How to sell part of your billing client list

You don’t have to sell your whole company to step back. Some owners would rather reduce their workload first, or hang on to the clients they enjoy working with, and a partial sale can do that as long as the boundaries are clear.

Why an owner might do this

The obvious reason is cutting your hours gradually before you retire. You might also want to leave a specialty or a type of work you’ve had enough of, like the one orthopedic group that takes up half your week. Some owners want to keep their long standing clients and pass on the rest, and others want to test a buyer on a small group before deciding on the remainder.

Deciding which clients go

Think about how each client fits as well as what it pays. Start with the contract, and find out whether it’s transferable or whether you’d need consent or a new agreement. Then ask yourself which clients would be comfortable with a new company, which ones require the most work, and which use a system the buyer knows.

You’ll also want to work out whether the part you keep will still be worth running on its own. Software and clearinghouse costs don’t shrink at the same rate your client list does, so run the numbers on what’s left.

Be careful about selling only your most difficult accounts. A buyer will notice in diligence, and the price will probably reflect that.

What to put in writing

• Exactly which clients are included
• What happens if an excluded client asks to move, or an included client refuses
• Whether the buyer may approach clients you keep, and for how long
• Whether you may keep working with transferred clients in any capacity
• How payments are calculated, and how you can verify them

Non solicitation terms protect you, but they can also affect how you and the buyer can work in future, so have your attorney review them.

Staff and shared systems

If staff divide their time across both groups, decide who does what after the sale. Shared logins and shared clearinghouse accounts need to be separated, and each client’s data access needs to match its new arrangement. If your one clearinghouse account holds all twelve of your clients and you’re selling five, those five need to move, and the buyer’s team shouldn’t be able to see the seven you kept.

How a partial sale is valued

A partial sale is valued in the same way as a larger one, and our guide to what affects the value of a billing business goes through that. Smaller groups may be easier to transfer, but they also carry more risk if one client leaves. In a group of four, one client leaving takes out a big piece of the revenue, and if you’re being paid from that revenue, your payments drop with it. They can also drop if the buyer performs poorly.

Next steps

Read how to sell a medical billing business, then talk to your advisers. We’re looking to acquire client portfolios as well as whole companies, so we may be a buyer here, and if you’d like to explore that, a confidential conversation carries no commitment.

Fieldstone may be a buyer in a sale like this, so read this guide with that in mind. It's general information, and it isn't legal or tax advice.