7 Questions to Ask Before Buying a New OT Practice

2026-08-21

Thinking of buying an occupational therapy practice? Ask these 7 questions first to avoid costly mistakes and ensure a smooth transition.

Buying an existing occupational therapy (OT) practice can be a smart way to skip the startup phase and gain immediate clientele, but it comes with hidden risks. Before you sign anything, you need to dig into the practice’s financials, operations, and market position. Here are 7 critical questions to ask, with concrete steps you can take this week.

1. Why is the seller really selling?

The seller’s reason for selling can reveal a lot about the practice’s health. Common reasons include retirement, burnout, relocation, or health issues. But be wary if the seller is vague or says they’re “just ready for a change” without a clear explanation.

What to do: Ask directly, and also talk to staff, referral sources, and local competitors (if possible). Look for signs of declining revenue, loss of key staff, or a shrinking referral base. If the seller is retiring, that’s often a positive sign, but if they’re selling because of a lawsuit or regulatory issue, you need to know.

2. What are the actual financials, not just the tax returns?

Tax returns can be misleading because owners often deduct personal expenses. You need to see the practice’s internal profit and loss statements (P&L) for at least the last 3 years, plus the current year to date. Look for trends in revenue, expenses, and net profit.

What to do: Ask for monthly P&Ls, bank statements, and credit card statements. Compare the tax returns to the internal statements. If there’s a big difference, ask why. Also, check for one-time expenses or income that won’t recur. A practice that looks profitable on paper might be barely breaking even after you adjust for owner perks.

3. How concentrated is the referral base?

If 80% of your referrals come from one physician or one hospital system, you’re vulnerable. If that source dries up, your revenue could drop overnight.

What to do: Ask for a list of top referral sources by revenue for the past 12 months. Calculate the percentage each represents. If any single source is over 30%, that’s a red flag. Also, check if there are any contracts with referral sources that might not transfer to you.

4. What is the state of the equipment and lease?

OT practices often have specialized equipment like therapeutic exercise machines, ultrasound units, and treatment tables. You need to know if the equipment is in good condition, leased, or owned. Also, review the lease for your office space: how much longer does it run, and will the landlord allow you to take over?

What to do: Get a list of all equipment with age, condition, and ownership status. If equipment is leased, find out the monthly cost and remaining term. For the lease, ask for a copy and have a real estate attorney review it. Also, check if the practice has any outstanding loans on equipment that you’d be assuming.

5. What is the payer mix, and are there any outstanding claims?

A healthy OT practice typically has a mix of private insurance, Medicare, Medicaid, and self-pay. If the practice relies heavily on one payer, especially a low-reimbursing one, your margins could be thin. Also, you need to know if there are unpaid claims that could become your problem.

What to do: Ask for a breakdown of revenue by payer for the past year. Also, request an accounts receivable (A/R) aging report. Look for claims older than 90 days, as they may be hard to collect. If the seller is selling, they should clear out old A/R or reduce the purchase price accordingly.

6. Are the staff and key contracts transferable?

Your OT practice is only as good as its therapists and front office staff. If key employees leave after the sale, you could lose clients and productivity. Also, check if there are non-compete agreements or contracts with independent contractors that you need to honor.

What to do: Ask for a list of all employees, their roles, salaries, and tenure. Talk to the top 2 or 3 staff members to gauge their intentions. Also, review any employment contracts, non-compete clauses, and independent contractor agreements. You may need to offer retention bonuses to keep key people.

7. What is the practice’s reputation and online presence?

In today’s world, a practice’s reputation is often visible online. Bad reviews or a poor social media presence can hurt your ability to attract new patients.

What to do: Search for the practice on Google, Yelp, and Healthgrades. Read all reviews, both good and bad. Check the practice’s website and social media profiles for activity and professionalism. Also, ask the seller for any patient satisfaction surveys or complaint records. If the reputation is poor, factor in the cost of marketing and reputation management.

FAQ

Should I hire a business broker or attorney to help with the purchase?

Yes, absolutely. A broker who specializes in healthcare practices can help you find a good deal and negotiate. An attorney with experience in business purchases can review contracts and protect your interests. Expect to pay $5,000 to $15,000 for legal and advisory fees, depending on the complexity.

How do I value an OT practice?

Valuation is typically based on a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA). For OT practices, multiples often range from 1.5 to 3 times EBITDA, depending on the practice’s growth, stability, and location. You can also compare to recent sales of similar practices in your area.

What are the tax implications of buying a practice?

You’ll need to allocate the purchase price among tangible assets (equipment, furniture) and intangible assets (goodwill, patient lists). This allocation affects your depreciation deductions and capital gains. Consult a CPA who specializes in healthcare to structure the deal tax-efficiently.

Can I use an SBA loan to buy a practice?

Yes, the Small Business Administration (SBA) offers 7(a) loans that can be used to buy an existing business, including an OT practice. You’ll typically need a 10% to 20% down payment, and the loan term can be up to 10 years for equipment and 25 years for real estate. Interest rates are competitive, but the application process is thorough.

The bottom line

Buying an OT practice can be a rewarding career move, but it’s not a decision to take lightly. By asking these 7 questions, you’ll uncover the practice’s true financial health, operational stability, and growth potential. Take your time, do your due diligence, and don’t be afraid to walk away if something doesn’t add up. A well-chosen practice can provide a solid income and a platform for growth, but a poorly chosen one can lead to financial stress and burnout. Start with these questions, and you’ll be on the right track.