Physicians need to consider what they might need to do in order to repurchase their medical practice-then get those provisions in place before agreeing to the sale.
When physicians sell their medical practice to a local hospital, the focus is typically on getting the best price for their assets and negotiating a generous long-term compensation package. These are certainly important aspects to any practice sale. However, more and more often, I am working with physicians who desire to repurchase their medical practices after some period of time. Unfortunately, provisions related to buying back a practice are rarely contemplated or included in sale documents, which can make it difficult-if not impossible-for physicians to easily reacquire their former practice.
If physicians are even remotely interested in one day reacquiring their practice, it is a good idea to think about including provisions that describe how that process would occur. Some concepts to consider include the following:
Although some hospitals will not agree to provisions that outline sale of a practice back to the selling physicians, agreeing to a reacquisition approach in advance is advantageous for many reasons. For example, sometimes hospitals are unsuccessful at running the physicians’ practice profitably or the physicians have not assimilated well to hospital employment. Under such circumstances, selling the practice back is an ideal approach. Outlining the sale in advance can help ease the transition. More importantly, even if the practice and physicians are doing fine, this does not necessarily mean the physicians are satisfied or will remain beyond the initial contract term.
From the hospitals’ perspective, agreeing to a reacquisition can provide a mechanism to assure the physicians remain in the community and that they will continue to refer to, and use, hospital resources. This is an important goal for many hospitals that wish to retain certain specialties, avoid losing physicians to competing hospitals, and preserve certain income streams. For all of these reasons (and many others), reacquisition provisions are certainly worth considering.
Ericka L. Adler has practiced in the area of regulatory and transactional healthcare law for more than 20 years. She represents physicians and other healthcare providers across the country in their day-to-day legal needs, including contract negotiations, sale transactions, and complex joint ventures. She also works with providers on a wide variety of compliance issues such as Stark law, Anti-Kickback Statute, and HIPAA. Ericka has been writing for Physicians Practice since 2011.