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Purchasing A Practice
Question:
I decided to purchase a practice from a solo practitioner relocating to another state. I relocated to the new area, obtained a license for the state and began working already as an employee with views of finalizing the purchase end of February. However despite multiple attempts via different venues I have not been able to secure financing from a bank to purchase the practice. I have one more venue to use but it is my last venue. If it turns me down for financing, can I be subjected to any legal action? If so, what can I do to protect myself and other assets I may have?
Response:
As always, the Devil is in the details. That is, what does the purchase agreement specifically provide for in this instance? The purchase agreement will virtually always have conditions to closing, of which the failure to satisfy permits the other party to terminate the agreement. The issue then arises as to whether the failure to meet the condition (i.e., obtain financing) was wholly the decision of the bank, or was the applicant somehow partially responsible?
As an alternative, is the seller willing to finance the sale directly with the buying physician, using the assets and accounts receivable as collateral/security? If the seller understands that the agreement may terminate without a closing due to no fault of the buyer, that may be a valid option. As far as the physician protecting his assets - at this point the issue is moot inasmuch as the document is already signed. However, suffice it to say that all physicians should use competent health counsel in asset protection prior to getting involved in specific contracting issues.
The preceding was prepared by John Powers, JD, an attorney with the healthcare practice of Husch & Eppenberger. It is prepared as a source of general information concerning recent health law developments and is not legal advice or an opinion. No action should be taken in reliance upon this information without obtaining the advice of a knowledgeable healthcare attorney.
Attorney John Powers has partnered with Cejka Search to address healthcare legal issues in our Legal Counsel feature on cejkasearch.com. His areas of expertise include hospital and medical practice issues, physician recruitment transactions, managed care counseling, development of MSOs, IPAs, and managed care delivery systems, antitrust counseling to healthcare clients, insurance matters, physician-hospital contracting, medical staff matters, and bioethical issues.
If you have a question or comment for Mr. Powers, please send a message to: info@cejkasearch.com