Is there any safe way to buy a failing business? (Medical practice)

Hello, it's 2:47am Pacific time as I write this. I'm not up because I've been partying. I'm not up because I've been crying. I'm up because I'm considering purchasing a failing medical practice! That's a new one for me. Used to be Letterman that would keep me up this late- oh how things change.

Anyway, there is a medical practice that I am aware of. It's failing but apparently only because the current owner has problems dipping and I mean dipping into the organization's funds for his own personal use. He's got problems with alcohol, at least. From what I've seen of the sheets the providers are working pretty well but they're only bringing (gross, monthly) about 20% of the organization's HUGE debt. I mean half a million dollars huge. The owner is falling apart quickly- he was a provider but just is not cut out to be the owner. The last few years have continually worn him down to the last, frayed, bits. That said that he really just wants someone to assume the debt of the organization- he's not asking for anything in return except a possible stipend if the organization ever regains its footing. He knows that the organization can pay for itself if only someone would make the right choices about hiring and expenditures, which he is not.

He is very concerned about his name being associated with a bankruptcy and will do anything just to get away from this fire he started. Most likely so he can build another house and set it on fire, too. People don't seem to change.

I was learning and looking into LLC's, S corps, etc but it's very late and I'm foggy on the best option.

Can anyone suggest my best approach to acquire this organization and it's debts without putting everything I've ever owned at risk? Remember this gentleman is requiring very little money, if at all. BTW, I know most of the people working there. They love the place. They love their job. Everyone really dislikes him because they know what he's doing to their livelihood.

I don't expect a long answer but anything you can toss out there would be useful even if it's STAY AWAY THE DANGER IS HUGH!!!1!!!

Thanks folks,

PB

in the healthcare industry -- either as a provider or with experience in management?

If that's the case, you need to be very careful, and I would suggest you get an attorney experienced in healthcare business transactions, as well as an accountant on the team.

That being said, the first thing I would do would be to contact the MGMA (www.mgma.com), and hire someone to examine the books. In many cases, what your describing isn't all that unusual. And without looking at the specifics its impossible to know if its worth pursuing or not. Collections in healthcare is a very specialized area, and there are many issues well beyond what type of business you should form (which will be either a PLLC or a PC), such as provider retention (biggie), collections percentages, insurance contracts, etc.

Oh, If you have to ask it is a bad move. That is my opinion.

Could you hire his staff and buy his database. Really, I wouldn't touch it with a huge pole.

He might only by disclosing a small percentage of the debt. Think of it as eBay.. Would you drop the cash on a dude with 69% approval?