Interest in urgent care clinics has been growing rapidly. Not just from consumers, but from entrepreneurs looking to break into the lucrative healthcare industry. According to the latest report from the Urgent Care Association, there are nearly 9,000 urgent care centers in the United States. and reflects a 19 percent increase between 2015 and 2018.
Healthcare spending is projected to grow at an average rate of 5.5 percent annually through 2026 — one percentage point faster than the projected growth of the national gross domestic product during that same time. Healthcare is anticipated to account for nearly 20 percent of the GDP in the next seven years. Urgent care centers like American Family Care make up a $27 billion part of that pie.
Urgent Care Opportunity
With profitability potential like that, now is a great time for entrepreneurs to enter the market. Rather than start from scratch, one smart option is to look for an urgent care for sale. There are several things to consider when entering into an acquisition, whether the urgent care is an independent clinic or part of a franchise system.
Due Diligence – In addition to inspecting the facility, request documents to validate all representations and details included in the selling memo, which presents facts about what the business is and does and what makes it an attractive purchase opportunity without revealing sensitive information the ultimate buyer won’t want non-buyers (especially competitors) to know.
Due diligence documentation includes:
- Medical malpractice claims
- Any federal and state investigations
- Licenses and certifications for both physician and practice
- Third-party contracts (payors, management, etc.)
- Covenants not to compete
- Medicare billing
- Healthcare compliance (HIPAA, HITECH act)
- Insurance compliance
Two other key pieces of information to request include six months of unaudited financial statements and monthly purchasing invoices. This can help determine if money mismanagement within the business is a reason for the sale.
Other considerations include:
Acquisition Structure – Determine the arrangement upon which the acquisition of the company will be organized. Will it be an asset sale or a stock sale? Buyers generally prefer asset sales since the liabilities remain with the seller. Assets may include property, physical inventory, brands, customer lists, and intangible products.
Acquisition Target Valuation – Enlist a valuation expert; determine profitability, payer mix, reimbursements, growth potential, staffing costs, patient volumes, location and visibility, etc.
Create Closing Timeline – Acquiring an urgent care can be a lengthy process, so expect a minimum six months to a year for the final closing.
After-Closing Integration – Determine if the seller will stay on in the business and in what capacity.
This is just a basic overview of the first steps to follow in the purchase an existing urgent care for sale, whether it is an independent clinic or a franchise.
However, buying a franchise urgent care for sale might be an easier way to enter into the healthcare industry. Once the sale is complete, this is where the two businesses become vastly different.
If the purchase involves an independent urgent care for sale, the buyer must be good at everything the business will need to succeed, including marketing, human resources, billing, payroll, and more.
People who buy a franchise urgent care for sale will have the extensive support for those crucial business tools. A franchisee also enjoys a competitive advantage with brand recognition. Patients in need of urgent medical care typically want to go somewhere that they trust they’ll receive quality care.
Independent urgent care clinics may have a harder time keeping up with changing laws on the national, state, or local level. Franchises have the money and leverage to lobby and advocate for favorable laws — things that independent practices just don’t have.