Should I Buy an Existing Private Practice or Start One From Scratch?
- Jul 27
- 9 min read
One of the questions we hear most often in our physician communities from doctors exploring private practice ownership is whether they should buy an existing practice or build their own from the ground up. While there’s of course no one-size-fits-all answer, there are factors that everyone should consider in this decision, including your financial situation, your specialty, how quickly you want to get started, how much risk you're willing to take on, and what you want your daily life to look like. On one hand, buying a practice that's already up and running means you'll have patients and money coming in right away. On the other hand, while building your own practice from the ground up means starting without a clear idea of when you'll be profitable, you'll get to do things your way. Let's break down the pros and cons of each option so you can decide which one is right for you.
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Is it better to buy an existing practice or start your own?
Both paths can lead to a thriving practice, so the answer is that it depends on what you're optimizing for and where economics and your strengths shake out. Some physicians will prefer the safety of buying a known entity, whereas others will want to create their own venture, and have every aspect of their practice fit a specific vision.
Buying a practice means stepping into a business that's already functional and generating revenue. Assuming you’re buying a well-run practice, you already have a patient base, cash flow, experienced staff and vendor relationships, referral base, and a proven location and reputation. Essentially, you already have the logistics and start up hassles figured out, and because the hard work of building the practice from scratch has already been done, you’re free to spend your time seeing patients and optimizing or scaling the practice instead of focusing on all the logistics of starting a new private practice.
Starting your own practice, on the other hand, means building a new business from the ground up - potentially literally. It’s a lot of details, logistics, decisions, paperwork, and guessing. This may or may not be in your wheelhouse, and you may or may not have an interest in doing these things. While you may have a solid proforma, vision, or related business experience, making it happen is always going to be a process. On the other hand, you can create exactly what you want. Instead of trying to fit your dream practice into the existing practice’s model, you’ll have the freedom to build your practice in a way that allows you to grow in the trajectory that you’re imagining.
Neither option is objectively better as a general rule, but one of these choices may be better for you based on your current financial, professional, and personal situation and goals.
Why do physicians choose to buy an existing practice?
Essentially, you're stepping into a business that's already operating rather than building one from the ground up. Note that while this is great in that you can be revenue positive from day one and avoid the hassles of establishing a practice it also means you need to do thorough due diligence before committing (more on this in a second).
Some of the obvious things that are easier when you buy an existing practice include:
An established patient panel
Existing revenue from day one
Experienced, stable staff members who already know the practice and how to run it
Existing referral relationships and patterns with other physicians
Payer contracts already in place
Office equipment and outfitting of the office already done
Brand recognition and goodwill in the local community
Established known location for your services
Office workflows that are already optimized
One big upside is that you’re not guessing about the startup proforma for your private practice. You’ll have years of financial data that give you insights into the market, revenue trends based on seasonality, competition, and opportunities for growth.
The practice may also have financial relationships with banks or other lenders already comfortable with the practice’s cashflow that may be more willing to lend to you under favorable terms.
Are there downsides to buying an existing practice?
The most obvious downside is that unless you do a transaction that’s completely based on hard asset valuation, there’s likely some component of goodwill in the purchase price. If you think you could stand up your own practice and be successful (almost) immediately because you know there’s pent up demand in the market with long waitlists in the area, and/or because you already have a reputation in the area, it may not make sense to buy an existing practice, especially if that physician is retiring or if that office is closing down shop. The financial tradeoffs of any individual practice option will vary based on how much the practice is listed for and what terms and conditions are associated with the sale. For example, some practices may list in their terms:
A requirement to keep leasing the office space from the current owner, who wants to maintain the real estate revenue stream
An ask to allow the existing owner to continue practicing for as long as they’d like
An ask to keep on particular staff
A request to honor certain promises made to others, whether they be employees or vendors
It’s important to factor the long term opportunity costs of all of these requests in when evaluating the financials of a deal.
Additionally, as previously mentioned, you should keep in mind you're not just inheriting the good parts of a practice, you're also inheriting its problems. Existing private practices may have their own baggage, including things like prior reviews that aren’t favorable, litigation history or other skeletons in the closet, debts or liabilities, etc.
Some additional downsides worth watching for:
Aging equipment that needs replacing/repairing, or necessary repairs to the office spaces
Staff dynamics or old promises that have calcified over time
Inefficient workflows that need to be rebuilt
Weak online reviews or a shaky community reputation
Outdated technology, and/or staff and patients resistant to change
Existing leases or other contracts already in place
There's also the reality that patients are often attached to the physician who's selling or retiring, which can lead to churn. That transition can be stressful for patients, and some may be reluctant to stay on with the new owner. Therefore, you should expect some patient attrition after the sale concludes. This is normal, and it's part of why most practice purchase agreements build in a transition period where the selling physician stays involved for several months. You may similarly see a decline in referrals from referring clinicians who specifically sent business to the practice because of personal relationships with the prior physicians.
Why do physicians choose to start a private practice from scratch?
For many, autonomy is the main selling point of owning a private practice. Additionally, building a practice from scratch lets you design everything around your own vision, with no inherited decisions to modify or work around. Many physicians who choose this route also like that they're not paying for someone else's goodwill or buying outdated assets they'll just have to replace anyway. Advantages of starting fresh include:
Choosing your own location and space
Hiring staff you trust or can teach your preferences from day one
Selecting the EMR you actually want
A chance to establish your own reputation fresh without any baggage from a prior practice
Designing workflows around how you like to practice
Building your own culture & brand
Setting expectations for patients on the practice model and policies you’d like, instead of having to explain why things are being done differently than what they’re used to
Implementing the latest tech from the start
Offering only the services & products you want to offer
What are the challenges of starting your own private practice?
Starting a new private practice means literally starting from scratch on every decision, and hanging up your shingle without recurring patients, referral relationships, or steady revenue already coming in. Even with the best laid plans, there will likely be 3-6 months before you’re generating enough revenue to cover your costs.
Just some steps to remember in the process that can feel particularly overwhelming to someone who “just wants to practice medicine”:
Find & secure office space, & address physical infrastructure/renovations necessary to make the space functional
Get necessary insurance policies
Consult with a lawyer to make sure the practice is set up correctly
Secure financing
Purchase medical equipment and furniture
Hire & train new staff
Credentialing and contracting with insurance companies
Market the practice and build referral relationships
Establish a way to cover expenses while patient volume is still building
Establish practice and HR policies and procedures
In addition to the hassle of all of this, remember that it can get expensive, fast. Between legal, physical office, marketing, and staffing costs, you’ll be spending a lot of money just to get off the ground. None of your efforts magically turn into enough appointments (and more importantly, payments!) overnight, so it's important to budget both money and patience for this stretch.
Financial considerations of buying an existing practice vs starting fresh
A common assumption is that starting fresh is always cheaper than buying, but that's not always the case. You’ll have to do the math to see which costs are actually greater.
Buying an existing practice usually requires a larger check upfront, since you're paying for an established business. That can include:
Practice purchase price
Legal fees and other transactional costs
Valuation & financing costs
Inventory buyouts
Equipment upgrades
Contract buyouts (if applicable)
Opportunity costs of any existing obligations or agreements to accommodate the current practice owner (office space for them to continue to practice, taking over lease or continuing to rent from the new owner, etc.)
Starting a new practice, on the other hand, skips the acquisition cost but brings its own set of expenses, and the total cost can vary depending on specialty, location, and how you structure the practice:
Office buildout
Medical equipment
Furniture
Technology (EMR) & other software
Marketing & branding
Licensing (if applicable)
Initial payroll setup
Operating expenses before you're profitable
Which one is more profitable in the long run?
Every practice's path looks a little different, but buying an established practice generally gets you to profit faster, simply because patients are already on the schedule. That said, this only stays true if patient retention is steady, or improves, after the ownership change.
Building your own practice usually takes more patience and understanding. Depending on your specialty and how long payer credentialing takes, it could be several months or more before you have consistent patient volume.
However, that doesn't mean it's the financially weaker option - plenty of physicians who built their own practice end up more profitable than they would have been buying one, simply because they’re thinking bigger when starting fresh than just adapting the status quo. For example, if you’re limited in office space in the current practice or if another part of town may have brought you a payer mix with a more favorable compensation profile, you may do a lot better by taking the upfront risk.
What due diligence should you perform before buying a practice?
If buying a practice is the direction you're leaning toward, due diligence is the single most important thing you can do to protect yourself. Most physicians bring in professionals who have extensive experience in dealing with healthcare transactions: attorneys, accountants, lenders, valuation experts. Their fees are usually minimal when comparing the cost of buying the wrong practice. At a minimum, you should request and review:
Three (3) years of financial statements
Tax returns
Patient volume trends
Patient growth, both actual & forecasted
Staff contracts
Physician referral sources
Payer mix
Accounts receivable
Equipment inventory/value
Online reputation
Office lease and contracts
Compliance history & any pending litigation
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Conclusion
There's more than one road to owning and maintaining a successful private practice. Plenty of physicians have built thriving practices by buying an established one, and other physicians have gotten there by building the practice from the ground up.
Buying an existing practice gives you a head start–an existing patient base, trained staff, systems that already work, and cash flow from day one–but it demands real due diligence to make sure what you're buying is financially sound and actually fits your future goals for where you want to see the practice go. Building your own practice gives you the freedom to shape every part of the business, from culture to workflows to branding, but it usually asks for more time, more planning, and more capital before you start seeing the fruits of your labor.
In the end, the right call comes down to your goals, finances, and specialty, and just how much risk and work you're willing to take on as a physician owner. Weigh both paths carefully, and bring in the right legal, financial, and business advisors along the way. This will ensure you'll be in the right position to make the decision that's right for you.
Related resources for physicians looking to start a private practice
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