Succession Planning for Medical & Pharmaceutical Practices

Following the aftermath of the COVID-19 pandemic, burnout rates of employees in the healthcare industry have skyrocketed to scary rates. Therefore, it has become vital for private medical practitioners to start considering developing a succession plan in order to avoid the loss of an essential team member. As well as this, succession plans also serve to ensure sustainable business growth, healthy profits and a productive workforce that has the ability to care appropriately for your patients. Failure to do so may see a reckless transfer of assets that can negatively impact the long-term viability of your medical or pharmaceutical practice. 

Why do I need to consider succession planning?

• Ownership transition may be required at short notice as a consequence of illness, death or retirement of current owner(s)
• Continuity of care for patients may be heavily impacted if the transition isn’t a smooth one
• An increasing number of physicians are expected to retire in the next decade, making the market for the selling of medical/pharma practices extremely competitive

We understand that configuring and implementing a business succession plan can be a daunting task, especially at its initial stages, but our services will ensure you have everything in place to maintain the functionality of your medical or pharmaceutical practice throughout this process.

• Guidance in selecting a designated successor: Our team of qualified Financial Advisors have years’ worth of expertise and will help you assess the different options you have for the transfer of ownership. Careful consideration of the person(s) or entity who will inherit your business is vital in ensuring standards are maintained following succession. If you fail to do so, it may result in your medical practice being passed on to a person whose skills, dedication and willingness to embrace the responsibility are insufficient or lacking.
• Identification and implementation of training strategies: In the domain of healthcare, it is crucial that all positions are considered for succession planning. We will assist you in developing strategies to create a talent pipeline which will allow your employees to widen their skillsets and prepare better for the future. We will also help you in devising cross-training opportunities which simultaneously build employee retention whilst increasing worker efficiency.
• Creation of a buy-sell agreement: A buy-sell agreement is one of the most widely adopted legal arrangements in the medical and pharmaceutical field. The agreement allows you to make provisions that dictate what will happen when you decide to leave the practice. It enables you to identify who will own your practice, how shares will be allocated and at what price the shares will sell. At MPFS, we can help you take care of all those details in order to ensure a seamless transfer of ownership, even in unforeseen or unaccounted for circumstances.
• Arrangement of malpractice insurance: If your practice holds claims-made professional liability insurance, then the exit plan must include payment of the malpractice tail, which is sometimes waived by some insurance providers. Failure to purchase the tail coverage may result in uninsured liability for which claims could be made following your retirement/exit.
• Management of real estate: If ownership of premises/space is linked to the practice, then you will be required to include a buyout provision in the exit plan. This only applies in cases where ownership of real estate is connected to the professional corporation. In situations where offices are leased from third parties, our team will help you ensure the new successors are equipped to deal with the real estate owners and maintain a positive working relationship.