Buying a Medical Practice: 8 Questions Doctors Should Ask Before Signing a Deal

Buying a medical practice is one of the fastest ways to move into ownership, but it is also one of the easiest ways to inherit hidden risks if the right checks are not done before signing.

For doctors who are actively looking to buy a medical practice, the focus should not just be on price or patient numbers. The real decision comes down to whether the deal is financially sound, legally clean and operationally ready from day one.

If you are serious about purchasing a medical practice in Australia, these are the eight questions that should be answered before you commit to the deal.

1. Buying a Medical Practice: What exactly am I buying? Assets or the entity?

When you buy a medical practice, you need to confirm whether you are purchasing:

• the business assets only or
• the company or entity itself

This distinction directly affects risk, tax and finance structure.

An asset purchase generally limits exposure to historical liabilities, while a share or entity purchase may include both known and unknown obligations. Government guidance confirms that business purchases can involve acquiring assets or ownership interests and each structure carries different legal and financial implications.

What to confirm before signing:

• Full asset list including equipment and goodwill
• Any liabilities attached to the business
• Legal structure outlined in the sale agreement

2. Does the financial performance support the purchase price?

If you are planning on buying a medical practice, you cannot rely on headline revenue alone.

Buyers should review:

• financial records
• tax returns
• profit and loss statements
• cash flow liabilities

You should be reviewing at least 2 to 3 years of financials to determine whether the income is stable and repeatable.

Key Checks:

• Is revenue dependent on one practitioner?
• Are there one-off income spikes?
• Is the billing mix sustainable?

This is one of the most critical steps in understanding how to buy a medical practice properly.

3. Can the lease, licenses and accreditations transfer smoothly?

Location and approvals are core to the value of any practice. When buying a medical practice, you need to confirm that:

• the lease can be assigned
• licenses and permits are valid and transferable
• accreditations remain in place

Government guidance highlights that due diligence must include reviewing contracts, lease agreements and regulatory requirements before committing to a purchase.

What to verify:

• Landlord approval for the lease transfer
• Timing of licence transfers
• Any conditions attached to accreditation

4. Are any assets tied to loans or security interests?

A common issue when buying a medical practice in Australia is assuming equipment is owned outright. In reality, assets such as fitout, IT systems or medical equipment may be secured against loans.

The Australian government recommends checking whether business assets have debts registered against them through the Personal Property Securities Register, as these liabilities can transfer risk to the buyer.

What to confirm:

• PPSR search completed
• No outstanding finance on key assets
• Written confirmation from the seller

5. What employee entitlements will I inherit?

Staff are a major part of practice value, but they also represent ongoing liabilities.

When you buy a medical practice, you may inherit:

• annual leave and long service leave
• existing employment agreements
• contractor arrangements

Due diligence guidance confirms that reviewing contracts, employee arrangements and obligations is essential before purchase.

What to request:

• Employee entitlements summary
• Copies of contracts
• Clarification of employee vs contractor status

6. Is there any payroll tax risk in the practice structure?

Payroll tax is one of the most overlooked risks when buying a medical practice.

In many cases, contractor doctors may still fall under payroll tax rules depending on how the practice operates. This can significantly impact profitability after settlement.

What to assess?

• Contractor agreements
• Control over billing and operations
• State-based payroll tax exposure

This is a key part of how to buy a medical practice without unexpected costs.

7. How will Medicare, provider numbers and cash flow transition?

Cash flow continuity is critical from day one. When buying a medical practice in Australia, you need a clear plan for:

• Medicare provider number updates
• Banking details
• Practice ownership changes

If these are delayed, payments can be disrupted.

What to confirm:

• Timeline for provider number updates
• Medicare and billing setup
• Banking alignment before settlement

8. How will patient records and privacy obligations be handled?

Healthcare businesses carry strict privacy obligations.

When you buy a medical practice, patient data must be handled in line with Australian privacy laws.

Due diligence should include reviewing how records are stored, transferred and protected.

What to confirm:

• Secure data transfer process
• Access controls during handover
• Compliance with privacy requirements

Pre-Signing Checklist for Buying a Medical Practice

Before you move forward with obtaining a medical practice, make sure you have confirmed:

• Deal structure is clearly defined
• Financials are verified and sustainable
• Lease and licences are transferable
• PPSR searches are completed
• Employee liabilities are understood
• Payroll tax exposure is assessed
• Medicare and billing setup is planned
• Patient data and privacy are compliant

Government guidance reinforces that due diligence is essential to avoid overpaying, uncover risks and ensure the business is compliant before purchase.

Before You Sign: Make Sure the Deal Actually Works

Many doctors focus on the opportunity, but the real outcome depends on execution. Small oversights when buying a medical practice can turn into long-term financial and operational issues.

Before signing, it is critical to:

• stress test the numbers
• confirm the structure
• identify risks early

If you are serious about purchasing a medical practice in Australia, speak with a finance specialist before committing so you can structure your medical practice purchase finance properly and avoid costly mistakes.

Thinking about taking over a medical practice? Speak with a specialist here at JSMDF who understands medical lending and practice acquisitions before you sign.