Selling a solo practice

Q: I have a solo private practice that was appraised at over $1 million in 2005 and income is still very high despite recent reimbursement cuts. I have been trying to recruit a replacement physician to take over my practice However, no one seems to want to practice solo. I am beginning to think my only option is to close the practice. Any ideas on other options I could explore or better ways to find a buyer?

A: The ability to sell a practice is contingent on finding someone who wants to be where you are, when you want to sell. Their motivation is often for nonfinancial reasons, such as having nearby family, or personally desirable recreational or social activities. In addition, "star" high-performing practices are often more difficult to sell than middle-of-the-road practices, because candidates fear that they can't "fill the seller's shoes" or afford them. Lots of data show that "star" practices frequently sell for less than what appraisers and owners logically think they are worth because of that fear. Further, your appraisal certainly is outdated, and we don't know if it was accurately performed in 2005. Any bank lending to a buyer would want data from the last 90 days. We also don't know if you effectively marketed the practice to potential buyers. Most candidates now come via Internet searches. As a possible solution, perhaps you could employ one or two physicians to create a small group, then sell to them or a third at a later date, or just employ physicians and remain a passive owner. It's better to sell the practice for nothing and get rid of the records-custodianship burden, than bear the financial and legal cost of custodianship for decades.