Arriving at the decision to go into independent practice can be tough for Nurse Practitioners.
It’s understandable because many things must be considered and explored; the possibilities are endless, and so are the unknowns.
The decision is further complicated by choosing between buying an established practice vs starting one from the ground up.
While most Nurse Practitioners start their own practices, some come across an opportunity to buy an established one.
They could have been looking to purchase a practice or knew someone who wanted to sell. Frequently, the seller is ready to retire or needs to make a change in their life, which requires selling the practice.
A Good Idea?
At first glance, purchasing an existing practice may seem like a great idea. But at the same time, it raises a host of questions because it could come with its own problems and challenges.
The bottom line is that both options come with unique opportunities and challenges.
However, making an informed decision should be easier once you know what to look for and consider.
Pros & Cons of Buying a Practice
This article covers the pros and cons of starting your practice vs buying an established one.
For the record… I will try my best to be as thorough as possible. However, I encourage you to do your due diligence when evaluating the opportunity of purchasing a practice vs starting your own.
As mentioned earlier, buying an existing practice is tempting, provided it has most of everything you may want and need in a practice.
- Acquiring a practice provides an established patient base and immediate cash flow. This would be a significant advantage over the usual slow start-up phase most new practices experience.
- An established practice provides an instant and ready-to-step-in infrastructure: equipment, supplies, furnishings, systems & procedures, protocols, and even staff… all of which take time to establish, develop, streamline, or hire.
- Buying a practice provides you with a proven and profitable practice model; all you have to do is continue with it. All of it translates into less uncertainty and stress for you.
- Buying an established practice provides you with working marketing and referral systems you can continue to use and grow your practice.
- Depending on the type of practice and the setup, chances are billing, follow-up, and collection processes are in place, ready for you to continue.
While purchasing an established practice could be a significant shortcut for you, it could also open a host of potential problems.
- There is the possibility the practice is overvalued, meaning you could pay more than it’s worth. This can be offset by the appropriate professional’s diligent review of all practice financials. Even if you know the seller, are familiar with the practice, or even have worked in the practice… always arrange for a thorough professional review of all financial records.
- You could get stuck with existing liabilities, including old debts, outstanding loans, equipment leases or financing, interest payments, etc. A thorough examination of financial records and existing contracts should significantly reduce such risk.
- You might experience fluctuations in revenue because the practice is overly dependent on the previous owner/provider. This can be avoided with a transition plan. During the transition period, the current owner could work side-by-side with you so that patients can get to know you and stay with the practice.
- You could run into staffing issues. If you are a previous employee turned owner, you may run into resistance from your former co-workers. They may resist changes or may disagree with your vision. Additionally, you may experience employee turnover, which could be costly and disruptive.
- Problems with patient retention… established patients may not stay with the practice because of a change in ownership or provider, a dislike of the new policies and procedures implemented by you, or differences in practice styles between you and the former owner… and any number of other reasons.
- Existing leases and mortgages may have to be renegotiated or refinanced, which may be challenging.
- Existing vendor and supplier contracts may have to be renegotiated if not favorable.
- Buying an existing practice may limit your ability to shape it according to your vision, goals, and dreams.
- Limited growth potential… the practice might be in an area that has experienced high growth and competition, which could limit your ability to expand the practice in the future.
While this is not a complete list of all the problems you might encounter when buying a practice, it certainly will get you thinking and looking in the right places.
Pros & Cons of Starting a Practice
Now, let’s look at the pros and cons of starting a practice from the ground up.
Most Nurse Practitioners build their practice from the ground up because of preference or because the option to buy is not readily available.
- While buying an established practice may limit you when it comes to shaping the practice to your vision, starting your practice provides full control and complete customization of everything in your practice.
- You are free to establish the practice’s culture, choose the location, design the workflow, and implement the latest technology based on your preferences.
- You have complete flexibility in the services you want to offer. You have the freedom to specialize or diversify the services you provide and tailor them to the needs of your target community.
- You build your practice from scratch based on your vision and ideas. Most gain a profound sense of accomplishment in building something from nothing. You can create a practice that aligns perfectly with your values and approach to patient care.
- There are no pre-existing issues… only what you bring to the table. Starting anew means you don’t inherit any problems an existing practice might have, such as outdated equipment, unresolved legal issues, or a tarnished reputation.
Everything has pros and cons, including starting a practice.
So here are some of the more significant drawbacks when starting a practice from the ground up. However, not everyone will experience or agree with the listed disadvantages.
Depending on your level of business expertise, financial situation, and timeline… you may see things differently.
At any rate, here are what most would consider the drawbacks of starting a practice from scratch.
- The initial costs may be significant, and there is some financial risk. The initial expenses include leasing or buying space, purchasing equipment, hiring staff, and marketing your new practice.
- It may take a significant amount of time to do the initial market research to ensure your practice idea is viable, that there is demand for your services, and that you can make the numbers work. However, once you have clarity, you can move toward your goal without delay.
- Building a Patient Base: Attracting new patients can be slow, tedious, and challenging. Creating effective marketing strategies to fill and grow the practice will take some time and resources.
- Creating effective and efficient operational and administrative systems from scratch takes time, diligence, and expertise.
- Licensing, legal, and regulatory issues… navigating federal and state regulations, setting up billing, dealing with insurance, getting credentialed, etc., can be challenging without an existing framework to go by.
- Adequate cash to stay in practice… there will be initial costs to run the practice, pay the overhead, start seeing patients, set up and do the billing, collect patient payments, etc. You must have enough cash to break even and eventually achieve profitability. The time it takes to get there depends on multiple factors and is different in every situation.
So, making a choice… what should you do?
Unsurprisingly, both paths have distinct advantages and disadvantages.
On the one hand, starting your practice offers you freedom and creativity, but it comes with financial exposure and growing pains and takes time.
On the other hand, buying an existing practice gives you immediate cash flow and drops you into a known framework. However, it may also come with hidden problems, restrictions, and limitations.
As you can see, there is no clear-cut path.
What works for you may not work for me. What is right for you may not be right for me.
So, in conclusion, I‘d like to say this…
As you consider going into independent practice, think about your personal goals, financial situation, risk tolerance, and long-term vision.
Build your practice around the life you want. It may take some time, but you will get there.
- Take time to uncover your “Why;” it’s essential.
- Research the opportunity before you, and don’t rush!
- Make a plan and follow it!
- Lastly, take care of yourself along the way.
What do you think about buying a practice vs building it from scratch? Tell us if you think one is better than the other… leave us your comment below; we’d love to know what you think!