Multi-site physician services platform

Transition Services Build

The buyer set the close date and owned practice revenue from day one, while credentialing to its own entity finished in the background.

The situation

The platform was buying physician practices, and on every deal the payers, not the parties, set the close date. An acquired practice cannot bill under the buyer's tax ID until the payers have credentialed its providers, which takes months on the payers' clock. Medicaid enrollment, malpractice coverage, vendor contracts, payroll and benefits carried similar dependencies.

The buyer had two options, and each had a cost. Credential first, then close: the deal sat open for months while the seller's business drifted, and the buyer inherited the drift. Close first, then credential: the buyer took over on day one and had no billable revenue until the new entity was credentialed.

What I built

A transition services agreement that took the whole dependency stack off the critical path. The buyer signed and closed on its own schedule, then ran the practice inside the seller's structure for three to six months by design: care and billing continued under the seller's tax ID and payer contracts, the seller's Medicaid panel stayed in place while the platform finished its own Medicaid enrollment, staff stayed on the seller's payroll and benefits at the buyer's cost, and malpractice coverage and an agreed list of vendor contracts stayed in force

Interim economics fixed at close: the buyer owned 100% of collections and reimbursed every payroll and vendor cost, so the seller was kept whole. Billing, collections and the seller's bank account ran under a power of attorney from close

Credentialing to the platform's own entity started at close and ran in the background. The buyer could end the agreement at any time

A seller explainer showing how the structure worked, and a seller-expectations document setting out what the seller would do during the transition, what the buyer would reimburse and how the seller was kept whole. Sellers were uneasy about someone else operating under their tax ID, and the document answered that before it could stall the deal

A decision at the Deal Committee I chaired, taken with all four costs written out: forgone rate lift for the whole period, weaker lock-in on key providers, an interim in which the practice looked unchanged to staff, and integration work pushed past close

The result

Closed on a date the buyer set, with no day-one revenue gap

Practice revenue owned from close, and the switch to the platform's own entity in under four months, once credentialing finished

The first practice closed under the structure. It was small enough that a slipped close would have cost more than the forgone rate lift

The structure went into the next five deal proposals

Where is the platform stuck?

Deals closing faster than the platform can take them on? Let's talk.

Start a Conversation