The 8 Stages of Sales of Medical Practices to the Hospital

Sales of medical practices to a hospital can be imtimidating; however, we have learned they all usually follow the same trends.
selling medical practices

I have represented physicians in dozens of sales of medical practices to hospitals, and I have noticed that these deals tend to follow the same path each time:

  1. Everybody loves each other. The physicians feel that this will be a great match. The hospital understands what they want and is extremely willing to do whatever it takes to make the deal happen. Warm and fuzzy best describes the atmosphere.
  2. The employment agreements and asset sale agreement  are produced. Perhaps because of an oversight, several of the promised concessions somehow didn’t make it into the agreements. The physicians assure me that the lawyers just didn’t get the deal right. We only need to point out the problems, and they will be fixed. All is good.
  3. I give my responses to the agreements as produced. The physicians feel I went a little overboard, since I seem to be questioning why the pieces of paper don’t match the discussion. A vague sense that the lawyers might screw up this deal begins to pervade the discussions.
  4. The hospital responds to my requested changes. It turns out the hospital “never” commits to doing some of the things the docs felt were agreed to in their discussions. The physicians begin to question whether they should be going forward with this deal.
  5. Negotiations continue. The hospital begins to perform its due diligence. The physicians feel that any examination of their practice is a breach of trust, and that the questions being asked are invasive. The doctors begin to develop a feeling that the “corporate folks” don’t understand the practice of medicine, and that the hospital is only interested in them for the value of their services. A definite sense of unease permeates discussions with the physicians.
  6. The hospital makes its final offer. It really isn’t what the docs understood the deal to be, and they feel  the process is driving them into a bad decision. A time of self-reflection for the physicians ensues.
  7. Some relatively minor issue (e.g., a document is requested that was previously supplied) puts the physicians completely over the edge. The deal is off!
  8. I end up soothing ruffled feathers, and the physicians decide that, all things considered, it isn’t a horrible deal.The documents are signed. The physicians are happy that the ordeal has ended.

I really wish I could make things better during this process. My hope is that physicians reading this will recognize that they are going through natural stages, and will have a little less angst as we work through the process of selling a medical practice together.

You may also be interested in my posts about physician compensation after the sale of a medical practice, hospital negotiations, and closing a medical practice in Pennsylvania (my home state).

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Dennis Hursh

Dennis Hursh

Dennis Hursh has been providing healthcare legal services in Pennsylvania since 1982. Since 1992, he has been a physician's lawyer serving as Managing Partner of Physician Agreements Health Law, the first law firm in the country to focus exclusively on physician employment agreements. Dennis has devoted his life to serving physicians and medical practices. He is the author of the definitive book on physician contracts "The Final Hurdle - a Physician's Guide to Negotiating a Fair Employment Agreement, and a frequent lecturer on physician employment agreements.

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Physician Prosperity Program

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After purchasing the physician contract review, you will receive an email asking you to transmit the agreement and any concerns you have to me. Many physicians do this by email, but I will be available by phone, too. In three business days from the time you purchase the Physician Prosperity Program® and transmit the draft physician employment agreement along with any concerns you have about the agreement and the information I will need to perform the MGMA analysis, you will receive a detailed physician contract review letter from me.

After you receive my physician contract review letter, you will have the opportunity to discuss it with me, to make sure all of your concerns were met, and to correct any factual inaccuracies, or to point out things that were verbally promised but didn’t make it into the physician employment agreement. These discussions, and revisions of the letter following these discussions, are included in the initial fixed fee.

Once you are completely comfortable with the physician contract review letter, you transmit the letter to your potential employer.