We can normally value your practice by obtaining some basic information and talking with you briefly about your goals. Both parties will sign a non-disclosure agreement (or NDA) to protect our mutual interests. Then there are just four data request items:
- Last three years of financials - the purchase price is a multiple of net earnings, so understanding owner compensation is helpful
- Collections and patient visits by provider
- Procedure mix by CPT
- Collections by payor category (Medicare, Medicaid, BCBS of SC, other commercial, self-pay)
Typically, it takes 60 – 90 days from start to finish. We recognize that in many cases you/your partners are busy seeing patients, and we strive to make the process as efficient and simple as possible.
In general, if you are the sole owner of a small practice the process takes approximately 60 days of “due diligence” to complete (including wiring sale proceeds to your account) from the date you sign a letter of intent. If there are multiple partners, and your practice is larger we estimate a 90-day period.
As noted above, we determine purchase price largely based on cash flow, or net earnings of your business, after taking into account all business expenses including doctor compensation. To put this in simple terms, we offer a multiple of the earnings stream of your business.
This is similar to how you invest in public company stocks, which are valued on a price to earnings basis. The value of your company, like that of a stock, is unique and depends on a number of factors, which we can elaborate on.
The typical structure of a deal with FCP is the holding company will purchase substantially all of the assets of your practice. We seek to structure every transaction compliantly and as tax efficiently as possible. The details depend on how you and your partners set up and have operated your practice.
The documents to be signed to complete a transaction are: (1) a definitive purchase agreement and (2) related documentation (including assignment of payor contracts, equipment leases and real estate leases, as applicable), and (3) satisfactory employment agreements with you and key providers.
The purchase price, subject to satisfactory completion of financial and operational due diligence, is based on our assumed minimum historical pro forma EBITDA reflected in the LOI. A majority of the proceeds will be delivered at closing in cash. The remaining proceeds will be paid over either a one- or two-year period. To ensure our interests are aligned, we will afford you the option of rolling a portion of the proceeds to be re-invested in the form of FCP common stock, which would be tax-deferred pending a future liquidity event for FCP.
In addition to proceeds from the sale of the business, FCP employs seller providers at competitive salaries with bonus structures that enable providers to share in the growth of the practice. FCP also offers competitive health, medical, dental, and 401(k) plans to all employees who meet standard eligibility requirements.
Yes. Transaction proceeds can be re-invested as equity “rollover” and, annually, FCP holds an open enrollment period for all of its providers. Accredited investors are eligible for investment in FCP.
FCP is majority owned by Varsity Healthcare Partners, a healthcare-focused private equity group specializing in multi-location healthcare providers. In addition, FCP is owned by the doctors employed across all of our markets.
No. Although a production-based compensation model incentivizes you to see more patients, and the FCP efficient model makes it easier for you to practice medicine by reducing administrative burdens, FCP is happy to accommodate such a request.
Yes, initially. Our eventual goal is to maintain one PM and EMR system. However, FCP recognizes the complexities in conversions. The FCP billing team is able to handle multiple EMRs at the same time but it is not ideal over the long term. Over time, we will migrate all practices to a single platform. The speed of that migration for your practice will depend upon you, and your current systems.
Nothing; they will remain in place. We do operate centralized services for many of the back-office functions, as the goal for us all is to minimize administrative overhead costs. There are substantial economies of scale and operational efficiencies obtained by co-locating staff involved in billing, for instance. We will work with you to determine how to best make any adjustments deemed necessary.
No. We assume all existing compensation arrangements.
FCP offers competitive benefits, which includes health insurance coverage, dental, and a 401k plan. During your first year with FCP, it is anticipated that no changes will be made to any benefits. If you wish to join one of our plans, we can bring you and your organization on to the 401k plan within 30 days, and enroll staff in the health and dental plans in a similar time frame. However, you do not need to cancel your existing plans, nor scale back in any way in your first year with FCP.
If you own your real estate, FCP will lease it from you. Additionally, through our partnership with a local real estate fund, FCP has the opportunity to purchase the property from you, if desired. If you rent your real estate, FCP will assume responsibility for the lease.
Family Care Partners Holding, LLC is the holding company in which your stock will be in. Colonial Family Practice is the clinical arm, and Family Care Partners Management, LLC is the administrative arm.
Yes. FCP will invest in your practice and spend meaningful capital on marketing and other resources. In many cases, billing for your services under our payor contracts will result in increased collections, and therefore higher compensation for our acquired doctors.
FCP operates many practices utilizing their historic brand names. We understand that healthcare is local and your brand has significant value. We will work with you to ensure the practice leverages the best brand awareness.
Shortly before close, we will expect you to notify your staff of the change of ownership so we can introduce our organization. FCP will never inform your staff of our discussions unless you give us permission; you and your advisers are our only points of contact.
Yes. FCP has setup its ACO, which will go live on January 1st, 2017. All acquired practices will be able to join and participate in its upside.