Strategy Checklist for Medical Practice Acquisitions

With the everchanging healthcare landscape and the increasing competitiveness among physician practices and hospitals, many physicians are looking at acquiring other practices and bringing them into the fold.  Unfortunately, I have often seen physicians who would like to jump to valuations or due diligence of a medical practice without having first established their own strategy as it relates to potential acquisitions.  If your practice doesn’t already have a strategic growth plan, make one.

Growing for growth’s sake really doesn’t make sense for you or for the potential target.  Instead, think about practices that might be interesting to acquire, geographies that might be important, capacity that might enhance operations, or perhaps even technology that could be transformational.  You want to consider what you need before looking at opportunities, because after the acquisition the integration follows, and that can be an extremely difficult process if there was no strategy beforehand. The discipline of articulating a strategy will guide you in finding and assessing acquisition targets.

Getting started

What is your vision for where you want your practice to go?  In developing your acquisition strategy, you should consider your goals (What is it that you want to do?) as well as your experience (What have you already demonstrated the capability to succeed at?). It is imperative that these two areas are fully thought out and written down before proceeding. As a physician owner, you need to know what strategic outcomes you ultimately want from engaging in acquisitions and consider the implication to both you, as the buyer, as well as the practices that may want to sell. Developing an acquisition strategy requires knowing what makes your practice successful now and what a potential acquisition can add to make your business even better in the future.  This strategy will help you clearly define the value proposition for both buyer and seller, as well as the value drivers that should guide acquisition decisions. In this instance, the value drivers are essentially capabilities that add worth to the practice.

Practices are continually bought and sold as a result of an opportunity being made available or because of a strategic plan. As the buyer, you are acquiring an established practice that’s hopefully making money and has patients and employees already in place. You also know that if you buy a good practice, you have the opportunity to make it a better one. From time to time, things come your way that are more opportunistic. Ask yourself, is the downside risk significantly less than the realistic upside opportunity? Are the seller’s goals aligned with what you want to do? Look at the fit. Will integration require a fundamental change in either practice? Unfortunately, the answers are rarely black and white thus the importance of having an underlying acquisition strategy. 

Defining the practice you want to buy

When your desires and experience intersect with a good acquisition strategy, you have the foundation for your plan. It is now time to look at opportunities, by first defining the parameters of the practice you want to buy.  What are the characteristics of the medical practice that you propose to buy? Items such as practice size, location, price range, and patient catchment area are just some of the key areas to initially think about. 

What is your plan to grow the new combined business? You should include both top and bottom line growth in your discussion. Are you looking for a troubled practice where you can create value or a practice that’s already on a fast growth trajectory? Do you foresee additional acquisitions? If so, what are the attributes of the prospective add-on medical practices. What will the new combined business look like as your plan moves forward?

Targeting a practice

Once this exercise is complete, you will be in a position to start targeting the right practice.  There are two ways of targeting a medical practice: find one already listed for sale, or approach a physician owner of a practice not for sale, and make an offer. Some key questions you want to keep in the forefront of your mind are:

  • How does the target make you, the buyer, better?
  • How do you make the target better?  Most often you’re buying the producer (the physician) so alignment with his or her personal goals is absolutely critical.
  • What are the risks that could impact the future success of the business?  What is your plan to deal with them?

The process of buying a medical practice can be narrowed down to one very simple question: Is the practice you’re buying actually the business that you think you’re buying? Some purchases are more straightforward than others. If you have a thorough understanding of the practice you are buying, then the process will be smoother. It is extremely important to remember that when you encounter an opportunity that does not align perfectly with your original strategy, return to the key questions that defined it. Local market dynamics may change your own practice and thus there may be a need to alter your acquisition strategy. There is nothing wrong with that.  In fact, I am a firm believer that strategy should be fluid and ever-evolving.  Just make sure that as your acquisition strategy changes over time, the practices you acquire still make your business better and more valuable.

Final thoughts

Essentially your strategy will become the roadmap for your acquisition initiatives and will serve you well at every stage. Thoughtful development of an acquisition strategy should tell you as much about the medical practices you should not pursue as those you should. You can use your refined strategy to help locate medical practices, seek investors and lenders, assess the value of practices, and structure deals. Most importantly, as you get caught up in the heat of the chase, it will help you to assess whether the deal that you’re working on is really going to be right for you.

The challenge is to stay true to your strategic direction, not allowing yourself to be distracted by acquisitions that don’t keep you on the intended path. Physician owners often make mistakes here. All the work you do to meet and evaluate practices, only to walk way, is not wasted. It’s part of staying true to the thesis and testing and achieving your long-term vision for your business.


Contact ABISA for healthcare consultancy support or speaking engagements.

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Negotiation Tips for Physicians

Negotiations are essentially human interactions seeking to discuss deals.  Physicians often call me when they want assistance negotiating a deal (perhaps for a merger with another practice, an acquisition by a hospital, a partnership with private equity, or even as part of internal physician governance matters).  Sure there is experience involved, but these are learned skills which everyone can practice and benefit from over time.  This article will cover just some of these tactics and skills which physicians may want to utilize the next time they find themselves in need of negotiations.


First, note that it is common to feel like you are “bad at negotiating” as indeed the very idea of negotiating often makes many of us feel uncomfortable, awkward or anxious.  Fundamentally, negotiation is actually not about money, or deal terms, or even “winning”, but rather about creating a relationship where both sides get the best result.  The central rule of every negotiation is to create agreement between parties with different interests and objectives. All that’s required of you is the ability to provide value to the other party and the willingness to step out of your comfort zone to get things done.


Jumping straight into negotiations is ill-advised.  Before you start negotiations, you need to have a clear idea of what your priorities are. There are lot of ways to organize these, but the easiest way is to rank what you want from highest to lowest priority as this helps you stay clear on exactly what’s most important for your specific needs. It is easy to enter a negotiation thinking one thing, only to agree to something far less than you had hoped for. By writing down a list of your priorities in order, you can be sure the items at the top of the list stay in place, and you only compromise on the lower items.

Once you have a solid understanding of your priorities and those of the other party, you need to create the offer.  I have found that most physicians discover this during the negotiation process, but you’ll be more powerful if you can plan this in advance. The more prepared you are before you walk into the negotiation, the better you will be able to make your decisions. Doing your homework will give you ideas on exactly what the other party wants and needs. If you have to make a decision on the spot in your negotiation, you’re going to struggle to make the right choices each time. Instead, decide ahead of time exactly where you’re willing to compromise, and where you’re firm.

Equally important is to remember that price is not the only factor.  For example, if you are merging your practice with another entity and you have nurse practitioners currently in your group, it may be very important that those personnel are maintained in the transition.  Or, if you are allowing another physician to buy into your practice, you may want to maintain some control over certain voting rights.  Perhaps your practice maintains a presence at skilled nursing facilities and as part of the sale of your group to the hospital, you want to be able to continue to see patients at those nursing homes.  These are all illustrations of items that have nothing to do with the “negotiation price”.

Walking away

Based on your strategy, you should have some firm “lines in the sand” at which you are willing to walk away from the deal.  To be clear, this is not that you must have everything your way, otherwise it would not be called negotiation.  However, you have to know what your deal breakers are. If you don’t draw a firm line in the sand before you invest your time and energy into a negotiation, you are at risk of eventually losing track of what is good for your practice and will end up making concessions that hurt your own interests. Not all deals are meant to get done.

To go a step further, think about what the other party’s walk-away point is too. So often, we get caught up in what we need and what we want. But think about what is going to happen if the other party does not get this deal done, because that allows you to find out where they are flexible and where they are not.


To be blunt, close your mouth and just listen.  Using silence in negotiations is a skill. Don’t go into a negotiation feeling like you should do all the talking. Sometimes the best thing you can do when negotiating is to keep quiet. For example, if the other party presents a ridiculously bad offer then waits for your response, just keep your mouth shut and let them drown in awkward silence.

When you want your point of view acknowledged, acknowledge theirs first. You should be listening and asking lots of questions. To be fair, this is where experienced consultants add a lot of value because they have seen many deals and know which questions to ask. The goal is to understand what the other party’s circumstances are. What are their constraints? What are their timelines? What are they up against? It will help you frame how to get to the right results. When you acknowledge their point of view first, it helps bridge the gap and they will be more receptive to hearing your point of view. Remember to listen carefully for potential flexibility the other party may have.

Maintain emotional control

Oftentimes, negotiations become heated. While there are ways to de-escalate them, it’s much easier to keep a steady composure no matter what happens. My suggestion is to remain steady throughout the negotiation and look to perceive exactly what the other party is communicating. You should strive to keep both positive and negative emotions in check.  Also, clarify any communication you don’t understand immediately so that your emotions don’t run wild based on your own misinterpretation.

Never negotiate alone

Even if you opt not to use a consultant, make sure you do not negotiate by yourself.  Negotiations consume time and energy and the longer you have been engaged in the process, the more emotionally invested you become in making a deal happen.  No one is immune to this, which is why it is important to have someone else with you during the discussions.

Final thoughts

Negotiations in the healthcare space can be difficult to manage properly, and are often twisted with misunderstanding and miscommunication.  Unfortunately, when it comes to negotiations we usually think we’re better than we are, and we end up settling in the negotiation process. But that doesn’t need to be true for you and hopefully you have picked up a few tips in this article.

Lastly, keep a perspective on the fact that you may continue to be practicing in the same community after your negotiations (whether they were successful discussions or not). While it may make sense to be firm in the midst of the negotiation, always have a limit on how tense the negotiation is (another good reason to have a calm-headed consultant by your side).


Contact ABISA for healthcare consultancy support or speaking engagements.

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