PREPARING A PRACTICE PROFILE
What is a Practice Profile?
Your Practice Profile (or Memorandum of Information) is a short promotional document which gives an overview of the history, structure and financial performance of your medical practice for the benefit of pre-vetted potential buyers. Whilst carefully hiding the location and identity of your practice, it is designed to give potential buyers a financial and operational snapshot of your practice so they can decide if your practice fits their general requirements in terms of size, location, clinical setup etc. Beyond this document, strict confidentiality agreements must be signed by all buyers interested in obtaining further information.
Most serious buyers will have a set of criteria for the type of medical practices they are interested in. Your Practice Profile will allow them to quickly assess the suitability of your practice. Some examples of buyer criteria are as follows:
Practice size as measured in annual revenue or FTE doctors. Does it match their budget?
Practice size, layout and infrastructure. Does it allow for expansion?
Practice history and location. How reliable is patient base and demand?
Potential to amalgamate your practice into their existing group structure. Are you a good cultural fit?
Mix of clinical services and billing arrangements. What is your revenue potential?
What your Practice Profile contains
Your practice profile, or memorandum of information, should be set out in headings as outlined below:
* Period established & how long at current site.
* General Location (i.e. city, rural NSW, Sydney eastern subs etc.)
* Position (i.e. shop front, suburban house, shopping centre etc.)
* Hours of operation
* Number of GPs, Full Time Equivalent, and overview of Roster, work status (contractors or employees)
* Nature of Service Agreements?
* General Layout (Number of Consulting Rooms Treatment Rooms, parking etc.)
* Security of Tenure (lease details or property for sale)
* Allied health, type, roster overview & financial arrangements
* Fee Schedule, % of Private Fee billing (when last reviewed) (if applicable)
* Accreditation details.
* Software used, patient record storage
* Patient Numbers for last 3 years (monthly and annually)
* Work done, GP House calls, Health plans, any specialised work (i.e.) skin, occup health
* Annual Gross Revenue over last 3 financial years, PIP, PNIP & other income in addition to GP gross billings
* Major Practice expenses such as doctors, rent, wages, super, medical supplies, phone etc.
* Asking Price
Preparing your Practice Profile
Your Practice Profile summarises the answers to the most common questions asked by any interested buyer or their advisers. It would normally be completed by your business broker but is a useful document for anyone selling your medical practice, regardless of your method of sale. Assuming that you are using a broker, it is a good idea to compile the information for your Practice Profile at the same time as your Practice Valuation as they share some key details about your surgery.
Your contents of your practice profile should be comprehensive, honest, up to date and positive as it will be the first document presented to any potential buyer and will help to form their first impressions. Your Practice Profile, although quite informative about the overall structure of your practice, is of a general confidential nature and any details that may divulge the name of your practice, its address, the identity of your doctors & staff will be carefully hidden to preserve your privacy.
Why the secrecy?
The sale of a medical practice can be a very sensitive time in the life of your surgery for a wide range of reasons. The major consideration for owners should be the raised level of concern for the future that will be felt by patients, staff and business associates of the practice. As a practice sale can be a protracted exercise, taking anywhere from 3-12 months to complete, this uncertainty can be very destabilising on a practice.
Patients may fear loss of their doctor and begin to shop around with other practices. Staff may fear the loss of their job and look to move on just in case. Doctors may be concerned about the new owners and the changes that they may make to the culture of the practice. Unwarranted concerns over the financial viability of the practice may hinder new contracts or business arrangements being entered into. Potential buyers may value their privacy and be put off by the public nature of the sales process.
Who will receive your Profile?
Your broker would normally receive inquiries from buyers via telephone or email. They will carefully screen any potential buyer to check their suitability, prior to releasing any information about your surgery. Furthermore, your broker will request the potential buyer to complete and sign a NCA (Non-Disclosure Confidentiality Agreement) to ensure a commitment is received from the buyer to maintain confidentiality of any information given.
If the buyer is a local surgery in your area this may need to be discussed with you prior to releasing your surgery profile.
What comes after the Profile?
If the buyer continues to express an interest after reviewing your Surgery Profile your broker will interview them in more depth to further assess their suitability for your practice. This will encompass important factors such as their budget, reputation in the industry, plans for the future of your practice and whether they are a good cultural fit. Before proceeding any further, your broker will discuss their findings with you to ensure you agree that the buyer would be a suitable candidate.