Physician business glossary for medical practices
Plain-English definitions of 79 business terms physicians come across, from valuation and contracts to marketing, IT, phones and office space.
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Business terms, explained simply
This physician business glossary defines the terms that come up across the guides on this site. Each definition is short and general, and most link to a guide that explains the topic in more depth. For the full list of guides, visit the physician practice resource center.
This page is for general informational purposes only. It isn't specific legal, tax or financial advice and doesn't create an attorney-client or other professional relationship.
For guidance specific to your practice, contact us and we'll introduce you to an independent attorney or other qualified professional.
A
Accounts receivable (AR) aging
A report that groups unpaid patient and payer balances by how long they have been outstanding, such as 0-30, 31-60 and 61-90 days. It is a common view of revenue cycle health.
Related guide: Medical practice operations review
Add-on acquisition
A practice acquired by an existing platform group and folded into it. Add-ons usually join the platform's systems, brand or management structure over time.
Related guide: Private equity and partnership options
After-hours answering
The way a practice handles calls outside office hours, whether through an answering service, an on-call rotation, voicemail routing or an AI receptionist.
Related guide: After-hours answering
AI search optimization
The work of making practice information clear and consistent so AI assistants and AI Overviews can describe the practice accurately when patients ask questions.
Related guide: How patients find doctors in AI search
Ancillary services
Services offered alongside physician visits, such as imaging, therapy, lab work or durable medical equipment. They are often organized as separate service lines within the practice.
Related guide: Medical practice growth and expansion
Asset purchase
A transaction in which the buyer acquires selected assets of a practice, such as equipment, records and goodwill, rather than the ownership interest in the entity itself.
Related guide: Selling a medical practice
Auto attendant
A phone system feature that greets callers with a recorded menu and directs them to the right department or person without a receptionist.
Related guide: Call routing and IVR
B
Backup and disaster recovery
The combination of regular data copies, offsite storage and a tested plan for restoring systems after an outage, ransomware event or hardware failure.
Related guide: Data backup and disaster recovery
Benchmarking
Comparing a practice's operating and financial measures with peer groups or its own history to see where it stands.
Related guide: Medical practice benchmarking
Build-out
The construction work that turns raw or second-generation space into a finished clinical office, including exam rooms, plumbing, electrical and specialty rooms.
Related guide: Office build-out
Buy-in
The process by which a physician acquires an ownership stake in a practice, usually after an initial employment period. The terms often cover valuation, timing and how payment is made.
Related guide: Succession, buy-ins and buyouts
Buy-sell agreement
An agreement among owners that sets out what happens to an ownership interest when a triggering event occurs, such as retirement, disability, death or departure.
Related guide: Medical practice buy-sell agreements
C
Call routing
Rules that send incoming calls to the right person, location or queue based on time of day, caller choice or staff availability.
Related guide: Call routing and IVR
Cloud phone system
A business phone system that runs over the internet and is hosted by a provider, rather than on hardware in the office. Staff can use desk phones, computers or mobile apps.
Related guide: Cloud phone systems (hosted PBX)
Cloud services
Software and storage delivered over the internet, such as hosted email, file sharing and collaboration tools, instead of servers kept in the office.
Related guide: Cloud services and Microsoft 365
Collection rate
The share of collectible charges a practice actually collects. Net collection rate is a common revenue cycle measure.
Related guide: Medical practice operations review
Confidentiality agreement
An agreement, often called an NDA, that limits how a party may use or share information it receives, commonly signed before a buyer reviews practice details.
Related guide: Selling a medical practice
Conversion rate
The share of website visitors, callers or consultations that take a desired next step, such as booking an appointment.
Related guide: Website design for medical practices
Cost per lead
The marketing spend divided by the number of new patient inquiries it produced. It is a common way to compare channels.
Related guide: Google Ads and PPC for medical practices
Cybersecurity
The tools and habits that protect practice systems and data from unauthorized access, including email filtering, endpoint protection, access controls and staff training.
Related guide: Practice cybersecurity
D
Days in AR
The average number of days it takes to collect payment after a service is billed. It is a widely tracked revenue cycle measure.
Related guide: Medical practice operations review
Due diligence
The review a buyer or partner carries out before closing a transaction, covering financial, operational, legal and clinical records.
Related guide: Selling a medical practice
E
Earnout
A portion of the sale proceeds that is paid later, contingent on the practice meeting agreed measures after closing.
Related guide: Private equity and partnership options
EBITDA
Earnings before interest, taxes, depreciation and amortization. It is a common measure of operating earnings used in practice valuations and transactions.
Related guide: Medical practice valuation
Employment agreement
The contract between a physician and an employer that sets out duties, compensation, schedule, termination terms and restrictive covenants.
Related guide: Physician contract review and employment terms
Equity rollover
The portion of a seller's proceeds reinvested as ownership in the buying organization rather than paid out at closing. It is common in private equity transactions.
Related guide: Private equity and partnership options
Exit readiness
How prepared a practice is for an ownership change, considering records, operations, leadership depth and documentation.
Related guide: Exit readiness assessment
F
Fair market value
The value at which a property would change hands between a willing buyer and a willing seller, both reasonably informed and neither under compulsion. It is one of several standards of value.
Related guide: Medical practice valuation
G
Goodwill
The part of a practice's value that comes from intangible factors such as reputation, patient relationships and the trained team. It is often split into practice goodwill and personal goodwill.
Related guide: Medical practice valuation
Google Business Profile
The free Google listing that shows a practice's name, address, hours, reviews and photos in Maps and local search results.
Related guide: Google Business Profile setup for doctors
Governance
The rules for how a practice makes decisions, including voting rights, board or committee structure and which matters need owner approval.
Related guide: Medical practice mergers and acquisitions
H
Hosted PBX
A phone switching system run by a provider in the cloud. It handles extensions, transfers, voicemail and routing for the practice.
Related guide: Cloud phone systems (hosted PBX)
I
Independent practice
A medical practice owned and run by its physicians rather than by a hospital, health system or investor-owned group.
Related guide: Medical practice valuation and growth overview
Interactive voice response (IVR)
A phone menu that lets callers choose options by keypad or voice, such as scheduling, billing or prescription refills.
Related guide: Call routing and IVR
L
Lease vs. buy
The comparison a practice makes between renting its space and owning the building, weighing flexibility, control and long-term plans.
Related guide: Leasing vs. buying office space
Letter of intent (LOI)
A document that outlines the main terms of a proposed transaction, such as valuation, deal structure and timing, before definitive agreements are drafted.
Related guide: Selling a medical practice
Local SEO
Search optimization focused on nearby patients, including the Google Business Profile, local citations, reviews and location pages.
Related guide: SEO for medical practices
Have a question about a term on this page that is specific to your practice? Take the 2-minute Practice Planning Check or call (972) 616-4581, and Physician Planning Partners can introduce you to an independent, qualified professional.
M
Managed IT services
An arrangement in which an outside provider handles a practice's IT support, monitoring, updates and device management under an ongoing agreement.
Related guide: Managed IT services
Management services organization (MSO)
A company that provides business and administrative services to a medical practice, such as billing, staffing and technology, often under a management services agreement.
Related guide: Private equity and partnership options
Map pack
The group of local business listings with a map that Google shows near the top of many local searches.
Related guide: SEO for medical practices
Marketing plan
A written plan that sets out a practice's marketing goals, channels and calendar over a period such as twelve months.
Related guide: A 12-month medical practice marketing plan
Medical office manager
The staff member responsible for daily operations, such as staffing, scheduling, vendors and reporting.
Related guide: Medical office manager responsibilities
Merger
A combination of two or more practices into a single organization, usually with shared ownership, governance and systems.
Related guide: Medical practice mergers and acquisitions
Multi-factor authentication (MFA)
A sign-in method that requires a second proof of identity, such as a code or app prompt, in addition to a password.
Related guide: Practice cybersecurity
Multi-specialty group
A practice that brings physicians from several specialties together under one organization.
Related guide: Medical practice mergers and acquisitions
N
Network segmentation
Dividing an office network into separate zones, for example clinical systems, staff devices and guest Wi-Fi, so traffic in one zone cannot freely reach another.
Related guide: Network security and office Wi-Fi
No-show rate
The share of scheduled appointments that patients miss without notice. Practices track it to manage reminders, overbooking and waitlists.
Related guide: Reducing patient no-shows
Non-compete
A clause that restricts a physician from practicing within a defined area and time period after leaving a practice or employer.
Related guide: Physician contract review and employment terms
Non-solicitation clause
A clause that restricts a departing physician from soliciting the practice's patients, staff or referral sources for a period of time.
Related guide: Physician contract review and employment terms
Normalized earnings
Historical earnings adjusted to remove unusual, one-time or owner-specific items, so the practice can be viewed on a consistent ongoing basis.
Related guide: Medical practice valuation
Number porting
Moving existing phone numbers from one carrier or system to another so patients can keep calling the same numbers.
Related guide: VoIP migration and number porting
O
Online reviews
Patient ratings and comments posted on Google and other platforms. Practices commonly request and respond to reviews as part of their reputation work.
Related guide: Patient reviews for doctors
Operating agreement
The governing document of an LLC or PLLC that sets out ownership percentages, management, voting, distributions and what happens when an owner leaves.
Related guide: Physician partnership formation and agreements
Owner-occupied building
A building that a practice or its owners buy and occupy, rather than lease from a third-party landlord.
Related guide: Buying a medical office building
P
Partnership dispute
A disagreement among practice owners about matters such as compensation, governance, workload or an owner's departure. Agreements often set out how disputes are handled.
Related guide: Handling doctor partnership problems
Patient intake
The steps a new patient goes through before the visit, such as scheduling, forms, insurance verification and records collection.
Related guide: Medical office manager responsibilities
Patient texting
Two-way text messaging between the practice and patients, commonly used for reminders, confirmations and quick questions.
Related guide: Patient texting and reminders
Pay-per-click (PPC)
An advertising model in which the practice pays each time someone clicks an ad, such as a Google Ads search ad.
Related guide: Google Ads and PPC for medical practices
Platform practice
The first practice a private equity investor acquires in a specialty or region, which becomes the base for later add-on acquisitions.
Related guide: Private equity and partnership options
Practice broker
An intermediary who markets a practice for sale, identifies potential buyers and coordinates the process.
Related guide: Selling a medical practice
Professional entity (PLLC, PC, PA)
A business entity designed for licensed professionals, such as a professional limited liability company, professional corporation or professional association. Available forms vary by state.
Related guide: PLLC vs. PA vs. PC for physicians
R
Recapitalization
A transaction that changes a practice's ownership and capital structure, often by bringing in an outside investor while current owners keep a stake.
Related guide: Private equity and partnership options
Relocation
Moving a practice to a new location, which typically involves site selection, lease timing, build-out, equipment moves and patient communication.
Related guide: Relocation and second locations
Restrictive covenant
A general term for contract clauses that limit future activity, such as non-competes, non-solicitation clauses and confidentiality terms.
Related guide: Physician contract review and employment terms
Revenue cycle management
The process of capturing, billing and collecting payment for services, from scheduling and eligibility checks to claims and patient balances.
Related guide: Medical practice operations review
S
Schema markup
Structured code added to web pages that helps search engines and AI tools understand details such as services, locations and FAQs.
Related guide: SEO for medical practices
Security risk assessment
A structured review of where practice systems and data could be exposed and which safeguards are in place.
Related guide: Security risk assessment
Site selection
The process of evaluating potential office locations by access, visibility, parking, patient catchment area and referral proximity.
Related guide: Office site selection
Social media marketing
Using platforms such as Facebook, Instagram and YouTube to share practice education, updates and culture with patients and the community.
Related guide: Social media for medical practices
Stock purchase
A transaction in which the buyer acquires the ownership interest in the practice entity itself, including its contracts and history.
Related guide: Selling a medical practice
Succession plan
A plan for how ownership and leadership of a practice will pass to new physicians or owners over time.
Related guide: Succession, buy-ins and buyouts
T
Telehealth
Patient visits conducted by secure video or phone rather than in person.
Related guide: Telehealth video and unified communications
Tenant improvement allowance
An amount a landlord agrees to contribute toward a tenant's build-out, typically defined in the lease.
Related guide: Office lease negotiation
Transition plan
The steps for handing over a practice after an ownership change, including patient communication, staff, records and systems.
Related guide: Practice transition and records handover
Triple-net lease
A lease in which the tenant pays base rent plus a share of property operating costs, such as building upkeep and common-area expenses.
Related guide: Office lease negotiation
U
Unified communications
A single platform that combines phone, video, chat and messaging so staff can communicate from one system.
Related guide: Telehealth video and unified communications
V
Value drivers
The characteristics that tend to raise or lower what a practice is worth, such as payer mix, provider depth, growth and systems.
Related guide: Medical practice value drivers
VoIP
Voice over Internet Protocol: phone calls carried over an internet connection rather than traditional phone lines.
Related guide: Phone systems and VoIP for medical practices
W
Work RVU (wRVU)
A unit that measures the physician work component of a service. wRVUs are commonly used in productivity-based compensation.
Related guide: Physician contract review and employment terms
Have a question specific to your practice?
Request an introduction, and Physician Planning Partners will connect you with an independent, qualified professional who works with medical practices.
Take the 2-minute Practice Planning Checkor call (972) 616-4581
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