6 Tips for Selling Your Practice to a Corporation
The corporation played to these traits. It knew from the outset that what the parties really were negotiating was a short-term purchase price for the physicians' practice. Little else of significant value to the physicians was being negotiated because the company was not actually committing to anything else other than payment of salary.
Caveat venditor. "Let the seller beware."
After the first full year, when the physicians learned that according to the company, their practice showed little or no profit and that the physician would be paid no bonus, many sought legal advice. The legal advice: the physicians had no legal recourse. The non-compete clauses—fair provisions under the contract terms that the doctors thought they were agreeing to, but disastrous under the terms (or lack thereof) of the actual contract—were broad, tight, specific and ironclad.
Most physicians were even barred from practicing medicine within the geographical area that they lived. And under the equally ironclad confidentiality clause, the doctors could not publicly discuss their situation or, for that matter, anything else of significance about the corporation; if they did, they would be subject to huge fines and penalties.
What had appeared to the physicians as a mutually beneficial situation turned into a nightmare for them. They lost their practices, lost money and took years to recover. They had no legal recourse. And they could not even warn others. The corporation could, and did, continue on with impunity. It used its strategy successfully in numerous instances.
In retrospect, it is clear that the physicians were victims of what, at its essence, is a chasm between the respective norms of two opposing cultures. Medicine is, after all, the ultimate healing art; its essence, its purpose, is altruistic. Business—at least the predominant culture of business—is, well, not. Unlike physicians, the corporation and its top executives, non-physicians all, were involved in the practice of medicine solely to make money; the medical practices, and the very practice of medicine, were just commodities.
What could the physicians in this particular saga have done differently to get a better contract? What can other physicians learn from the mistakes these physicians made?
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