Build or Buy a Medical Practice?

So, you want to become a self-employed physician? Congratulations! The journey ahead is involved but ultimately rewarding. Whether you plan to work as a solo practitioner or a partner in a group practice, one of the earliest decisions you’ll make is whether to build or buy a medical practice. In this article we provide an overview of the pros and cons of building vs. buying, as well as factors you’ll need to consider with both options.

From the large number of retirees who call Florida home at least half the year, to the state’s sizeable veteran population, Florida is a great place to own a medical practice. In Ocala specifically, healthcare services are in demand, according to a 2015 Community Health Report for Marion County. So, keep reading to make your decision on buying or building and begin the process of opening your own medical office.

Over 19% of Florida's population is over 65 years old

Building A Medical Practice: The Pros and Cons

Some physicians decide to build their own medical practice right out of school, while others take a job with a hospital or established medical office, then get the itch to go independent. Whatever your path to building your own practice, it’s a decision accompanied by much excitement and responsibility. Here’s an overview of the pros and cons:

Control Control: From designing the layout of your office and making stylistic choices, to having the final say on hiring, building your own medical practice means you’re in control 100 percent of the time. Depending on your personality, this could be either thrilling or overwhelming.
Investment Real Estate Investment: Whether you buy an existing building or go with new construction, the structure that houses your medical practice is also an investment in real estate. When you are ready to retire you can sell your building and practice or rent it out to generate extra income. And if you have space for additional offices, you can earn rental income from the beginning. You may also be able to set up a co-op agreement with your tenants to share overhead costs such as utilities. Of course, owning comes with all the financial responsibilities of insurance and maintenance, and makes it harder to relocate if you outgrow the building or the location is no longer optimal.
Marketing Marketing: Unlike taking a salaried job in someone else’s practice, striking out on your own means you’ll need to invest in marketing in order to grow a full schedule of patients. Besides reaching out to patients, you should also make yourself known to other physicians and business leaders in the community who could become a source of referrals.
Cash flow Cash Flow: As a business owner you will have to pay your staff before you cut your own paycheck. Make sure you have the right combination of financing and savings to help you weather the first year or two as you build your patient base and experience unpredictable cash flow.

What are the benefits of buying an established medical practice?

Physicians who wish to be their own boss but feel intimidated by the prospect of starting from scratch, may find the ideal solution in buying an established medical practice. Just as one can purchase a “turn key” pizza shop or other business, a doctor can buy a “turn key” medical practice from its retiring owner. Here are the potential benefits of choosing this path to owning your own practice in Ocala.

  • There is already a full staff in place with experience in your specialty and knowledge of the patient load you are assuming.
  • Because there is already a patient base associated with the practice, you will take on less cash flow risk.
  • The practice is already laid out and furnished to suit the needs of a medical office.
  • If the equipment is owned, not leased, it will be included with your purchase of the practice.
  • Overall, there is less planning and design involved when you take over an already-successful medical practice.

What are the risks of buying an established medical practice?

Although taking over an existing medical practice may seem like the easiest route to self-employment, it is not without its risks.

  • Office staff may be resistant to any changes you wish to implement. Some staff turnover is bound to coincide with the change in ownership, so you will still have to make hiring decisions.
  • As with staff, you may lose some regular patients. Some people become very attached to one physician and are wary of switching. You will have to do some outreach to persuade patients to give you a chance.
  • Make sure that any furniture and equipment included in the sale is functional and up-to-date. Otherwise it has no value to you.
  • The current layout may not fit your needs or plans for expansion, leading to future renovations.

What to Consider Whether You Choose “Turn Key” Or “From Scratch”

Turn Ken vs From Scratch

Now that we have examined the benefits and risks of the two main choices entrepreneurial physicians confront, we will look at considerations that apply to both building your own practice and buying an established medical office.

Time and Planning

When you decide to open your own practice, you wear the hat of business owner in addition to physician. That means the first step in acquiring your medical office is to make a business plan, set goals, and identify the best strategies for achieving success. Keep in mind that this will take some time, so you may need to stay in your current job as you plan for the transition to solo practitioner.


If you are going to own the building your practice is in, whether that means buying an existing medical complex or building from scratch, you’ll want to think carefully and choose the location wisely. As a renter, you can always move when your lease is up if you need more space or wish to switch neighborhoods. As an owner, selling a building and practice takes more time and effort. Do your research or hire a professional consultant to help you choose the best location you can afford, where your services will be most in demand.


Unless you have enough personal wealth to cover start-up costs, obtaining financing is the key to making your vision of your own medical practice a reality. Consider two types of financing: a loan to cover start-up costs like a down payment and related fees, plus any equipment and other purchases you’ll need to make at the beginning. A line of credit is also a good idea to supplement any cash flow shortages you experience in the first several years. The strong business plan you created in the first step will help you apply for financing.

Legal Incorporation and Tax Registration

Once you’ve chosen a location and secured financing, it’s time to make your medical practice official. The first step is to incorporate as a legal entity, which protects your personal assets from liability. There are several choices, such as S-corp or LLC, so talk to your accountant about the best option for you. Next, you’ll need to file for an Employer Identification Number (EIN) from the federal government and register with local and state tax offices. Here is a New Business Start-up Kit from Florida’s Department of Revenue.


First you need to follow the credentialing process for the health insurance networks you wish to participate in. This can take anywhere from three-six months. Then you’ll need to obtain essential insurance policies such as malpractice, liability, and life.


Consult with health care attorneys, accountants, medical practice consultants, and any other experts you need to ensure you are following all state and federal rules and regulations.

Tax Breaks

When you own your own practice, you may be able to use depreciation to lower your tax burden. Talk to your accountant about this and other potential tax breaks.

Zoning and Regulations

From the 2010 passage of the Affordable Care Act to more recent attempts at repealing or replacing the law, much has changed in healthcare regulations. You will need to stay up-to-date on federal and state healthcare regulations or hire an employee with knowledge in this area. Also, local zoning laws will dictate where your medical practice can be located. Do the research yourself or work with an experienced consultant. Here is a list of Florida Building Codes and contact information for the City of Ocala’s Growth Management Department, home to its zoning laws.

Find A Local Banking Partner

Physician Lending

Physicians have many options for medical practice financing, but here at CBTFL we believe local is best. Not only do our loan officers have specialized knowledge of the local economy and healthcare field, but as a community bank we believe in the value of adding more healthcare choices to Ocala and Marion County. CBTFL isn’t just a source of financing; we’re a true partner in the process of buying or building a medical practice. Learn more about our Physician Banking services in Ocala, Gainesville, Belleview, Summerfield and The Villages, and contact us for specific answers to your questions.