1. A physician group should conduct extensive “reverse due diligence” before entering into a private equity (PE) partnership.

    Important things to consider include:
    - the PE firm’s financial ability to close the transaction with the physician group;
    - the physicians’ comfort level with the PE firm’s experience, integrity, culture, vision, and fit as a partner for the group;
    - and the PE partner’s specific experience and track record investing in physician services.

    You should speak directly with multiple physicians who have partnered with the investor in the past to assess all of these factors.

    Check out our other top considerations for physician groups evaluating PE.

    The Thought Leaders in Health Law® video series tracks the latest trends in multiple areas of the health care and life sciences industries, featuring attorneys and advisors from Epstein Becker Green and EBG Advisors.

    Visit ebglaw.com/thoughtleaders

    These materials have been provided for informational purposes only and are not intended and should not be construed to constitute legal advice. The content of these materials is copyrighted to Epstein Becker & Green, P.C. THOUGHT LEADERS IN HEALTH LAW® is a registered trademark of Epstein Becker & Green, P.C. ATTORNEY ADVERTISING.

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  2. Physician groups can keep their practice competitive–and on the “cutting edge”—by partnering with a private equity (PE) platform.

    The health care marketplace is evolving, and it takes substantial investment in infrastructure, such as IT, to stay ahead.

    A PE investor provides capital to acquire important strategic initiatives, like cutting-edge medical equipment and technologies, advanced electronic medical record capabilities, data analytics, new offices, and ancillary services.

    The PE investor’s existing corporate infrastructure may immediately provide some of these benefits.

    Stay tuned for more top considerations for physician groups evaluating PE.

    The Thought Leaders in Health Law® video series tracks the latest trends in multiple areas of the health care and life sciences industries, featuring attorneys and advisors from Epstein Becker Green and EBG Advisors.

    Visit ebglaw.com/thoughtleaders

    These materials have been provided for informational purposes only and are not intended and should not be construed to constitute legal advice. The content of these materials is copyrighted to Epstein Becker & Green, P.C. THOUGHT LEADERS IN HEALTH LAW® is a registered trademark of Epstein Becker & Green, P.C. ATTORNEY ADVERTISING.

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  3. A private equity (PE) transaction can give a physicians group more room to focus on clinical care as they relinquish much of the administrative and practice management duties. A PE partnership allows physicians access to the PE platform’s seasoned and sophisticated management team and capital.

    The team can provide managed-care contracting expertise, advanced electronic medical record capabilities, excellent billing and collection teams, financial management, HR executives, compliance staff, and more. Not only will significant cost savings be enjoyed, but operations will be improved and expanded.

    On the flipside, PE investors don’t want to tell physicians how to practice medicine. In fact, in many states, interference of that kind is illegal. PE investors will keep their focus on improving the business aspects of the practice.

    Stay tuned for more top considerations for physician groups evaluating PE.

    The Thought Leaders in Health Law® video series tracks the latest trends in multiple areas of the health care and life sciences industries, featuring attorneys and advisors from Epstein Becker Green and EBG Advisors.

    Visit ebglaw.com/thoughtleaders

    These materials have been provided for informational purposes only and are not intended and should not be construed to constitute legal advice. The content of these materials is copyrighted to Epstein Becker & Green, P.C. THOUGHT LEADERS IN HEALTH LAW® is a registered trademark of Epstein Becker & Green, P.C. ATTORNEY ADVERTISING.

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  4. A private equity (PE) transaction can help physicians “hedge” the uncertain future of private medical practices in an ever-changing and regulated industry. Uncertainty in the industry includes changing reimbursement models, the prospect of “Medicare for All,” increasing regulation/compliance, and the need for advanced IT and other infrastructure investments.

    With a PE investment, some of this risk is mitigated because PE brings in an experienced and sophisticated management and “C-suite” team and the ability to be part of a large platform with hundreds of other physicians in the same specialty, experience in value-based care, and significant economies of scale for expensive EMR and other infrastructure.

    But not all uncertainty can be eliminated. For example, when the PE partner eventually “exits” its investment who will the new buyer be? How will it impact the practice?

    However, stability can be its own hedge. Any new buyer will likely be wary of changing a well-run and managed enterprise without the continued support of its physicians.

    Stay tuned for more top considerations for physician groups evaluating PE.

    The Thought Leaders in Health Law® video series tracks the latest trends in multiple areas of the health care and life sciences industries, featuring attorneys and advisors from Epstein Becker Green and EBG Advisors.

    Visit ebglaw.com/thoughtleaders

    These materials have been provided for informational purposes only and are not intended and should not be construed to constitute legal advice. The content of these materials is copyrighted to Epstein Becker & Green, P.C. THOUGHT LEADERS IN HEALTH LAW® is a registered trademark of Epstein Becker & Green, P.C. ATTORNEY ADVERTISING.

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  5. Partnering with a private equity (PE) investor can help physicians monetize the value of their practice.

    Why treat your practice differently than other assets in your retirement portfolio?

    A PE transaction will provide an up-front cash payment and/or rollover equity in the PE platform. Up-front cash, usually 70-80% of the “real value” of your practice, is calculated on a multiple of the practice’s free cash flow or earnings before interest, taxes, depreciation, and amortization (or “EBITDA”). The remaining balance of purchase price (20%-30%) is usually paid in the form of rollover equity.

    Rollover equity converts to additional cash payments upon a secondary sale to another investor down the road. Further, many PE transactions are structured so that if a physician retires, becomes disabled, or dies, his/her rollover equity is purchased at its then fair market value.

    Stay tuned for more top considerations for physician groups evaluating PE.

    The Thought Leaders in Health Law® video series tracks the latest trends in multiple areas of the health care and life sciences industries, featuring attorneys and advisors from Epstein Becker Green and EBG Advisors.

    Visit ebglaw.com/thoughtleaders

    These materials have been provided for informational purposes only and are not intended and should not be construed to constitute legal advice. The content of these materials is copyrighted to Epstein Becker & Green, P.C. THOUGHT LEADERS IN HEALTH LAW® is a registered trademark of Epstein Becker & Green, P.C. ATTORNEY ADVERTISING.

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