7 Questions to Ask Before Buying a New Functional Medicine Practice

2026-08-21

Before you buy a functional medicine practice, ask these 7 critical questions about finances, patients, staff, and systems to avoid costly mistakes.

Buying an existing functional medicine practice can be a faster path to ownership than starting from scratch, but it comes with hidden risks. Many buyers focus on patient count and revenue, then discover after closing that the practice has outdated billing, a toxic staff culture, or a lease that eats profits. To protect your investment, ask these seven questions before you sign anything.

1. Why is the seller actually selling?

The stated reason (retirement, relocation) may not be the whole story. Ask for the real reason, and verify it. If the seller says they’re retiring, check if they are over 60 and have been in practice for 20+ years. If they say they’re relocating, ask for the new address and confirm it’s not a competing practice nearby. A seller who is selling because of declining referrals, a pending malpractice suit, or a key employee’s departure will not be upfront. Ask directly: “What has changed in the last 12 months that made you decide to sell?” Then talk to staff, vendors, and even patients (with permission) to corroborate.

2. What is the real monthly cash flow after all expenses?

Don’t rely on the seller’s profit and loss statement. Ask for the last 36 months of bank statements, tax returns, and a detailed P&L that separates owner’s salary, discretionary expenses, and one-time costs. Calculate the true free cash flow: revenue minus all operating expenses, including rent, payroll, supplies, marketing, software, and loan payments. For a functional medicine practice, typical owner’s net income ranges from $80,000 to $200,000 annually, depending on location and patient volume. If the practice shows a net profit of $150,000 but the seller took a $120,000 salary, your real cash flow is $30,000. Use a CPA to verify.

3. What is the patient retention rate, and how many are on membership plans?

Functional medicine practices often rely on recurring revenue from membership plans or package visits. Ask for the number of active patients (seen in the last 12 months), the percentage who are on a membership or subscription, and the average retention rate (how many stay after 6 months). A healthy functional medicine practice retains 70% to 85% of patients year over year. If retention is below 60%, find out why: poor outcomes, high prices, or a difficult front desk. Also ask for the patient acquisition cost (marketing spend divided by new patients). If it’s over $300 per new patient, you may struggle to grow profitably.

4. What are the terms of the lease and the equipment?

A practice’s location and equipment can be a liability. Ask for a copy of the lease: how many years are left, what is the monthly rent, and does it include annual increases? For a 1,500 to 2,500 square foot functional medicine clinic, rent typically runs $3,000 to $8,000 per month in suburban areas, higher in cities. Also list all equipment (lab analyzers, IV infusion chairs, EMR systems) and ask if it’s owned or leased. If leased, get the monthly payments and remaining term. If you buy the practice, you may assume the lease, so negotiate an assignment clause or an option to terminate.

5. Are the staff and their contracts transferable?

Your success depends on the team. Ask for a list of all employees, their roles, salaries, and tenure. Are they employed at-will or under contracts? If the practice has a nurse practitioner or physician assistant, their employment agreement may include a non-compete that could affect your ability to keep them. Also ask about the office manager: if they leave, you lose institutional knowledge. Plan to offer retention bonuses (e.g., $2,000 to $5,000 after 6 months) to key staff. Verify that all staff have signed non-disclosure and non-solicitation agreements to protect patient lists.

6. What is the state of the billing and coding practices?

Functional medicine often involves cash pay, insurance, or a mix. Ask for a breakdown of revenue by payer: cash, insurance, membership. If more than 30% is from insurance, check the current accounts receivable (AR) aging report. A healthy AR has less than 20% over 90 days. Also ask if the practice uses proper ICD-10 and CPT codes for functional medicine services (e.g., 99213 for an established patient visit, 99204 for a new patient). If the seller has been undercoding or overcoding, you could face audits. Hire a medical billing auditor to review a sample of claims before closing.

7. What is the reputation and online presence?

A practice’s reputation directly impacts future revenue. Ask for the last 12 months of online reviews on Google, Yelp, and Healthgrades. Look for patterns: complaints about wait times, billing, or staff. Also ask for the practice’s social media following and website traffic. A functional medicine practice with 500 Google reviews and a 4.8-star rating is worth more than one with 20 reviews and 3.5 stars. Use a tool like ReviewTrackers to monitor mentions. If the practice has a poor reputation, factor in the cost of reputation repair: $1,000 to $5,000 per month for a marketing agency.

FAQ

Do I need to buy the practice’s existing patient records?

Yes, but you must comply with HIPAA. Ask for a data transfer agreement and ensure the EMR system allows full export. If the seller uses a proprietary EMR, you may need to pay for data migration, which costs $2,000 to $10,000.

Can I negotiate the purchase price based on these answers?

Absolutely. Use the findings as leverage. For example, if retention is low, reduce the price by 10% to 20%. If the lease has a high rent, ask the seller to cover the first 6 months of rent.

What is a fair price for a functional medicine practice?

Typically, practices sell for 1 to 2 times annual net profit, plus inventory and equipment. For a practice with $150,000 net profit, expect to pay $150,000 to $300,000. Use a business appraiser for a formal valuation.

Should I hire a lawyer and CPA before buying?

Yes. A healthcare attorney can review the purchase agreement and lease, and a CPA can verify the financials. Expect to pay $3,000 to $7,000 in professional fees, but it’s worth it to avoid a bad deal.

The bottom line

Buying a functional medicine practice is a major investment, and these seven questions will help you uncover hidden problems before you commit. Do your due diligence: review financials, talk to staff, verify the lease, and check the reputation. If the numbers don’t add up, walk away. A good purchase should give you a solid foundation to grow, not a sinkhole of debt. Take action this week: schedule a call with a healthcare business attorney and a CPA who specializes in practice transitions. They will guide you through the process and protect your interests.