 2009 at 1:43 pm

    I know of 2 massage therapists that have looked into buying established practices and they both told me that the files were $10,000 + the equipment, stock and supply costs. I’m in Canada so I’m not sure what this would relate to in U.S. terms, but probably within a few thousand dollars. My practice is in its 7th year, I have a very cool location and included is a small herb shoppe as well as my practice. I would think that I could easily ask $35,000 + for it. I’ve also been told that a practice is worth the average of 3 years of income, but I’m not sure that I would pay this amount but I know of people who have asked this (and not gotten it). I think the question I would ask myself is how much would you pay for it?

  • 7 Jann // May 9, 2009 at 1:50 pm

    One more thought… as for my files, they are mine, not the patients and although I would send a letter introducing the new owner to them and thanking them for their business, I would not ask their permission to sell the files. I just can’t imagine the paper work involved or the potential chaos of getting everyone’s permission. In Ontario, depending on the modality, practitioners are required to notify their patients in writing that they are leaving the practice and nothing more.

  • 8 Rik Ehmann // Jun 13, 2009 at 11:57 am

    I recently bought a practice in Phoenix AZ. The issues I weighed during the process include:
    1. Office location and costs – is the lease assumable? Do I need to move?
    2. Phone number – is it transferable?
    3. Name of business – if it is your name and not a business name it is less valuable (thus in starting a business, pick a name that can be sold with the business, not your given name – ‘Jane Smith Acupuncture” has no sale value)
    4. What equipment and stock is included?
    5. How many active clients? How many inactive clients?
    6. What is the focus of the practice -for instance if you are a women and most of your clients are women and your focus is female fertility and gynecology, then the purchaser should probably be a women or be willing to lose 1/2 to 2/3 of the client base.
    7. What are the profits and losses for the last three years?
    8. How flexible are you in terms. As you know, most of us graduate with a high debt load. The purchase of the practice will probably need to be financed from the practice income, which will also need to provide some support for the practitioner.
    Best of luck. If you want to talk with me, get my email from Burton or give me a call.

  • 9 Dan Karp // Jul 14, 2009 at 3:37 pm

    I own the office and treatment room that I have been practicing in since 1982. If I sell my condominium, the only thing I have left is a list of clients. Why would anyone buy a practice, without a place to treat their patients? If I sold my practice with the condominium it would be too expensive for most beginner acupuncturists.I need some advice.

  • 10 Burton Kent // Jul 16, 2009 at 8:57 am

    Dan,

    Your patient list is WAY more valuable than your office. An acupuncturist can always buy/rent/borrow/steal another office within months or even days. For example, it’s possible to find a chiropractor that’s not using their office 5 days a week and do a revenue split. This can be set up in less than a week.

    Building a patient base is what takes time, and is the real core of your business. The office is important, but not worth anywhere near as much. A change in office will have an impact on patient base, but losing the patient list will have even more of an impact.

    You can also approach other established acupuncturists and offer to sell them your patient files. Not all patients would go to the new acupuncturists, but many would.

    As for selling the condominium, you can simply help the beginning acupuncturist by finance all or part of it out of the earnings.

    Bottom line, there are MANY, MANY ways to get creative in setting up and financing a business.

    Burton

  • 11 Jimmy Yen // Jul 16, 2009 at 12:11 pm

    Dan,

    You are correct in 99% of beginner acupuncturist would not be able to afford your to buy your condo. As Burton mentioned, there are many scenarios or options that you have, I have listed two below:
    1. Selling condo + active patient list + business phone number together: your target market is probably acupuncturists who have some cash in the bank. The most common buyers that I’ve seen are acupuncturists who already have a successful clinic and are looking to expand their business by buying a satellite clinic. If your practice produces a NET income of >$100,000, then I don’t see you having a problem finding buyers. Contact the acupuncturists around your area and present them with a proposition.

    2. Sell your condo and active patient list (phone number) separately: you can pretty much sell your condo to any type of business, you may want to find a realtor to help you out. Active patient list, I would recommend contacting acupuncturists closer to your clinic to see if anybody would be interested in buying your active patient list.

    Hope this helps!

    Jimmy

  • 12 Itay Neta, LAc // Aug 16, 2009 at 11:33 am

    Another idea I think would be nice to sweeten the pot in a case like this is to offer to stay around for a little while (few months?) to overlap so you can introduce the buyer to your actives, market and give presentations together. I’d think the retention rate would be higher if you do this…

    Seen this offered before and sounded like a good idea to pass on.

    Good luck!

  • 13 bob bretell // Oct 7, 2009 at 9:22 am

    I am not an acupuncturist but my wife is, an i know the business fairly well. What I don’t hear from any of you is the importance of insurance network referrals. On average, 50% of my wife’s yearly business originate through these networks. So sure, active patients are number one, but consider how these active patients found you in the first place. If I was looking to buy an acupuncture business, i would want to know how people are finding me. This guarantees that there will be a flow of new business which is essential if you want to survive.

  • 14 Christina Wolf // Oct 13, 2009 at 10:48 am

    I just got off a phone with the third business broker I’ve spoken with and the ONLY one who would talk to me about valuing my business without first charging and arm and a leg (honestly, if we had to pay to put our homes on the market, nothing would ever get sold). The first “uh oh” is that b/c I take home every bit of profit, there’s no “discretionary income”, so the practice is less valuable. However, he is going to look over my last two tax returns and get back to me–all free of charge. If he can help me, then we talk price, if not–well then I’m going to set a price and go it alone. My first price I put out there (valued by Biz Pricer software) did not go over well with the two people who called me. I put selling on hold for a bit and am now back at it. I will keep you all posted on what I find out!

    Thanks for all your posts–I am a pretty discouraged acupuncturist today and it was nice to just touch base with some other acus (discouraged or not)!

    Christina

  • 15 Romi // Mar 10, 2013 at 11:07 pm

    Tomorrow I am going in to negotiate buying a practice I’ve been sub-contracting for for the last two years.
    When I came on board the owner was about to close, she had already given notice to the landlord. there were four existing patients, three who stayed on with me. I established a yelp and google page and started accruing patient comments on both pages , but especially the yelp page. All of my new patients have come from yelp or Healthgrades. there have also been 4-6 patients that returned that had been on their inactive patient list. All of the practices patients equal less than 3% of my patient list and about 6% for my active patients. The business grossed $47,123.454 for 2012. About double what 2011 brought in when I only worked part time. There is a phone number I would like to keep, but not the name or website. There contents of the office i,s by their own estimates, valued under $600. No herbal pharmacy etc.
    I’m finding it difficult to value the business since there were so few patients and now there are many more but brought in my me. I don’t want to undervalue the help of their website in this either. The office has a good location that I can take over the lease at.
    Any thoughts on this would be appreciated, even if its after tomorrow since there will probably be more than one meeting on this.

  • 16 Jennifer Everett // Apr 11, 2013 at 4:46 pm

    Nalini & Christina –
    Do you have references for the business brokers that you mentioned? I have my practice for sale currently but would like to get it evaluated.
    Thanks!

  • 17 J.Stein // Nov 16, 2013 at 11:11 am

    I am looking for an acupuncturist to buy supplies from my husband’s practice. He has recently passed away, leaving behind his practice of acupuncture and alternative healing. I am not looking to sell the practice, but merely the extensive amount of supplies, text books, medical books, tables and several electronic healing devices such as a Rife generator.

    Does anyone have any advice for me?

    Thank you, and good luck to all of you on selling your practices.
    Ps. I am located in the Philadelphia, Panarea.