It seems all the rage currently: the few medical practices left standing after the wave of consolidation with health systems are heavily courted by private equity investors, particularly in gastroenterology, dermatology and radiology.
But moving out, or selling out, doesn’t always equate with moving up in life. Just ask the health law savant Billy Joel. Billy Joel sang in “Movin’ Out”:
If that’s what it’s all about
Mama if that’s movin’ up
Then I’m movin’ out.
I’m movin’ out!
As I wrote in this article that was published in the most recent ACG Magazine (the magazine of the American College of Gastroenterology), selling out to private equity could be a lot like Billy’s characters’ experiences in “Movin’ Out.” Just because everyone else seems to think selling out to private equity is “movin’ up” doesn’t mean it’s right for you.
In the song, Sergeant O’Leary, after walking the streets, works at Mr. Cacciatore’s as a side gig and earns enough money to trade in his Chevy for a Cadillac. But “he can’t drive with a broken back.”
Don’t get me wrong, the payout from selling to private equity can make dreams come true. But, as with Sergeant O’Leary – who worked hard to buy the Cadillac but was left unable to drive — at what cost? The cost is usually predictible to an experienced healthcare attorney who reviews the sales documents.
Don’t be stuck “polishing the fenders” like Sergeant O’Leary. When considering a sale of your group, seek the advice of an experienced health care attorney during the first steps of the process so you understand what “it’s all about.”