Buying a medical practice in Florida

A physician practice sells visits and procedures, and someone other than the patient pays for most of them. The practice codes each visit and bills Medicare, a Medicaid managed care plan or a commercial insurer, each at its own contracted rate, and the patient pays a copay or deductible. Some practices add cash income from memberships (concierge or direct primary care), cosmetic services or physicals, and some earn quality bonuses under contracts that reward keeping patients healthy.

Primary care and chronic-disease practices see the same patients several times a year, so much of the revenue repeats. Specialty practices depend more on referrals from other doctors. Many also earn from services done in the office, such as lab draws, imaging, infusions or minor procedures.

The team is usually one or more physicians, often with nurse practitioners or physician assistants, plus medical assistants, front desk staff, and billing staff or an outside billing service, all run by an office manager. You'd be buying the patient relationships, the insurance contracts, the electronic health records system, the staff and the location. The revenue follows the clinicians, so what matters most is who keeps seeing patients after the sale.

• More than one clinician seeing patients, so the practice doesn't stop when one person leaves.
• Clean billing: claims paid on the first try, coding that holds up to review, and no open audits by Medicare or insurers.
• A mix of payers (Medicare, Medicaid plans and insurers), with no single one large enough to hurt you if it cuts rates.
• A steady base of returning patients with scheduled follow-ups.
• Referral relationships with many doctors and hospitals, not one.
• An office manager who runs the day without the physician owner.
• In-office services, like lab or imaging, that earn their keep and are set up within the referral rules.
• A records system the staff use well, with a patient portal and online scheduling.

Physicians' licenses (from the Board of Medicine or the Board of Osteopathic Medicine) are personal and never transfer.

Florida doesn't reserve medical practices for physicians, but who owns the practice decides which license it needs. Under the Health Care Clinic Act (section 400.9905), a practice is exempt if it's wholly owned by licensed health care practitioners, or by one practitioner plus a spouse, parent, child or sibling, with the practitioner supervising. Medicaid providers and some large groups are exempt too, though billing auto insurance may still require a clinic license. Any other practice needs a health care clinic license from AHCA (the Agency for Health Care Administration), a physician medical director who accepts legal responsibility in writing, and fingerprint screening of anyone who owns 5 percent or more. Ask AHCA which applies.

Pain-management clinics must register with the Department of Health (or hold an exemption) and be either owned by physicians or licensed by AHCA (section 458.3265). Offices that perform Level II or III surgery must register too (section 458.328).

If the practice holds a clinic license, a new tax ID or a change in 51 percent or more of the ownership needs written notice from the seller and an application from the buyer at least 60 days ahead. Medicare wants ownership changes reported within 30 days. A new tax ID generally means a new Medicare enrollment (42 CFR 424.550) and new credentialing (approval to bill) with each insurer.

Start with how much of the practice's collections come from the selling physician's own work, and how long they'll stay. Then hire an independent coder to audit a sample of charts: past overbilling can become a repayment demand, and how the deal is structured affects whether that debt follows you. Check every clinician against the federal exclusion list, which names people barred from Medicare and Medicaid.

Read each payer contract to see whether it can be assigned to you, and plan for a gap in cash while new enrollments and credentialing go through. If any referring doctor owns part of the practice, or the practice sends patients to labs, imaging or therapy it owns, have a health care attorney check the arrangement against federal law and Florida's Patient Self-Referral Act (section 456.053). Ask about malpractice claims and who pays for the seller's tail coverage (insurance for claims filed after a policy ends). Work out with your attorney how patient records will transfer and who will keep them.

• How much of the practice's collections come from your own visits, and how long would you like to keep practicing here?
• Which insurers make up most of your revenue, and when did you last renegotiate your rates?
• Who handles billing and coding, and has the practice had any audits or repayment requests?
• What brings in revenue besides office visits?
• How do new patients find you, and which doctors or hospitals send you the most?
• Who owns the practice today, and does it have an AHCA clinic license or rely on an exemption?
• Do your other clinicians have contracts, and are any of them planning to leave?