Top 5 Tips for Selling and Transferring a Medical Business for Sale
In our office we work with all different types of businesses and every industry is different. In fact, each business we have ever sold has been unique. When we work with selling a medical based business, there are some major items that need to be dealt with at the time of a transaction. It is always important that the buyer, seller, and broker understand these items so they can handle them when the time comes. Otherwise, the deal could potentially fall through.
1. Transferring a Medicaid License:
One of the aspects business brokers deal with when selling a medical business in Florida is working with state licensing, including Medicaid licenses. These licenses are handled through AHCA (Agency for Health Care Administration). Working with AHCA http://ahca.myflorida.com , is always interesting. Typically, there is a 60 day transfer with this license. Keep in mind However, that it is 60 days from the time AHCA receives the application. When filling out this application, the Buyer must be absolutely precise and not miss anything on the transfer form. If the Buyer looking to transfer the license misses something on the form, AHCA can reject the form and the Buyer has to resubmit the application once the mistake has been corrected. This mistake could take up to an additional 6 weeks to be corrected. ACHA requires other items such as finger prints from the person looking to acquire the license. But sometimes the finger prints are too light and they get rejected. If that happens, you must get fingerprinted again and then that is another 6 weeks. At Crowne Atlantic Business Brokers, we suggest using FedEx with this agency so you always have a confirmation. In the past, we’ve advised our clients to send mail with return receipt, to fax, and to scan and email all communication to AHCA to ensure some form of delivery. If you the sale of your medical business requires a Medicaid License transfer, whether it is a Doctors office, home health agency, or another Medical business, plan on 90 days. Here is the link: http://www.fdhc.state.fl.us/MCHQ/Health_Facility_Regulation/HealthCareClinic/change_ownership.shtml.
2. Transferring a Medicare License:
As main street business brokers, we never promote using a stock sale to sell a business. However, if you want a business that has a license with Medicare and gets reimbursed by Medicare, this license is almost impossible to transfer. At the end of the day, many medical businesses use a stock sale purchase when they sell thus insuring that the Buyer continues to have access to the business’s Medicare License. To do a stock sale properly, both Buyer and Seller are recommended to obtain proper legal counsel and indemnifications on both the Buyer and Seller side. Obtaining a new Medicare license is not easy and often Medicare requires you to be operational for many months before reimbursing…and they don’t reimburse retroactively. You can see the 59-page CHOW (change of ownership) application here: http://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/downloads/cms855a.pdf.
3. Transferring Insurance Contracts:
If you contact Blue Cross and Blue Shield, and United and Cigna and such, they will all give you the same answer. The business is tied to the Tax I.D. number. Tax I.D. numbers are only transferrable with a stock sale. However, if you want to avoid a stock sale, many insurance companies will agree to work with medical businesses long as they qualify with the company’s standards.
4. Transferring Clients/Patients
Depending on the type of medical business, this transition may go fast or it may take a year or two. When very personalized medical businesses sell such as Dental Practice or Family Physician practices for sale, Sellers will often take on the Buyer as a partner and the transition takes place over a time frame of one to five years. A great tip is to keep the management, receptionist, and any other important staff members in place to help make for a smooth transition. Often the staff knows the patients, their spouses, their kids, etc, so it is always helpful for a new owner to keep them on. When transferring a business such as an MRI Facility for sale or a Rehab Business for sale, the most important thing for the Buyer to keep is the contacts that feed patients to that facility. Buyers need to be aware how the seller will transfer those important contacts. Often these contacts are not given out until the closing. The Seller may share a few possibly, but generally not the entire referral list.
5. Bank Financing for Medical Business Purchases
Banks love to finance businesses for Doctors. Though an SBA Guaranteed loan is difficult for some industries, it is easier to get approved for a medical business if you are a doctor or own other medical businesses.
At Crowne Atlantic Business Brokers, we sell all types of medical businesses, dental practices, medical practices, MRI facilities, rehab facilities, home care agencies, assisted living facilities and alternative health facilities as well. For a 360 Business Valuation on your medical business or for more information on how to buyer or sell a business, please feel free to call us at 407-478-4101 or www.crowneatlantic.com.