The 12-Point Physician Practice Owner Readiness Checklist

Category 1 – Personal Financial Readiness
Goal: Could your household function if your clinical income dropped 50%?

1. Clear Household Spending Number:

• Do you know your average monthly non-practice spending (home, family, lifestyle) within ±10%?

2. Personal “FI Number” (Financial Independence Target):

• Have you calculated the total investable assets you need so your portfolio could support your lifestyle with conservative assumptions?

3. Savings Rate & Cushion:

• Are you consistently saving/investing a meaningful percentage of your income (e.g., 20–30%+), and do you have at least 6–12 months of personal expenses in cash reserves?

4. Retirement Plan Optimization:

• Are you maximizing the right mix of retirement vehicles for a practice owner (e.g., 401(k)/profit sharing, cash balance, defined benefit), rather than just “maxing out what your CPA mentioned once”?

Category 2 – Practice Health & Dependence on You
Goal: Is your practice a transferrable asset or just your job in disguise?

1. Revenue Diversification & Payer Mix:

• Are you overly dependent on one payer or referral source (e.g., >25–30% from a single hospital, group, or payer)?

2. Associate/APP Support:

• Do you have at least one other physician or APP generating a meaningful share of patient visits/revenue, or is nearly all revenue tied directly to you?

3. Documented Processes:

• Are your core processes (scheduling, intake, coding, billing/collections, follow-up) written and standardized, or reliant on a few “key people” and tribal knowledge?

4. Administrative & Billing Infrastructure:

• Do you have reliable billing and collections (internal or outsourced) with:
• Claims denial rates and days in A/R monitored regularly,
• And minimal “surprises” in cash flow?

Category 3 – Exit & Flexibility Readiness
Goal: Could you realistically negotiate and accept a deal in the next few years if you wanted to?

1. Clear Exit Preference (or Shortlist):

• Have you at least ranked your likely exit paths:
  
• (a) Sell to hospital, (b) sell to a group / PE roll-up, (c) internal sale, (d) gradual wind-down?

2. Up-to-Date Practice Valuation Indicators:

• Do you have a current sense (within a reasonable range) of your practice’s value based on:
• EBITDA, specialty multiples, payer mix, and growth trajectory—not just “what a colleague heard someone got”?

3. Contract, Compliance & Risk Review:

• Are your patient, payer, and vendor contracts, employment agreements, and compliance documentation (HIPAA, coding, etc.) in good order and ready for buyer review?

4. Life After Medicine Plan:

• Have you considered what your work and lifestyle will look like if you:
• Cut back to part-time,
  
• Shift to a different role,
  
• Or fully exit clinical practice in 3–7 years?

Your Practice is Your Largest Asset—Is It Working with Your Wealth Plan?

If this checklist has highlighted gaps in your retirement optimization or "FI Number," consider speaking with a financial advisor to help you integrate your practice’s value into a comprehensive wealth strategy.

Disclosures:

The information contained herein reflects the opinion and projections of Bergamot Asset Management LP (“Bergamot”) as of the date of publication, which are subject to change without notice at any time subsequent to the date of issue. Bergamot does not represent that any opinion or projection will be realized. All information provided is for informational purposes only and should not be deemed as legal, tax, investment advice or a recommendation to purchase or sell any specific security. This shall not constitute an offer to sell or the solicitation of an offer to buy any interest in any fund managed by Bergamot or any of its affiliates. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any data presented. Market conditions can vary widely over time and can result in a loss of portfolio value. Past performance does not guarantee future results.